Scott Stantis - Chicago Tribune

Corrupt Feedback Loops: Public Employee Unions

Civil Service rules insulated government employees from political demands, but also made firing the incompetent more difficult. The final barrier to accountability was the addition of another layer of employee empowerment, the public employee union. Private-sector unions are not the enormous political force they once were, but public-sector unions have continued to grow until they now control one of the two US political parties and have driven many state and local governments to near-bankruptcy, with underfunded pension and medical coverage for retirees taking a larger and larger share of local government revenues.

How did we get here? The advent of industrialization and large workplaces encouraged formation of worker associations. Facing a powerful employer, workers that joined in a union could send a message about compensation or working conditions with less fear of individual reprisal. In the United States, the union movement coalesced in the late 1880s, about the same time Wilson and the Progressives were formulating their program to mold the citizenry through government directives and regulation.

Since unions threatened the interests of powerful industrialists and employers, conflict was inevitable. Violence broke out between management and labor forces, with contract security agents (“company men”) from Pinkerton infiltrating and fighting union members during extralegal labor actions. Unions were illegal in some places, and union tactics like picket lines enforced by union violence were met by violence from company goons.

In one incident, the Homestead Steel Strike of 1892, steelworkers union members fought Andrew Carnegie’s Homestead Steel company managed by Henry Clay Frick. Frick intended to break the strike and had hired an army of three hundred Pinkertons to help get strikebreakers into the Pittsburgh-area riverside plant, bypassing the strikers’ picket lines by boat. With both sides armed with guns and thousands of workers and local citizens joining the battle, fighting went on for days, killing nine strikers and seven Pinkertons. Martial law was declared and public opinion turned against the union, resulting in deunionization of most US steel plants.[1]

Union activity was seen as a threat to the social order and unions themselves were feared as introducing “socialist” ideas. Conspiracy to join together to raise pay had been illegal under English law, and US law had followed suit. Many typical union tactics — picket lines and harassment of workers and suppliers trying to get into plants, secondary boycotts, and sabotage of equipment — were illegal. Yet unions could perform a valuable function in communicating worker views to management, and many thoughtful employers were able to work with unions as an outlet for worker grievances.

The Depression and FDR’s New Deal administration brought much more government recognition and support for union activities. The new administration believed overproduction and low prices were the key reason for economic weakness, and so favored controls on agricultural and industrial production to reduce quantities and raise prices — so the administration also supported union activity restricting the entry of low-priced labor and increasing wages for union members. Much New Deal legislation protected and encouraged labor unions, and the National Labor Relations Act of 1935 (the “Wagner Act”) guaranteed the right of workers to form unions and bargain collectively in the private sector. Nonunion industries were organized, strikes increased, and wages rose in those sectors. For those left out of unions, notably black men, prospects of employment were diminished, and the economic recovery as a whole is thought to have been delayed by the New Deal’s legalized cartels and restraints on competition.

Clarified rules and legalization of a constrained right to strike under the law defused most of the violence and disorder associated with union activity. Private-sector unions became another accepted part of the American scene, and the big labor union coalitions like the AFL-CIO joined in disavowing Communism to rid themselves of “un-American” associations.

The simplistic narrative of the noble union is usually set in a one-company town, say a coal mine, where workers have little choice of employer, while management is free to take advantage of their monopoly on local employment to gouge and mistreat workers. In a modern urbanized area, these conditions rarely occur, and workers have a choice of employers vying to hire them, which provides a competitive environment that tends to improve compensation and working conditions as productivity increases.

In reality, unions grew powerful where a choke point existed — where a large and expensive plant, fixed rails, or docks prevented re-routing the business activity elsewhere during a strike. Unions did best where workers were low-skilled and interchangeable, and where the workplace could not be moved and had a lot invested in it, or where a government monopoly existed, as in transit and garbage in many cities. Unions could raise worker compensation and write work rules tailored to union preferences in such situations, making the union job preferable to any competitive nonunionized work, with the union as a barrier to entry of new workers — those already in the union got more money and protection from competition who might be willing to take the job for less.

