In the summer of 2015, the former mayor of San Jose, Calif., Chuck Reed, launched a ballot initiative intended to alter the retirement benefits of future state and local employees. Several California cities have already gone bankrupt and more are teetering on the brink. That prompted Reed to take a step intended to stem the fiscal bleeding resulting from the state’s excessively generous pension system.
The Politician–Public Sector Unionism Complex
Key provisions in the measure would require local governments to obtain voter approval if they want to continue giving new employees defined-benefit pensions after 2019, and require voter approval for increases in existing pensions. Further, the initiative is designed to prevent the state’s gigantic public employee pension system, CalPERS, from undermining it, something the union has done with other initiatives.
It’s noteworthy that Reed is a Democrat. As mayor, he struggled with the budgetary troubles caused by the tremendous and growing cost of public pensions. It’s also important to note that CalPERS is working behind the scenes to block Reed’s initiative. A union-friendly member of the State Assembly requested a legal opinion from CalPERS about the effects the initiative would have if it passed. The union duly produced an alarmist “analysis.” The Wall Street Journal opined in August that this “appears to be a test-run for the political attacks unions are likely to wage should Reed’s initiative qualify for the ballot.”
California is drowning in red ink, but the public sector unions worked hard to attach themselves like lampreys to the treasury. They will use every bit of their great political power to remain there.
All of that is pertinent to Daniel DiSalvo’s illuminating book Government Against Itself. DiSalvo, an assistant professor of political science at the City University of New York, has written a scrupulously fair account of the effects of public unionism nationwide. He comes from a family with deep union roots and is represented by the university’s faculty union—facts that add to his credibility. Having looked at a great deal of evidence, he concludes that public unionism results in “government that spends more but does less.”
Symbiotic relationship / DiSalvo reminds us that, for a long time, there was bipartisan consensus against allowing government employees to form unions and bargain collectively. President Franklin D. Roosevelt dismissed the idea of government employees unionizing, as did long-time AFL-CIO president George Meany. Unions, they thought, existed to help workers extract some of the profits earned by capitalists, but in the public sector they would only extract additional dollars from the taxpayers.
Some Democrats, however, presciently sensed political advantage in allowing (and often encouraging) public employees to unionize. In 1959, Wisconsin became the first state to approve of such unions. In January 1962, President Kennedy signed Executive Order 10988, which gave federal workers the right to form unions, although not always to engage in collective bargaining. Ever since then, public sector unionism has been growing apace while private sector unionism has been in steady decline. Today, only four states hold out against public employee unions: Virginia, North and South Carolina, and Utah.
Quickly, a symbiotic relationship developed. Politicians would help the unions get what they wanted—higher wages and benefits, greater job protection, better working conditions—and in turn the unions would give those politicians their full support. Once that relationship started, the unions learned how to exploit it to the utmost, not only squeezing government budgets tighter and tighter, but also taking over policymaking to a large extent.
Among the author’s most memorable examples is the way the California Correctional Peace Officers Association (CCPOA) has become the 800-pound gorilla of Sacramento politics. Not only are the “correctional peace officers” remarkably well compensated (including large pensions) for rather low-skill work, but the union’s lobbying has driven up the demand for prison guards by pushing through the “three-strikes” law that takes away judicial discretion in sentencing and thus leads to a growing number of prisoners. That illustrates one of DiSalvo’s recurring themes, namely how public unionization increasingly leads to policy decisions being made to suit the interests of the union rather than the citizenry at large.
The CCPOA also exemplifies how unionization interferes with standards and discipline. After it was discovered that some of the “correctional peace officers” had organized “Gladiator Days” where they enjoyed the spectacle of fights among the inmates, the union’s stonewalling made it extraordinarily difficult to fire those responsible.
Teacher unions are another powerhouse created by public unionism. DiSalvo writes, “Many features of school organization are designed to protect teachers rather than to deliver the best possible education for students.” For example, collective bargaining contracts usually require that teachers be paid according to a rigid salary schedule based on seniority. That rigidity prevents public school administrators from compensating teachers based on their performance and thus improving incentives. But from the standpoint of the union, improving incentives and performance is not desirable. Its interests are best served by maintaining the sense of solidarity, and competition among its members would erode that sense. Despite all the rhetoric union leaders lavish on their dedication to academic excellence, they readily sacrifice it to their own good.
