Friday, July 22, 2011

Monopolistic Public Sector Unions, FDR and JFK

FDR opposed public sector unions in 1937. George Meany, president of the AFL-CIO in 1955, agreed with FDR, "It is impossible to bargain collectively with the government."

Their thinking went along the following lines: Unions were viewed as a way to get workers more of the profits that they helped generate. Government workers don't create profits. They simply negotiate for more tax money. If government workers strike, they strike against taxpayers. As a simple matter of common sense, FDR and George Meany had it right.

Yet in 1962 JFK endorsed public sector unions for federal government employees, following Wisconsin's lead in 1959. That meant a government monopoly in which the unions could negotiate, and unions thrive on monopolies. It also enabled union membership to grow exponentially and lots of new union dues, too. In addition to monopolies, unions thrive on growing membership dues as well.

Now we have 40% of the public sector employees belonging to unions (50% in Wisconsin). And lots and lots of dues paying public employees who pay the salaries and benefits of their union officials. Unfortunately, this also means that voters don't have much to say about the wages, benefits and working conditions of public employees. Those things must be negotiated with the unions by elected taxpayer representatives.

In my view, this is the worst of all possible outcomes for taxpayers. And the biggest problem is not with the unions. They just do what they always do. Get the best deal they can by leveraging their negotiating strength. The problem is with the elected officials who negotiate with the unions. Both sides of the bargaining table are using OPM, of course, but the elected officials, unlike their union counterparts at the negotiating table, really have nobody to whom they are accountable. Taxpayers are widely dispersed and "rationally ignorant" about what's going on, to say the least. It's a condition ripe for exploitation, and that's what the unions have done.

In addition, the union is often negotiating indirectly on behalf of those public officials sitting across the table from them. In other words, as the wage and benefit situation improves for public employees generally, it often indirectly brings about improvement for the elected officials serving on the public's bargaining committee. And even if not, these taxpayer representatives probably won't want to make their neighbors upset, and those neighbors often are the very public employees represented by the union. Obviously it's a situation that's ripe with conflict.

When these types of conflicts of interest exist, the taxpayer inevitably pays and pays and pays some more. Making a bad situation even worse is when pension benefits are considered. That's because when the "cash basis" for government accounting is used, the general public won't see the adverse financial impact of pension improvements for many years to come.

So here's the simple solution. We need to repeal collective bargaining for public employees. If the public employees can't or won't trust their fellow taxpayers to set policy and pay at appropriate and competitive levels with comparable jobs in the private sector, they can always seek employment elsewhere. The taxpayer will be better served if parity exists between the private and public sector compensation programs. So will the public employee.

Today there are countless examples where the public interest isn't properly being served by public employee unions. For instance, Notable & Quotable sets forth the California teachers' union current position on a choice between accepting a shorter school year versus teacher layoffs. The union will get more dues if no layoffs occur, but the students will learn more if the school year isn't shortened. Guess which route the union endorsed.

Then there are the Project Labor Agreements, or PLAs. To boil it down, PLAs are an easy way for unions, and an expensive way for taxpayers, to increase union dues paying members. According to Project Labor Revolt, there is a growing movement in many states and cities to void these taxpayer adverse PLAs, despite President Obama's strong support.

In any event, these PLA mandates require state and local governments to award construction contracts only to union contractors regardless of whether a non-union contractor has a lower cost, higher quality or greater capability. We used to call this type of thing discrimination, and that's exactly what it is. It makes no sense unless you're either a union official or a Democrat seeking political office and union support.

Why do states and localities have PLA rules? Well, unions collect more dues from growing memberships when PLAs are in effect. On the other side, there is incontrovertible evidence that taxpayers get less in the way of a finished project while spending more (Boston's Big Dig, for example) -- often very much more -- to get that lesser result, if you know what I mean. When taxpayers get to vote, they vote against PLAs, but they usually don't get to vote.

Taxpayers would be better advised to just send the union officials sacks of money which they could then spend as they wished. This would end the charade of representing members and take the place of membership dues. Then we'd just proceed to pay public employees fairly, since they're our fellow taxpayers and neighbors, and eliminate all the convoluted ways, including union dues, now used to get money to union officials.

FDR and George Meany had it right. Down with public employee unions and up with equal pay, benefits and working conditions for public employees.

Thanks. Bob.

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