Unions in private industry with free trade and low barriers to entry tend to harm their hosts and eliminate themselves over time as their hosts are crippled by high costs and loss of flexibility. As a result, entire union-dominated US industries were either offshored or automated, and private-sector union employment as a percentage of total private employment has fallen from a peak of around 35% in the mid-1950s to 7% today.[2] Unions are no longer a significant drag on the private sector, and remaining private-sector unions are much more aware of their need to cooperate with company management to produce high-quality, competitive products in a globalized world.

But the dynamics of public sector unions are quite different, and their enormous growth from the mid-1960s until today means the majority of union members now work for government — 35% of government employees are now unionized,[3] and public employee unions are important members of the political coalitions that keep governments in power at all levels. While private-sector unions decline in influence, public-sector unions have never been more powerful. Federal Election Commission statistics show public employee union campaign and PAC contributions grew from $17 million in 1998 to $54 million in 2014, with the vast majority going to Democrats.[4] Public employee unions now dominate election spending for local issues like school board races, city councils, and state-level ballot initiatives affecting their interests. There’s no good source for data on total state and local campaign contributions, but the Federal election numbers show how unions distribute their contributions:

Table 1: Public Sector Unions: Top Contributors to Federal Candidates, Parties, and Outside Groups, 2014 Election Cycle. Source: Open Secrets.org Center for Responsive Politics

 

 

 

To Candidates and Parties

To Outside Spending Groups

Rank

Contributor

Total Contribs

Total

Dem%

Repub%

Total

1

National Education Assn

$24,961,199

$2,183,752

91.1%

8.8%

$22,787,447

2

American Fedn of St/Cnty/Munic Employees

$10,002,495

$2,288,816

99.2%

0.3%

$7,717,155

3

American Federation of Teachers

$4,797,032

$2,484,870

98.8%

0.8%

$2,312,162

4

American Federation of Govt Employees

$4,072,005

$1,019,250

94.3%

5.6%

$3,052,755

5

International Assn of Fire Fighters

$2,184,303

$1,948,946

84.4%

15.6%

$235,357

6

National Assn of Letter Carriers

$2,113,796

$1,688,360

94.9%

4.9%

$425,436

7

American Postal Workers Union

$1,007,341

$988,950

98.8%

1.2%

$18,391

8

National Rural Letter Carriers Assn

$735,500

$735,500

76.8%

23.0%

$0

9

National Treasury Employees Union

$681,550

$631,550

96.1%

3.9%

$50,000

10

National Active & Retired Federal Employees Assn

$441,000

$441,000

75.7%

24.3%

$0

When a private-sector union overplays its hand with a private industry, that industry declines and the goods or services it provides are either imported or are replaced by alternatives. Unfortunately government services are usually monopolies, so there’s no competitor or foreign supplier waiting to provide what they cannot. Public employee union power continues to grow as governments become more dysfunctional as a result.

Civil service employment almost never declines, and monopoly services like public schools, police, and transit are ideal for giving unions more negotiating power via strikes and slowdowns since no alternative service is available in the short term. Wages and benefits can go up consistently without harming the host government, at least up to the point where tax burdens are so high citizens start moving away to less taxed locales.

Public employee unions were not legal in most jurisdictions until the 1960s. Politicians recognized that many public services were too critical to the orderly functioning of cities to allow unions to strike. The Boston Police Strike of 1919 and the resulting outbreaks of looting and violence had turned the public against the idea:

In the Boston Police Strike, Boston police officers went on strike on September 9, 1919. They sought recognition for their trade union and improvements in wages and working conditions. Police Commissioner Edwin Upton Curtis denied that police officers had any right to form a union, much less one affiliated with a larger organization like the American Federation of Labor (AFL). Attempts at reconciliation between the Commissioner and the police officers, particularly on the part of Boston’s Mayor Andrew James Peters, failed.

During the strike, Boston experienced several nights of lawlessness, although property damage was not extensive. Several thousand members of the State Guard, supported by volunteers, restored order. Press reaction both locally and nationally described the strike as Bolshevik-inspired and directed at the destruction of civil society. The strikers were called “deserters” and “agents of Lenin.”

