The Exempt Class: Unionized Government Workers

“All animals are equal, but some animals are more equal than others”
George Orwell, Animal Farm

Public sector unions, who have now raised over $50 million to defeat California’s Prop. 32, have called it the “Special Exemptions Act,” because it supposedly was deliberately written to exempt billionaires and certain business interests from its provisions. The irony is appalling. Because public sector unions are exempt from a host of regulations that all other businesses and political actors have to follow. And because public sector employees are exempt from the challenging economic realities of our time.

There is an October 10th guest editorial in the Orange County Register called “Yes, stop the special exemptions,” written by Pepperdine University economics professor Gary Galles that does as good a job of any to debunk union misinformation. Galles writes:

“Proposition 32 creates no special exemptions to put a stop to. The initiative would ban corporate and union contributions to candidates and their committees, contractor donations to politicians, who award contracts, and deductions from employee’s wages for politics, without annual written permission. Unions and their allies claim it creates a special exemption for corporations, because the ban on direct contributions doesn’t restrict businesses’ ability to fund independent campaigns. But such donations are constitutionally protected forms of speech, which cannot be restricted, so the “special exemption” is failing to ban what cannot be banned.”

But Galles goes further, exposing the irony of a political campaign by unions claiming that their opponents are the ones who seek to benefit from exemptions. Here are excerpts from Galle’s summary of how unions enjoy special exemptions are denied all other political and business entities:

“Unions have been exempted from antitrust laws.

Unions are exempt from prosecution for any acts by members or officers in the course of strikes.

Unions are exempted from lower wage competition for government contracts by the Davis-Bacon Act’s “prevailing wage” requirements, generally interpreted to be higher, union wages.

Labor law imposes “exclusive representation,” in which a union that wins a certification election is given monopoly authority to bargain for every worker.

Nonunion employers can be forced to hire paid union organizers as ordinary employees, even though their main goal is to undermine the employer’s nonunion status.

Mass picketing of a strike target is allowed not just by those workers striking but by large numbers of others not directly involved, to intimidate targets and those who would work for or do business with them.”

In the case of public sector unions, another exemption they receive is an almost complete absence of public disclosure requirements. As exposed in the California Public Policy Center study “Understanding the Financial Disclosure Requirements of Public Sector Unions,” government worker unions are exempt from the requirements to file detailed public disclosures of their financial activity and operations that are required of all public corporations and even private sector unions.This makes it far easier for them to obfuscate their dominant role in elections, especially at the local and state levels, where two-thirds of all tax revenues are spent.

More generally, it is the public sector workers, represented by public sector unions, who constitute an entire exempt class in American society. They are exempt from the challenging economic realities of our time. Having endured decades of lavishly funded, relentlessly applied, highly sophisticated union propaganda, one can hardly blame the average public employee for thinking they are underpaid, overworked, and under-appreciated. One can forgive them for accepting the comforting lie that all it takes for them to continue to enjoy the pay and benefits to which they have become accustomed is for rich people to pay their “fair share.” But facing the truth can only be delayed by propaganda, never denied.

It would be wonderful if every worker in the United States could, on average, earn annual base pay of $70,000 per year (ref. U.S. Census Bureau – California State Payroll 2010, and U.S. Census Bureau – California Local Government Payroll 2010) and retire by age 60 to enjoy pensions that average well over $60,000 per year (ref. CalPERS Annual Financial Report FYE 6-30-2011, page 153, and CalSTRS Annual Financial Report FYE 6-30-2010, page 149). But the implacable truth is this: There is only enough wealth to be expropriated from rich people to elevate a small segment of the population to this vaunted “middle class” status. Setting aside for a moment the devastating collateral consequences, even if you raised the tax burden on the “millionaires and billionaires” by 100% or more, you would still only generate enough revenue to keep paying public employees their current levels of pay and benefits, which are literally twice as much on average as what private sector workers earn. You could never collect enough money to guarantee such largesse to every American worker.