And, as with the prison guards, teacher unions make it extremely hard to fire a teacher even when there is ample cause. DiSalvo points to statistics showing that doctors and lawyers are more than 10 times as likely to lose their licenses to practice as a teacher covered by a union contract is to be fired for performance-related reasons.
In many other ways, public unions increase the cost of services. One field where that is glaringly obvious is firefighting. Although the number of fires across America has fallen by 40 percent over the last several decades, the number of firefighters has actually increased by 40 percent thanks to the lobbying power of firefighter unions. They have succeeded in keeping their numbers growing by recasting fire departments as “first responders.” In Los Angeles, DiSalvo reports, only 2 percent of the calls to the fire department are now for actual fires, and most of those are for small fires in garbage cans and dumpsters. The majority of calls are requests to transport a sick person.
Political benefits, public costs / Arguably, the most serious effect of public unionism is on pension costs. Politicians tend to think in short-run terms, so a promise of immediate union campaign support in exchange for a politician’s commitment to back pension increases is hard to resist. The future budgetary trouble will likely be someone else’s problem, but even if the politician who takes the deal is still in office, he can count on union help in deflecting the blame. That explains why, in states where public unions are strong, workers can often retire early and make nearly as much as they did when they were working. Sometimes they can even make more by taking advantage of easily gamed rules about claimed job-related disabilities.
In states where the politician/union alliance dominates, the cost of pension generosity is hitting hard. DiSalvo points to the rift that has opened between those Democrats who don’t want pension costs to gobble up many dollars they would rather put toward their priority uses, and those who won’t risk antagonizing their union backers under any circumstances. The battle between San Jose’s Reed and union-loyal Democrats in the California legislature is a sign of more internecine warfare to come.
Not only are pensions high in the union-friendly states, but they are also badly underfunded. Why wouldn’t union officials pressure their legislative allies to make sure the pension and other retirement funds are kept on a sound financial footing? DiSalvo answers: “Because union leaders know that benefits are legally—and in some cases constitutionally—guaranteed, they have confidence that the benefits in the future will be paid. Union leaders adopt something of a ‘too big to fail’ mentality.” That is, they calculate that it is a better use of their political capital to push for greater benefits than to use it fighting to divert enough money into the plans to avoid crises. So far, that strategy has worked.
Pushback / Looking at the sweep of history, we have gone from a bad situation in early America where the spoils system of patronage gave the people high-cost, inefficient public services to the fairly good system of largely nonpartisan civil service, and now back to a new sort of spoils system controlled by the public employee unions. DiSalvo makes a strong case that it is time for the pendulum to swing back—and that now seems to be happening. He points to several hopeful trends.
Efforts to undo the economic and political damage that has been done by public sector unionism will be opposed vigorously at every step.
First, there is the pushback from liberal Democrats who see how badly city and state budgets are being distorted by the hegemony of the public unions, which consumes public resources those politicians want to devote to other purposes. Second, the unions have been defeated in some pitched battles against reform-minded Republicans (most notably Wisconsin Gov. Scott Walker) where they threw everything they had into protecting the status quo. Third, the legal landscape for public unions is becoming more hostile. DiSalvo discusses two recent cases, Knox v. SEIU and Harris v. Quinn, where the U.S. Supreme Court curtailed the power of public unions and suggested a willingness to go further. After the book was written, the Court granted certiorari in Friedrichs v. California Teachers Association, which could prevent unions from using dues money to fund political activism.
Maybe the pendulum image is misleading, though. Pendulums swing on their own, but efforts to undo the economic and political damage that has been done by public sector unionism will be opposed vigorously at every step. The nasty tactics employed by the unions in Wisconsin—occupying the capitol building, threatening legislators, having their allies in the legislature leave the state in an effort to prevent a vote—will probably be repeated over and over. DiSalvo is under no illusions about the difficulty of recovering ground that has been lost to the public unions.
Government Against Itself is an excellent analysis of the political economy of public employee unions. It will probably make DiSalvo persona non grata among many of his faculty colleagues, but that is the price of speaking truth to power.
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