Samuel Gompers of the AFL recognized that the strike was damaging the cause of labor in the public mind and advised the strikers to return to work. Commissioner Curtis refused to re-hire the striking policemen. He was supported by Massachusetts Governor Calvin Coolidge, whose rebuke of Gompers earned him a national reputation. The strike proved a setback for labor unions, and the AFL discontinued its attempts to organize police officers for another two decades. Coolidge won the Republican nomination for vice-president of the U.S. in the 1920 presidential election.[5]

During the New Deal era, FDR famously rejected public employee collective bargaining and strikes while his administration paved the way for further unionization of private industry:

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters. Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.[6]

Both the public and politicians remained opposed to public employee unions for decades after. In 1943, a New York Supreme Court judge held:

To tolerate or recognize any combination of civil service employees of the government as a labor organization or union is not only incompatible with the spirit of democracy, but inconsistent with every principle upon which our government is founded. Nothing is more dangerous to public welfare than to admit that hired servants of the State can dictate to the government the hours, the wages and conditions under which they will carry on essential services vital to the welfare, safety, and security of the citizen. To admit as true that government employees have power to halt or check the functions of government unless their demands are satisfied, is to transfer to them all legislative, executive and judicial power. Nothing would be more ridiculous[7].

The conflicts of interest inherent in giving public employee unions the legal power to organize, collect dues, and wield typical union strategies of withholding labor and attacking the employer (the government, and ultimately the citizenry) are obvious:

The very nature of many public services — such as policing the streets and putting out fires — gives government a monopoly or near monopoly; striking public employees could therefore hold the public hostage. As long-time New York Times labor reporter A. H. Raskin wrote in 1968: “The community cannot tolerate the notion that it is defenseless at the hands of organized workers to whom it has entrusted responsibility for essential services.”

A core problem with public sector unionism is that it creates a uniquely powerful interest group. In theory, bureaucrats are supposed to work for and be accountable to the elected representatives of the people. But suppose those bureaucrats organize into large, well-funded, powerful unions that can tip election results. With very few and very unique exceptions, no workplace in which the employees elect the supervisors functions well for long. [8]

Constitutionally, states were free to allow public employee unions, and the dam of opposition began to burst in the 1950s. In 1958, New York City Mayor Robert Wagner, Jr. issued an executive order authorizing unions and allowing exclusive representation, a concept borrowed from Federal law where employees could vote to authorize a single union to bargain collectively for the employees, even those who chose not to join — and those objectors still had to pay union dues, enshrining the system of enforced contributions that has served to grow public employee unions into political donation powerhouses. Unions had already become powerful enough in New York City politics to win this enforced monopoly, which further entrenched their power.[9] This also was roughly the peak of New York City’s postwar prosperity, and shortly thereafter it began to decline into the crime-infested, decaying New York City of the late 1970s as crime rose and government services faltered, driving prosperous residents to the suburbs.

In 1962, President Kennedy signed Executive Order 10988,[10] permitting collective bargaining for federal employees. This order authorized Federal employees to form unions but continued to disallow strikes; the order was intended to forestall imminent passage of a bill in Congress which would have gone further and allowed exclusive representation, so-called union shops. Military and intelligence agencies were wisely exempted.

Later orders and legislation legalized other typical features of private-sector unions like closed shops, paycheck withholding of dues for all non-management employees, and union work done on time paid for by taxpayers, called “official time”:

Unionized federal employees spent 2.48 million hours working for their labor unions while getting paid by taxpayers during 2013, and more than 360 workers who are on the federal payroll spent 100 percent of their time working for their union.

Under federal rules, employees who are members of a labor union are entitled to so-called “official time,” where they are dismissed from their duties as a government employee to engage in labor union organizing activities. A new report from the Government Accountability Office shows the use of official time has increased over the past several years as the size of the federal workforce has grown.

And it’s costing taxpayers plenty. According to the Office of Personnel Management, which tracks federal employees’ time, federal employees were paid more than $157 million during 2012 while doing work for labor unions.

