The union movement has changed considerably since American workers began observing Labor Day more than a century ago. Unions in the 1880s consisted of private-sector workers voluntarily banding together to fix horrendous working conditions. This is what most Americans envision when they think about unions: workers on the assembly line, or on a construction site, bargaining for safety or higher wages.But half of today’s union movement works in government-sector jobs. A movement formed to defend blue-collar laborers now fights primarily to help white-collar workers expand government.These transformations have been underway for the past half century. The problems that initially attracted members to unions vanished a long time ago. Federal law, for example, prohibits child labor and requires safe working conditions. Workers comp programs provide for those injured on the job. The forty-hour workweek has been standard since before any employees today started working.As unions scored these protections, employee interest in unionizing waned. It has been many years since unions organized more new workers than they lost to unionized firms going out of business. In the 1950s, one out of every three workers belonged to a union. Today less than 7 percent of private-sector workers do.Unions Come to GovernmentGovernment unions have been the only exception to this downward trend. The labor movement originally thought organizing government employees made no sense. Civil service laws protect them from mistreatment, and the government has no profits to bargain over. In 1955 AFL-CIO President George Meany opined that “bargaining collectively is impossible in government.”In the late 1950s, however, the unions came to see government employees as an untapped source of new members and dues. Starting with Wisconsin in 1959, many states began allowing—or requiring—collective bargaining in government. In the next two decades, unions organized millions of government employees.Union membership has flourished in government since then. Unionized government agencies have no non-union competitors. No matter how inefficiently they operate, they stay in businesses. Moreover, government unions don’t run for re-election, so they don’t have to persuade new employees to support them.Unions now represent two out of every five government employees, and those employees make up half the union movement. Twice as many union members work in the Post Office as in the entire domestic auto industry.Lobby for More GovernmentThis shift to government has transformed the nature and interests of the union movement. Private-sector unions often lobby for special treatment, such as trade barriers to limit foreign competition, but they fundamentally desire a strong and growing private sector. That’s why the AFL-CIO endorsed the 1963 Kennedy tax cuts. Today’s construction trades unions support the Keystone XL pipeline for the same reason.Government unions primarily want a bigger government. More government employees mean more government union members. Higher taxes mean more money they can bargain over. So government unions have campaigned for almost every major tax increase in recent history.For example, unions provided much of the financing for the successful 2012 California sales and income tax hike ballot initiative. Two years earlier, government union members rallied for higher taxes in Springfield, Illinois. With chants of “Raise my taxes!” and “Give up the bucks!” they helped persuade then-Governor Pat Quinn and the legislature to raise the Illinois income tax by two-thirds. Almost all that money went to fund government employee pensions.Samuel Gompers, the first president of the American Federation of Labor, was once asked what his members wanted. He memorably answered “More.” Today’s government unions give the same answer when asked how much Americans should pay in taxes.Conversely, anything that shrinks the size (or increases the efficiency) of government means fewer government union members and fewer union dues. So government unions fiercely oppose government spending cuts. They resist any outsourcing to the private sector, no matter how much it may save taxpayers. And they certainly don’t want to let parents send their children to non-union charter or private schools.Indeed, unions now see themselves as a left-wing political movement. At its most recent convention, the AFL-CIO resolved that it “has as a founding ideal the assembling of a broad progressive coalition for social and economic justice.”Of course many government employees do not support this agenda. However, their views matter little to union leaders. In the 25 non-right-to-work states, these workers must pay dues anyway. And the unions don’t have to earn their support in a re-election bid.Disaster for TaxpayersThis transformation of the labor movement has had disastrous consequences for taxpayers and the recipients of public services. In most states, the average government employee makes considerably more than comparable private-sector workers, with most of that difference coming in back-loaded retirement benefits. This pushes taxes higher and squeezes out funding for other programs.Consider California. In the late 1990s, Golden State unions pressured the legislature to allow most government employees to retire at age 55 with a pension worth three-fifths of their final salary. This increased the total compensation of the average government employee in California to a third more than an equivalently skilled private-sector worker.These labor costs have started pushing California cities into bankruptcy. Stockton and Vallejo have already filed for bankruptcy, and many more cities face severe financial shortfalls. Even San Jose, in the heart of thriving Silicon Valley, now spends more than a fifth of its general fund on retirement benefits—and still has multi-billion-dollar unfunded pension liabilities.These problems extend well beyond California. Moody’s estimates states and cities face more than $2 trillion in unfunded pension liabilities. Retirement benefits consume nearly 