There is a recent historical example of how a big government elite crippled a national economy in order to expropriate wealth for themselves. They were the nomenklatura, those communist party members living in the Soviet bloc, and they maintained their relative prosperity by enslaving and impoverishing an entire nation in the name of equality. An important distinction in America today is the alliance between government worker unions and Wall Street’s financial speculators. At the same time as government unions use their political power to harass and demonize productive businesses, they work together with the most parasitical forces within the capitalist sphere, pension bankers who are gambling with the economic future of the world in their doomed effort to achieve a fraudulently optimistic 7.5% return on investment. And as the returns fall short, these unions serve as foot soldiers for Wall Street, using their political power to raise taxes to cover the difference.

Government workers are indeed the exempt class. While they incessantly spew rich bashing rhetoric, they partner with the most undeserving rich in the world, the Wall Street financial speculators, to provide themselves retirement benefits that are laughingly impossible for all workers to ever come close to achieving.

As George Orwell vividly described in the closing passages of Animal Farm:

“The animals notice that the faces of the pigs have begun changing. During a poker match, an argument breaks out between Napoleon and Mr Pilkington, and the animals realise that the faces of the pigs look like the faces of humans, and no one can tell the difference between them.”

8 replies
  1. Avatar
    Tough Love says:

    But still, while AS A GROUP, the Public Sector workers know that this largess simply cannot continue, each worker INDIVIDUALLY (while looking to the left and to the right and knowing one or both will fall), thinks that somehow/someway he will make it to the finish line unscathed and get all that was “promised”.

    Anybody want to buy a “bridge” ?

  2. Avatar
    Richard Rider says:

    How’s THIS for an awesome labor union “special exemption” — a powerful exception that is seldom mentioned — even by Prop 32 supporters?

    Labor union dues are 100% tax deductible — on both federal and California income tax forms. About 75% of union dues are used (directly or indirectly) for politics.

    Hence unions and their members advocate and contribute with PRE-tax dollars, whereas those contributing voluntarily must use AFTER-tax dollars. Even corporate payroll deductions for politics (which are voluntary and would be banned under Prop 32) are treated as after-tax dollars.

    Let’s level the playing field. ALL political contributions should be with after-tax dollars. End the unions’ huge secret tax loophole.

    Vote YES on Prop 32.

  3. Avatar
    Tough Love says:

    Richard, I was unaware of the Tax exemption for Union dues.

    That’s WRONG on its face. If Romney gets elected, that one of the first things he should eliminate at the Federal level.

  4. Avatar
    Gene says:

    Prop 32 should be understood by every voting Californian. The public unions including the sacred cows, public safety unions, i.e., fire and police unions, are pouring money into the No on 32 campaign. I have received numerous mailers and phone calls asking me to support their efforts. As a 32 year public safety employee (serving both in law enforcement and the fire service)I saw first hand how our unions utilized our deducted dues to support candidates and politicians I would never vote for. The California Professional Fire Fighters are at the helm of these efforts where as the bulk of the men and women in these professions are caught in the middle. The unions have strangle hold on them. Prop 32 will free them to make their own decisions as to where there hard earned money is to be spent. They can opt to allow their dues to be utilized for union supported politicians or they can opt out and make up their own minds. Prop 32 is a good proposition and should be supported even by those who are members of these groups. Without their political puppets the unions will have to work harder to convince their bosses that they deserve more money and benefits. Prop 32 will put the decision making back into the hands of the citizens.

  5. Avatar
    Richard Rider says:

    Just to clarify who has been in charge of California in recent history:

    “The California State Legislature currently has a Democratic majority, with the Senate consisting of 25 Democrats and 15 Republicans and the Assembly consisting of 52 Democrats and 28 Republicans. Except for the period from 1995 to 1996, the Assembly has been in Democratic hands since the 1970 election (even while the governor’s office has gone back and forth between Republicans and Democrats). The Senate has been in Democratic hands continuously since 1970.”

    Yes, we’ve had some GOP governors who have been weak at best. And a handful of turncoat GOP legislators (who usually then got fired if they were up for reelection).

    But no CA legislation passes through the two state legislative bodies without Democrat majorities. Democrats rule!

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