The GAO says the price tag may be even higher, since some federal agencies are not adequately tracking their employees’ official time.

“Since agencies are most often managing the use of official time using an approach that has no specified number of hours, they could be at greater risk for abuse,” auditors warned in the report, released last week.[11]

Efforts to contract out services currently provided by public employees are effectively blocked by union power, with lawsuits and work actions typical when outsourcing is attempted. When AFSCME workers struck University of California campuses recently, one of their objectives was a contract preventing outsourcing of functions like janitorial and food services. The AFSCME spokesman commented, “We need to deal also with these staffing issues, because what good is a raise if you are permanently injured on the job or if you are out of a job because the UC decided to outsource it to some low-wage, inexperienced contractor?”[12]

Minimum wage laws (first implemented as Federal law in 1938) went well with union efforts to outlaw low-priced competitive labor, especially from newly-arrived Southern black men in Northern cities. (In this, unions played the Bootleggers in a Bootleggers and Baptists coalition to pass minimum wage laws.) By outlawing low-end, low-wage work, minimum wage laws help unionized businesses stay competitive. In the current Democratic push for much higher “living wage” minimum wages of $15/hour, both private and public-sector unions have actively campaigned for the increases since even though most of their members make much more than minimum wage, their wages will tend to be bumped up to some margin above the minimum wage, either by contract or future negotiation, and nonunion firms become less competitive when they are forced to use only higher-priced labor.

The rent-seeking nature of union demands for higher minimum wages was exposed when the same unions also sought carveouts that would allow businesses to pay below minimum wages to union workers under a negotiated contract.[13] This demonstrated that the wages of union members were not as important to union bosses as hobbling their nonunion competition; by offering employers a special deal, unions could organize even more workplaces and thereby obtain more members and more dues, allowing them to donate even more to the local politicians who had passed the minimum wage increase.

Attempts to streamline Federal agencies by contracting out some noncritical services have also been blocked by union actions:

Last May, nearly 250 workers [at the U.S. Department of Labor] received word that their jobs had been eliminated and would be outsourced through the Administrative Support Services Competition, a departmental bidding process, without an absolute guarantee that another job could be found for them within the department. Their union, American Federation of Government Employees Local 12, protested the decision, holding a rally by the Capitol Reflecting Pool in June and pointing out that most of these “non-inherently governmental” jobs (as the department’s human resources staff called them) were held by minorities and women.[14]

Of course the jobs that would have been sent out under contract might well have been filled by minorities and women also, but at much lower cost to taxpayers. Those minorities outside the union walls are just out of luck, since without the protection and sponsorship of the union and its contributions to political campaigns, they will remain jobless. The plantation system lives on, with dues collected by largely white Democratic power brokers.

Education researcher Terry Moe has written about the capture of elected local school boards by teacher’s unions, and the resulting inability of school boards to act in the best interests of students and their parents:

Since A Nation at Risk warned in 1983 of a “rising tide of mediocrity” in America’s schools, the nation has invested heavily in reform efforts to bring about significant improvement—generating countless changes to the laws, programs, structures, and curricula of public education, and spending untold billions of extra dollars.

All this activity might seem to be the sign of a wellfunctioning democracy. But pull away the curtain and the picture is not nearly so pretty: the reforms of the last few decades, despite all the fanfare, have been incremental and weak in practice. The nation is constantly busy with education reforms not because it is responsibly addressing social problems, but because it never actually solves them and they never go away— leading to continuing demands for more reforms. This is what keeps the “education reform era” alive and kicking: not democracy, not responsibility, but failure….

The teachers unions have been masters of the politics of blocking for the past quarter century. Major reform is threatening to their vested interests in the existing system, and they have used their formidable power — leveraged by checks and balances — to repel and weaken the efforts of reformers to bring real change. This is not the whole story of the modern reform era, needless to say. But it is at the heart of it….

The public school system emerged in roughly its present form about 100 years ago, and for most of its history was a union-free zone. Many teachers belonged to the NEA, which, even in the early 1900s, was the vanguard of the education establishment. But the NEA was a professional association controlled by administrators, and it was opposed to unions.