30 percent of school payrolls in Michigan. Chicago’s liabilities have hit levels the city cannot repay—more than $80,000 per household. Across the country, government labor costs have driven taxes higher while cutting into core services.Conservative Labor ReformsThis transformation of the union movement should make government labor reforms a top conservative priority. Government unions are a powerful institutional force opposed to limiting the size and scope of government. They make top conservative (and politically popular) priorities—from tax relief to school choice—very difficult to enact. Creating them was a mistake that states should rectify.Several states—such as Virginia and North Carolina—never permitted collective bargaining in government. States that did should return to this example.Wisconsin Governor Scott Walker did this in 2011. He signed legislation eliminating the power of unions to bargain over government benefits and work rules, and strictly limited bargaining over wages. This enabled Walker to transform a $3.6 billion budget shortfall into a surplus and $2 billion in tax cuts. Savings came not just from cutting government pay, but also from operating more efficiently.Wisconsin school districts, for example, saved tens of millions of dollars through lower health insurance premiums. Previously, the Wisconsin Education Association (WEA) had required school districts to buy health insurance through WEA Trust, a union-backed insurance provider. Once school districts were allowed to shop around, they got lower rates.Similarly, Wisconsin unions can no longer force their work rules on the state or local governments. The seniority system that forced Milwaukee Public Schools to fire Megan Sampson a week after naming her their “Outstanding First Year Teacher” has now become optional.Unions threatened to end Scott Walker’s political career for taking them on. They failed miserably. Walker won a union-backed recall election handily. He won his regular re-election bid by almost the exact margin he first won in 2010. Walker’s reforms cost him no political support.Exit polls in 2014 showed that Walker won the political argument over the role of unions in government. Wisconsin voters view government unions unfavorably by a 52–44 percent margin.Less Sweeping Reforms Still ConstructiveHowever, political and legal realities mean not every state can follow Scott Walker’s example. In states with referendum laws, unions can put reforms to a ballot before they take effect. Unions’ substantial financial resources immediately put the “Yes” side at a disadvantage, and the referendum occurs before voters can even see the reform’s benefits. Such a campaign killed Ohio Governor John Kasich’s collective bargaining reforms.In other states, legal realities make removing government unions’ powers impossible. The Missouri and Florida Supreme Courts have interpreted their state constitutions as expressly protecting collective bargaining. Their courts would void any legislation eliminating it in government. In these states less sweeping reforms, ones that would still roll back unions’ ability to grow government, may be possible.Right-to-WorkFirst and foremost, right-to-work (RTW) laws making union dues voluntary are a good target for reformers. Without these laws, collective bargaining agreements typically require workers to pay union dues or equivalent fees. These dues run from $500 to $1,000 per year. Workers who don’t pay get fired. Government unions collect billions through these mandatory dues—money they use to bargain for bigger government and to elect left-wing politicians. Mandatory dues effectively function as public financing for one half of the ideological spectrum.Given the choice, many government employees want no part of this. Scott Walker included right-to-work in his Act 10 reforms. By 2013, a third of teachers in Wisconsin quit their unions. The Michigan Education Association lost one-eighth of its membership in school districts for which the right-to-work law has kicked in.Right-to-work legislation is a popular and easily defended proposal. Gallup polling finds Americans support right-to-work by better than a three-to-one margin. Unsurprisingly, union efforts to defeat pro-right-to-work politicians have largely failed.Recently Wisconsin, Indiana, and Michigan have passed right-to-work. Conservative legislative majorities in each state are larger now than before. Not one Michigan legislator who voted for right-to-work lost in the general election. Michigan unions didn’t even try repealing it via ballot initiative.Union Re-Election VotesAnother target for reform is to force government unions to regularly run for re-election. The vast majority of government employees never voted to belong to a union. Rather they are represented by a union their predecessors voted for in the 1960s and 1970s. This is a major reason government union density remains so high.For example, New York City public school teachers voted to join the United Federation of Teachers (UFT) in 1961. Not one of those teachers remains on the job. Yet the UFT represents every teacher in the district to this day and collects about $1,000 in mandatory dues from each of them. This both inflates union membership and makes it very difficult for government employees to hold their unions accountable.States can fix this problem by requiring government unions to regularly run for re-election, as Tennessee and Wisconsin did in 2011. These re-election votes hold union leaders regularly accountable to the workers they purportedly represent. They also make it easy for workers to get rid of unwanted representation. Wisconsin unions have lost roughly a fifth of the re-election votes they contested.Importantly, union re-election laws should require unions to surpass a minimum quorum of support. Unions have considerable experience mobilizing small groups of supporters. Absent a quorum requirement, unions will win many elections even when most workers do not support them.This happened to homecare workers in Michigan. The Service Employees