Exposing Public Sector Unions
Several years ago a consummate Sacramento insider told me “unions run this town,” and subsequent research and observations have confirmed the truth of this statement. Slowly, very slowly, this reality, and the disastrous fiscal consequences of this reality, are being recognized. Criticizing unions is still something responsible people do with some reservations, after all, in the 19th and through much of the 20th century, unions played a vital role in securing basic worker’s rights. These contributions should not be dismissed. But unions today, especially in the public sector, are a different beast entirely. In our current anti-capitalist political climate, unions are getting far less criticism than they deserve, particularly because in the case of state, city and county governments, the unchecked power of public sector unions are almost the sole reason we have a fiscal crisis. Here are some points to consider:
(1) Compensation to public sector employees is not limited to their wages, but must take into account the value of their increased number of paid days off (AND the “9/80” program which equals another 26 paid holidays per year), as well as the current year funding requirement (less whatever they contribute out of their paychecks which is usually only a fraction of the cost) for their retirement health and pension benefits. This “overhead” can easily double the annual cost for public sector employees, whereas in the private sector, overhead costs of this sort rarely exceed 25%. This overhead must be included when assessing how much public sector employees actually make each year.
(2) The state budget not only includes state employees but also payments to cities and counties. The overall personnel costs as a percentage of the state budget should include any payments that aren’t directly to state worker salaries but also payments to other entities (public sector contractors and other public agencies/governments) that in-turn are used to fund salaries.
(3) The state worker pension funds were NEVER as solvent as they were being represented by their managers. The internet bubble, then the housing bubble, were used as justification to beef up retirement benefits that were already unsustainable to still higher levels (in some cases retroactively!), at the same time as the required annual inflow of payments were actually reduced.
(4) State worker unions don’t have to strike – they control elections. To verify this, simply investigate the amount of money they are spending in statewide, city and county elections to finance campaigns of compliant candidates. California Assemblyman Niello recently told me he met with some fiscal conservatives to evaluate what it would take to successfully pass an initiative that would bring about genuine reform and the minimum campaign funding required was $100 million. As you know, the state worker unions spent a lot more than that in 2005 to crush Schwarzenegger’s initiatives. Why is this legal? Isn’t this the taxpayer’s money? Isn’t there a conflict of interests?
(5) Unions at the state, city and county level don’t just bankrupt public entities by virtue of the bloated salaries and benefits they coerce out of politicians whose survival depends on their campaign funds, they also do so by requiring public sector jobs to be far less efficient than they could be. When negotiating their contracts these unions are able to require higher staffing than necessary and narrowly defined job descriptions in order to create more jobs. Equally significant to these crippling work rules, union contracts also take away the meritocracy – they undermine the incentives for any public employee to take individual initiative. There is staggering additional cost for all this.
(6) One reason most voters are still unaware of the role of unions in bankrupting our government entities is because of the lack of balanced media reporting and commentary on the benefits of capitalism as well as the mounting quantity of credible arguments against global warming alarm. The welfare state creates jobs for government workers by breeding dependence. Global warming fees are the only way to inject significant new taxpayer dollars into government coffers. Media influencers need to take a 2nd look at the virtues of the private sector as well as the fallacies of mainstream environmentalism through the perspective of how government unions benefit financially from liberal politics and environmental alarmism.
(7) Unions were a necessity 100 years ago. But it is obvious that they have created legacy obligations that are totally unsustainable and completely unjustified. It is common for journalists to point the finger of blame at Wall Street, with good reason. It is also easy – and accurate – to blame the politicians who failed to regulate the mortgage lending industry. But why aren’t journalists looking at the collusion between public sector unions, politicians, and Wall Street? Over the past 25 years, one of the reasons the financial sector evolved and attracted the best and brightest entrepreneurs is because the manufacturing sector was taken over by unions. Who wants to work or invest in such an anti-entrepreneurial environment? And then the public sector unions demonized “corporate profits” at the same time as their pension funds took major stakes in these corporations. There is a lot of connectivity here, and very few reporters are trying to expose it. Does anyone really think public sector union bosses don’t get the fact that artificially scarce land, “urban service boundaries” and inflated home prices means more property tax revenue?
(8) Public sector unions provide the farm team for political office. The depth of the field of political candidates coming from the public sector simply dwarfs anything possible from the private sector. In the private sector we have to work all the time. In the public sector they get 2-5x more days off each year with pay, then retire early. And they have more incentive to get involved, because the politicians directly control the salaries they receive. If you look at the candidates for the entry level political offices; school board, water board, firefighters commission, whatever, the candidates and officeholders are nearly all current or retired public sector employees. When I visited the California State Republican convention last February, my unscientific survey indicated nearly ALL of the party activists are government workers. Three public sector unions were the primary sponsors of the event! There wasn’t a corporation in sight. What does that tell you?
Because of the failure of politicians and voters to adequately confront the crucial differences between unions in the public sector vs. unions in the private sector, government workers have taken over our government. The result is a far less efficient government, a government with a self-serving political agenda that skews towards more self-defeating entitlement spending and more environmental alarmism, and a government that has poured all their financial resources into paying themselves far more than the rest of us earn with comparable skills. Crucial investments in infrastructure are deferred under the pretext of environmental concerns, when in reality, that investment money is being diverted to pay grossly overmarket salaries and pensions for unionized public sector workers.
What needs to happen in Sacramento and at every city hall and county seat in California is the salaries and pensions of government workers need to be cut at least 20% (or more) across the board; in the case of pensions these cuts should be as much as 50%. That is the solution, NOT cutting jobs or services. And it would be nice to see a major newspaper support this editorially, and lay the blame where it belongs – on the decades-long failure of voters, journalists, and politicians to recognize and restrict the political power of public sector unions.
Edward Ring is a contributing editor and senior fellow with the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, Forbes, and other media outlets.
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