All this changed during the 1960s and 1970s, when most of the states (outside the South) adopted public-sector labor laws. These new legal frameworks fueled dramatic increases in public-sector union membership and collective bargaining. They also triggered a transformation of the NEA, which, in competing with the AFT to represent the nation’s teachers, turned itself into a union—and soon grew to be the biggest union of any type in the country. The portion of teachers covered by collective bargaining soared from near zero in 1960 to 65% in 1978, and the system then settled into a new steady state. Bargaining coverage has remained virtually unchanged among teachers ever since. Membership levels have consistently been much higher, at about 79% and stable.

By the early 1980s, the teachers unions reigned supreme as the most powerful force in American education: with millions of members, armies of political activists, enormous wealth for campaign contributions and lobbying, and more. The rise of union power transformed the world of American public education, creating what amounted to a new education system, one that has been in equilibrium now for roughly thirty years—and protected from change by the very union power that created it….

Collective bargaining is also profoundly important for another reason: it has enabled the unions to impose ineffective forms of organization on the schools, thus exacerbating the very problems the reform movement has been trying to correct. Among other things, local contract provisions tend to include: salary rules that pay teachers based on seniority and formal credits with no attention to performance; seniority rules for transfers and layoffs that allow senior teachers to lay claim to available jobs; onerous rules for evaluation and dismissal that virtually assure that all teachers will get satisfactory evaluations and no one will be dismissed for poor performance; and more.

These and countless other contract rules are designed to promote the job-related interests of teachers, but from the standpoint of effective organization they are simply perverse. Yet this is how America’s schools are actually organized. There is a disconnect between what the public schools are supposed to do and how they are organized to do it—and this disconnect is a built-in feature of the modern American school system, a reflection of its underlying structure of power. Why have the districts “agreed” to ineffective organization? Partly it’s because no district wants a fight, because most work rules don’t cost them anything; and because as monopolies they have had little incentive historically to insist on effective organization anyway. But there is also a crucial political reason: school board members are elected, and the teachers unions are typically the most powerful forces in those local elections. As a result, many board members are union allies, others are reliably sympathetic to collective bargaining, and the rest have reason to fear that, if they cross the unions, their jobs are at stake.[15]

The Wall Street Journal review of Government Against Itself: Public Union Power and Its Consequences by Daniel DiSalvo (who is quoted above as well) had this to say:

Pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas. …Mr. DiSalvo [argues] that “unionization and collective bargaining in state and local government impose significant costs on society while providing few broadly shared benefits.” Still, the value in “Government Against Itself” lies not in the conclusion but in the lucid fashion in which his primer lays out facts and busts myths.

The facts: Public-sector unions are not underdogs. Since 2009, membership in unions such as the American Federation of State, County and Municipal Employees and the National Education Association has totaled more than the membership in traditional private-sector unions. The United Mine Workers, the union that resulted from the Harlan County conflict, counts under 50,000 active members, while the NEA boasts 2.5 million.

As Mr. DiSalvo shows, public-sector unions are also rich. Taken together, they spend hundreds of millions of dollars annually lobbying governments on behalf of their members. Our courts have ensured that funding for political activity will flow in the future by upholding rules that require payments from workers. Opponents of public-sector unions must content themselves with minor victories such as the recent Supreme Court opinion in Harris v. Quinn, which grants home-care workers, a narrow group, the right not to pay union dues….

The very timing of local elections, as Mr. DiSalvo demonstrates, has worked to the unions’ advantage. Towns hold elections in off years as well as presidential-election years. Turnout in off-year municipal elections runs about 36% lower. Unions, which can get out the vote, thus enjoy a disproportionate say in off years and schedule their referendums accordingly. But presidential years can yield results as well. When public-sector unions “pull out all the stops,” Mr. DiSalvo writes, “they almost always win.” By voting for Prop 98—powerfully pushed by the teachers’ union—Californians in 1988 guaranteed that four in 10 dollars of California’s general fund would henceforth be spent on K-12 education. This pattern of victory replicates itself across the states.

