The basic premise behind public employee financed campaigns is that the election is now while the bills may be deferred for years, particularly if they take the form of pension promises. Eventually, however, the bills do come due. This is why Governor Mitch Daniels (R-Indiana) said he decided on his first day of office in 2005 322 to end public employee collective bargaining rights and to stop collecting union dues. Without the state collecting dues, only 10% of union members chose to stay enrolled by paying their own dues.

Governor Chris Christie (R-New Jersey) stood before 200 of his state’s mayors in 2010 and declared that the era of “Alice-in-Wonderland” budgeting is over: “Money does not grow on trees. . . . For New Jersey and any number of other states and municipalities, it’s useless to pretend. . . . We have no room left to borrow. We have no room left to tax.” Chris Christie went on to say that his treasurer had presented him with  possible budget deletions or freezes to balance the budget and that he had adopted . Almost all observers thought that this was the end of the Governor’s career. Instead it made him a national figure and even won approval from New Jersey voters.

Governor Scott Walker (R-Wisconsin) was elected in 2010 and immediately moved to restrict collective bargaining for benefits (excluding police and fire) and also to stop collecting union dues. This led to a firestorm of protest and a recall election, which the Governor won. Governor John Kasich (R-Ohio), also elected in 2010, restricted public employee collective bargaining, including police and fire, but his actions were overturned by voters in a 2011 referendum.

In retrospect, Kasich’s chief error was in not moving to end automatic state collection of all union dues. Scott Walker’s experience in Wisconsin in this regard is highly instructive. Walker’s position was that the state would continue collecting all dues until the end of the contract. After that, dues would only be collected with the consent of the public worker. What actually happened was that two-thirds of workers enrolled in AFSCME, the state’s largest public union apart from the teachers’ NEA, refused to give their consent. As in Indiana, the political power of the union took a major hit. As Jim Geraghty commented in the National Review: “Apply this across the country . . . and you’re talking about . . . a game-changer in so many states.”

Ironically, a federal court ruled in 1966 that a union did not have the right to use member dues for political purposes if a member objects. But few union members know about the right to opt out or, if they do, may feel intimidated in pursuing what are called their “Beck rights.” Moreover the unions make it very difficult by stalling on Beck rights requests, smothering them in endless red tape, and refusing to calculate what portion of the dues apply. If, however, the public employer refuses to collect full dues for the union automatically and instead asks the member whether dues should be used for political purposes, it is much easier for the worker to express a preference.

As we have noted, the rules governing state and local public unions differ from those governing federal workers. The former can usually engage in collective bargaining and go on strike; the latter seem to serve little purpose other than to collect dues and put a share of it at the disposal of the Democratic Party. Despite these differences, federal wages and benefits have also risen, so that taken together they now exceed what can be earned in the private sector for the same job. This is a remarkable reversal: fifty years ago, it was generally understood that federal workers would earn less in exchange for more days off, slightly better benefits, and almost total job security.

Studies purporting to compare federal with private work levels do not agree with one another, but the Congressional Budget Office has found that, comparing employees of comparable educational level, federal wages are higher at lower pay scales, similar at middle, and somewhat lower at the high end, with benefits much higher across the board. Taken together, the federal employee advantage is 16%. In addition, federal employees work three hours less per week on average and one month less per year. An earlier Labor Department study found that state and local workers make 46% more, so federal workers were not doing as well. Other studies, however, suggest all categories of government pay are more like twice as high as private, when the net present value of soaring retirement awards, often equal to final year pay, is taken into account.

The number of very highly paid federal employees has also increased, even during the years following the Crash of 2008. For example, in early 2008, the Labor Department had only one employee earning $170,000 or more. Eighteen months later, there were 1,690 such employees. Over the same period, all federal employees making more than $100,000 rose from 14% to 19%. One federal employee, working in a government green energy lab in Colorado, was reported in 2012 to be making just under $1 million, with two deputies making over $500,000 each, and nine others making over $350,000. The number of all jobs during the economic recession of 2008–2009 also rose in the federal government, unlike in the private sector, where over eight million disappeared. It is not at all surprising that by the end of 2010, seven of the ten richest counties in the US surrounded Washington, DC.

Having come into office on a wave of union support and money, the Obama administration literally opened its doors to union leaders. Andy Stern, the head of the powerful SEIU, visited the White House more often than any other political figure during the first six months. What he seemed to want most was “Card Check” legislation that would end the secret ballot in union organizing. President Obama and Democratic leaders strongly endorsed the bill, but it must have lacked some Democratic votes in the Senate, because it was never put forward for a vote, despite overwhelming Democratic majorities in Congress.

President Obama found other ways to reward labor. During his first weeks in office, he signed executive order 13502, which made union membership a requirement of anyone working on federal construction projects. He also opposed Senator Jim DeMint’s (R-South Carolina) National Right to Work bill, which would have ended compulsory union membership as a job condition in all states (23 states have their own versions of this law).

The President backed a decision by the Democrat controlled National Labor Relations Board (NLRB) intended to block Boeing’s plan to move 787 Dreamliner plane construction from unionized Washington to union-free South Carolina. He backed another highly controversial decision to force companies to turn over their employees’ private email addresses and telephone numbers without employee consent to union organizers. He also tried unsuccessfully to force companies doing business with the government to reveal all political activity or donations, a rule that would not have applied to unions. By early 2012, he had granted waivers from his Obamacare legislation to unions representing 543,812 employees (also to administration friendly companies with 69,813 employees).

Meanwhile the president kept subsidies flowing to the Post Office which, despite massive losses, reliably collects union dues from workers, which are then made available to Democratic campaigns ($3.6 million in the 2010 election cycle). Other countries have successfully privatized their mail delivery. The obstacle to doing this in the US is that postal workers, like other government employees, are deemed to be, for the most part, reliable Democratic voters, and their union is regarded as an indispensable political cash cow.

Crony-Capitalism-in-America

About the Author: Hunter Lewis is co-founder of AgainstCronyCapitalism.org. He is co-founder and former CEO of global investment firm Cambridge Associates, LLC and author of 8 books on moral philosophy, psychology, and economics, including the widely acclaimed Are the Rich Necessary? (“Highly provocative and highly pleasurable.”—New York Times) He has contributed to the New York Times, the Times of London, the Washing­ton Post, and the Atlantic Monthly, as well as numerous websites such as Forbes.com and RealClearMarkets.com. This post is an excerpt from Chapter 20 of his most recent book, Crony Capitalism in America: 2008–2012.

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    2 Responses to Public Union Foes and Defenders

    1. Tough Love says:

      Ed,

      Can you provide links to the studies referenced in your paragraph beginning with the word “Studies”.

      I referred to these stats in a comment I made elsewhere and the Public-Sector-worker commentators are saying you’re full of it. Links to the actual studies would be helpful.

    2. Let schools crumble says:

      K-12 teachers should be more open to pension reform because when states are short of money, the easiest place to cut is education. In Calif. half of the state budget goes to education, so the education budget is a very big target when spending has to be cut. LAUSD teachers complain about crumbling buildings and the cutting of music, arts, and vocational ed. as well as no librarians, counselors, nurses, etc. Sorry teachers, get used to it. Those goodies are never coming back, with CalSTRS in need of $166 billion. We’re not giving up any more bucks for your pensions and Cadillac health care plans.

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