International Union (SEIU) persuaded former Michigan Governor Jennifer Granholm to hold a mail election on unionizing them. Less than a fifth of homecare workers voted, but the SEIU mobilized and won a majority of those who did.Lacking a Right-to-Work law, the union took more than $36 million in dues from these workers’ Medicaid reimbursement checks. Then state lawmakers made participation voluntary. Four-fifths of the homecare workers immediately left the union.States should require unions to regularly demonstrate the active support of a substantial number of employees to remain their representatives. Both Tennessee and Wisconsin required a majority of all employees—not just employees who voted—to support collective bargaining. Alternatively, states could require unions to win an election with at least 50 percent turnout.Such re-election legislation would be hard for unions to defeat in a referendum. Polls show over four-fifths of union members support regular union re-election votes.Union TransparencyRight-to-work and union re-election votes would make unions more accountable to their members. That accountability has limited value if workers do not know what their union does. Federal law requires private-sector unions to disclose their spending to their members. It does not require similar disclosure for most government unions.In the private sector, this transparency has ended many union officers’ careers. For example, Los Angeles Times reporters discovered that SEIU Local 6434 funneled hundreds of thousands of dollars to businesses owned by its president’s family members. These reports sparked an FBI investigation that lead to embezzlement convictions of that president and several other high-ranking union officers.Transparency also exposes unions’ priorities. Private-sector union members can easily see how much their union spends on politics and how much it spends representing them. They can see how much their union officers pay themselves.Last year, for example, several major unions donated almost half a million dollars to Planned Parenthood, America’s largest abortion provider. Union members who consider abortion the taking of innocent life now know their dues fund it.Unfortunately, most government union locals don’t have to file these transparency reports. Reformers should press states to pass their own transparency laws for government unions. These requirements should mirror the federal forms and require unions to categorize and itemize their expenses and receipts, as well as officer salaries. Union members should know what they get for their dues—and have the opportunity to decide whether they want to keep paying.Citizen Approval of Government PayThese measures would make government unions more accountable to their members, but they would do less to protect taxpayers. To do that, states should adapt a familiar policy—public referendums on bonds—to collective bargaining.Most states require voter approval of state or local government bond issues. The reformers who passed these measures wanted to ensure that politicians could not commit citizens to long-term financial obligations without their consent. When these requirements took effect in the 1880s, government unions didn’t exist. Today they do, and improvident labor contracts threaten many cities with bankruptcy.States should give voters a say on these obligations. States with collective bargaining in government should require a public vote on new union contracts. They could hold votes either on all contracts, or on contracts in which compensation increased faster than the rate of inflation.Of course, the public would probably approve most union contracts. Most bond initiatives pass, too. This reform would nonetheless be quite valuable. It would prevent government unions from controlling both sides of the bargaining table by electing political allies. They would still have to persuade voters to go along.End Public SubsidiesBeyond these measures, a final target for reform is the elimination of taxpayer subsidies for government unions. Virtually every state with collective bargaining automatically deducts union dues from members’ paychecks. This greatly reduces their fundraising costs.Most states also directly subsidize government unions’ administrative costs through “release time.” This allows government employees to do union business while on the clock. The public pays union officers to negotiate collective bargaining agreements, file grievances, and perform other union work.Release time costs taxpayers a lot of money. A recent lawsuit revealed the City of Phoenix spends $4 million a year on it. Nationwide, researchers estimate states and local governments spend roughly a billion dollars a year paying government employees to do union work. This subsidy significantly reduces government union spending on administrative expenses. In doing so, it frees up money for them to spend on politics and other activities.Release time and payroll deductions are unjustified public subsidies to government unions. The government shouldn’t allow any interest group to use public resources for private gain. It certainly shouldn’t give public subsidies to left-wing activist groups.Today’s unions look nothing like the movement that inspired Labor Day. Workers did not unite in the 1880s to protest insufficiently inflated government salaries, or to demand that Congress raise taxes. Today half of all union members work in government, and these unions have become a permanent lobby for bigger and more expensive government.Reformers should push to eliminate collective bargaining in government where possible. In states where that is infeasible, they should push through the many reforms that would give taxpayers a better deal.
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Published on: September 7, 2015
Labor DayTime to Rein in Public Sector Unions
Much has changed since the first observance of Labor Day more than a century ago. A union movement formed to defend blue-collar laborers now fights primarily to help white-collar workers expand government.