The trend is a shame and a drag on the economy. For the costs of public-sector unions are great. “The byproduct of political management of the economy is waste,” the author notes. Second, pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas. Increasingly, such a burden is fatal. When Detroit declared bankruptcy in 2013, a full half of the city’s$18.2 billion long-term debt was owed for employee pensions and health benefits. Even before the next downturn, other cities and some states will find themselves faltering because of similarly massive obligations.[16]

While public employees are still forbidden to strike in 39 states[17] and many cities, strikes and illegal job actions still occur, and even where strikes are illegal, threats to monopoly public services are powerful inducements for governments to kick the can down the road and give in to labor demands:

When the government entity bargaining with government employees cannot afford the cost of the union demands, the government increases the fringe benefits, i.e. pensions, and pushes the costs off to the future. The heavily unionized government worker states, including California, Illinois, New Jersey and New York, have the largest unfunded pension and retiree health care liabilities. In Wisconsin, public employers from 2000 to 2009 contributed $12.6 billion to public employee pensions while the employees contributed only $55.4 million.

State Budget Solutions examined the Bureau of Labor Statistics Databases and found dramatic evidence of the increases in fringe benefits by state and local governments. The revelation that public employees receive pension and retirement benefits that were worth 337% more than private sector employees is shocking, and illustrates the lengths to which governments will go in bargaining.

Overall, state and local government employees receive total benefits worth 171% more than what public sector employees earn. On an hourly basis, state and local government employees earn an average of $40.28 per hour in total compensation, whereas private sector employees average only $27.75 per hour.

In Milwaukee the average teacher will earn this year $59,500 in salary and $41,591 in benefit for $101,091 in total compensation. The average Milwaukee teacher has a $23,820 health insurance plan with no premium. Contrast that with a private sector employee in Wisconsin, who has a $14,656 insurance plan with a 20% premium. Despite this, last July the teachers union sued when the Milwaukee Public Schools stopped giving free Viagra because it cost the district nearly $800,000 per year and district was facing a deficit. The union just dropped this lawsuit on March 7, 2011.

Just as public sector unions are not concerned with the bottom line, performance is also not valued as it would be in the private sector. For example, Milwaukee School teacher Megan Sampson was laid off less than one week after being named Outstanding First Year Teacher by the Wisconsin Council of Teachers. She was laid off because the collective bargaining agreement requires layoffs to be made based on seniority rather than merit.

Government unions don’t bargain with the taxpayers who pay the bills. When teachers go on strike, they pay no penalty when their absence forces schools to close. Adding insult to injury to taxpayers, their actions force parents to either take time off work or quickly find someone else to care for their children. Also, unlike private sector unions, a government union has a natural monopoly over government services. This monopoly gives government union leaders extraordinary power over elected officials.

Most government unions would not exist without forced union dues. One of the first things government union leaders bargain for is a “union security” clause, which forces all government employees in the unit to pay for union services as a condition of employment. If a government employee works in a state with a “union security” clause, the individual must pay tribute to the union or they will be fired.

The money the government unions collect in dues helps to elect politicians who support the unions’ objectives. Government unions play a major role in electing their management team! In essence, government unions have a seat on both sides of the bargaining table. The U.S. Supreme Court made it clear that there is no “right” to collective bargaining. Collective bargaining for government employees makes them “super citizens” and the rest of the taxpayers are relegated to second-class status.

Today, the number of unionized government workers surpasses the number of unionized private sector workers. As a result, national unions have become advocates for higher taxes and government expansion, despite the fact that many of their private sector members oppose these efforts.

In the last election at the national level, government unions spent more than $200 million to defeat Republican candidates. The American Federation of State, County, and Municipal Employees — the main union of state government employees — spent over $90 million during the campaign, and it was the top donor to the Democrats’ efforts to win gubernatorial and state legislative races.

As a result, the Democratic Party is now heavily reliant on unions and forced political contributions from their members. Unions help elect Democrats who repay the unions with more pay and benefits, many of which are unfunded. In effect, government unions elect their “management,” who in turn can forcibly extract more money from taxpayers to increase wages and benefits. Government officials can promise pensions and retiree health care benefits that future taxpayers will have to fund. This, in turn, sucks jobs from the private sector by forcing businesses to pay higher taxes….[18]

Local and State government employee compensation

Local and State government employee compensation

Public vs Private-Sector compensation costs

Public vs Private-Sector compensation costs

The high direct costs of unionization hurt, but the inability of governments to implement changes to improve service quality hurts more. Incompetent or even criminal employees are protected (as we have seen in the VA and IRS scandals) and attempts to put services online are either absurdly expensive, complete failures, or both (as millions who waited for the Healthcare.gov web site to sign up for ACA health insurance can testify.)

At every level, government grows less competent and more expensive as a result of the rigidities imposed by Civil Service and union rules. As public-sector unions came to dominate the Democratic party, Republicans have made gains in state and local elections partly due to the public’s perception of corruption and special interests:

This leaves us with a superficially ironic situation. The Republican Party emerges as the organised champion of everyone who stands to lose in the fight over the fisc when public-sector unions win. The GOP’s base electoral incentive to hobble their rival’s main source of campaign cash and voter mobilisation leads it to function as a countervailing force against overpowered public-sector unions to the benefit of rich people, yes, but also to the benefit of less powerful and more needy constituencies within the Democratic coalition. A bit of public-employee union busting at the state and municipal level wouldn’t leave government workers vulnerable. There’s every reason to believe they’d continue to function as a powerful, pampered political faction. Pushback against public-sector unions would simply make the always-unfair fight over the fiscal commons slightly less unfair, and make fiscally prudent policy slightly less unlikely.[19]

Looming unfunded liabilities and fiscal issues are creating crisis conditions in several local US governments, notably in the bankruptcy of Detroit and problems in Illinois and its major city, Chicago. Puerto Rico has run out of time, and other states and cities have only a few years before they reach the same dead end. Efforts to reform pensions have largely been blocked by union lawsuits, and the downward spiral of higher taxes, fleeing taxpayers, and bankrupt governments is coming to more and more of the US.

Reform of the system is difficult — it is always easier to patch problems temporarily than to address the underlying structure of incentives that have caused them. But it will now be necessary to either reform public employee labor rules or let whole regions, and even the Federal government, slip into default and shut down some services entirely. The recent water contamination crisis in Flint, Michigan, is a harbinger of the type of regression to incompetence that is coming unless something is done.

The goal should be a single system that both protects employees from direct political retribution and allows managers to hire, fire, and rearrange workers as needed. Public-sector workers should lose their jobs at about the same rate as private-sector workers, and sinecures must be eliminated. And public-sector unions should not have their dues withheld from paychecks, or be allowed to contribute to election campaigns or lobbying efforts. Plato saw the corruption inherent in government employees dealing in property and business, and having tenured public servants is an invitation for them to act against the public interest to choose their own managers — which is how school boards became vehicles for protecting bad teachers and shutting out the interests of students and parents. “A tenure system increases [a] bureaucrat’s incentive to implement bad policies to replace a politician who does not share their preferences. Thus, tenure tends to make bureaucrat’s performance worse, and this tends to lower [total] welfare.”[20]

No one directly selling to a government body should be making campaign contributions to the politicians that run it, and retiring from public service to a high-salaried lobbying job should also be seen as the shameful double-dealing it is. Glenn Reynolds’ proposal of a Revolving Door Tax is one idea for shutting down this scam. The money that needs to be taken out of politics comes from public employees and corporate contractors to government, not contributions from private individuals and unregulated corporate sources.

[1] https://en.wikipedia.org/wiki/Homestead_Strike
[2] “Union Membership in U.S. Fell to a 70-Year Low Last Year,” by Steven Greenhouse, New York Times, Jan 21, 2011. http://www.nytimes.com/2011/01/22/business/22union.html
[3] http://www.bls.gov/news.release/union2.nr0.htm
[4] https://www.opensecrets.org/industries/contrib.php?cycle=2016&ind=P04
[5] “Boston Police Strike,” Wikipedia accessed 4-21-2016. https://en.wikipedia.org/wiki/Boston_Police_Strike
[6] “112 – Letter on the Resolution of Federation of Federal Employees Against Strikes in Federal Service,” Franklin D. Roosevelt, August 16, 1937. http://www.presidency.ucsb.edu/ws/?pid=15445
[7] “The Trouble with Public Sector Unions.” Daniel DiSalvo, National Affairs No. 5, Fall 2010.
http://www.nationalaffairs.com/publications/detail/the-trouble-with-public-sector-unions
[8] “The Trouble with Public Sector Unions.” Daniel DiSalvo, National Affairs No. 5, Fall 2010.
http://www.nationalaffairs.com/publications/detail/the-trouble-with-public-sector-unions
[9] “Management’s View of the New York City Experience,” Anthony C. Russo, Proceedings of the Academy of Political Science, Vol. 30, No. 2, Unionization of Municipal Employees (Dec., 1970), pp. 81-93
http://www.jstor.org/stable/1173366?seq=1#page_scan_tab_contents
[10] “Executive Order 10988 – Employee-Management Cooperation in the Federal Service,” January 17, 1962.
http://www.presidency.ucsb.edu/ws/?pid=58926
[11] “Labor union work by federal employees on ‘official time’ costs taxpayers millions,” by Eric Boehm, Watchdog.org, November 24, 2014

Labor union work by federal employees on ‘official time’ costs taxpayers millions

[12] “UC Workers Union Plans to Strike Again,” AFSCME Local 3299 web site, February 19, 2014

UC Workers Union Plans to Strike Again

[13] “L.A. labor leaders seek minimum wage exemption for firms with union workers,” LA Times, May 27, 2015
http://www.latimes.com/local/lanow/la-me-ln-los-angeles-minimum-wage-unions-20150526-story.html
[14] “Pushing Back Against Privatization,” The American Prospect, August 1, 2007
http://prospect.org/article/pushing-back-against-privatization
[15] “Teachers Unions, Vested Interests, and America’s Schools,” Terry M. Moe

Acing an Interview: A Quick Guide


[16] “Public Unions vs. the Public,” Amity Shlaes. Wall Street Journal, Jan. 15, 2015. http://www.wsj.com/articles/book-review-goverment-against-itself-by-daniel-disalvo-1421366405
[17] “Why Public-Sector Strikes Are So Rare,” Governing, by Heather Corrington, Oct. 10, 2012
http://www.governing.com/topics/public-workforce/col-why-public-sector-strikes-are-rare.html
[18] “Differences between private sector unions and government unions,” State Budget Solutions, March 23, 2011
http://www.statebudgetsolutions.org/publications/detail/differences-between-private-sector-unions-and-government-unions
[19] “Budgets and bargaining power: Government workers don’t need unions,” The Economist,
Feb 7, 2011
http://www.economist.com/blogs/democracyinamerica/2011/02/budgets_and_bargaining_power
[20] “Civil Service Reform,” Gergely Ujhelyi, Dept. of Economics, U Houston. Nov. 26, 2012
ftp://ftp.repec.org/opt/ReDIF/RePEc/hou/wpaper/201303216.pdf


Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

 


More reading on other topics:

Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy

3 comments

  1. “Efforts to reform pensions have largely been blocked by union lawsuits, ” I think you’re underplaying this issue, because the key thing is that in many states unions have been able to get pension entitlements hard-wired into state constitutions, to the point that in some states, you cannot even change pension accruals going forward for existing employees, and in some cases, for employees yet to be hired under existing contracts.

    1. State constitutions written during and after the Progressive era often have these entrenching features, so that even when a mild reform makes it through a Democratic machine, as in Illinois, a union lawsuit can block it. But it’s almost always the union that initiates the legal blockade, even if they are relying on language their forebears were able to insert. Of course this delay in reform has doomed Illinois to disastrous fiscal collapse later. But après nous, le déluge, for union members.

  2. There is no reason to have an industry-wide cartel controlling labor. At most, strikes should only be against individual companies. And never for public employees. Illinois taxpayers are being raped 24/7 by teachers and SEIU and their co conspirator politicians.

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