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The Philadelphia Inquirer


Power Players

October 18, 2009

By Fred Siegel

One group, besides Goldman Sachs executives, has done well during the Great Recession — the public-sector unions that have become political powerhouses in Pennsylvania, New Jersey, New York, Washington, California, and a host of other states. They have become so powerful that they threaten the Madisonian system set up to constrain any one faction from overwhelming the public interest.

Once upon a time, public-sector workers received less pay than their private-sector counterparts in return for better benefits and greater job security. But that bargain has been breached. Public-sector wages have more than caught up, while the differential between public- and private-sector benefits has increased so much that public-sector work, particularly for the unskilled, is greatly coveted.

Supporters of public-sector union power argue that public employees are the vanguard of the working class and that the benefits they achieve eventually will have to be matched by private-sector employers. As Carla Katz, the leader of New Jersey’s Communications Workers of America, told the Newark Star-Ledger, reformers embrace “the progressive theory that unless you create a substantial wage and benefits package that reflects good jobs and the ability to have a middle-class lifestyle, there will be a perpetual race to the bottom.”

Katz not only represents thousands of state employees, she also is the richly rewarded former girlfriend of New Jersey Gov. Corzine. Katz’s influence on Corzine became clear in 2006, when he shouted at a Trenton rally of about 10,000 public workers: “We will fight for a fair contract.” Corzine was, of course, management in that situation, not labor.

With the power of the public-sector unions to drive election outcomes, they now sit on both sides of the bargaining table. They make campaign contributions and organize get-out-the-vote drives to elect politicians who then control the negotiations over their pay, benefits, and work rules. The result is a nefarious cycle: Politicians agree to generous government worker contracts; those workers then pay higher union dues, a portion of which are funneled back into campaign war chests. That cycle has driven California and New York to the edge of bankruptcy.

Consider what happened in Washington state. After helping Democrats win full control of the Legislature in 2002, the state affiliate of the Association of Federal, State, County, and Municipal Employees (AFSCME) and other unions persuaded lawmakers to lift collective-bargaining restrictions. Within three years, the number of union members had doubled. With more state employees paying dues, the number of union dollars flowing into the coffers of Democrats running in state elections also doubled.

A prime beneficiary of such union generosity was Christine Gregoire, who became governor in 2004 after one of the closest elections in the state’s history. (AFSCME gave $250,000 to the state Democratic Party to help pay for the recount that handed her the election by 129 votes.) Once in office, Gregoire negotiated contracts with the unions that resulted in double-digit salary increases, some exceeding 25 percent, for thousands of state employees.

Public-sector unions can negotiate detailed work rules in which they largely exempt themselves from accountability in return for providing political support for their nominal managers. In New York, Mayor Michael Bloomberg and the United Federation of Teachers have created a cartel to advance their own interests at the expense of citizens and students. Nearly 800 Gotham “rubber room” teachers who have problems on the job are being paid not to work. Salary increases have been running at better than twice the rate of inflation.

But the teachers are not the only politically powerful labor force in New York. In the nominally private health-care sector, employees depend heavily on government programs, principally Medicare and Medicaid, for their livelihood. In the 1970s and 1980s, Local 1199 of the Drug, Hospital and Health Care Employees Union, under the leadership of Dennis Rivera, formed a partnership with hospitals to maximize the flow of government revenue.

The alliance has been so successful in aligning itself with politicians, Democrat and Republican alike, that not only has Local 1199 been largely untouched by the economic downturn, but New York spends as much on Medicaid as California and Texas combined. And come boom or bust, hospital and health-care employment in the state keeps growing. Rivera, who merged his local with the Service Employees International Union, is now in Washington as the SEIU’s point man on health care.

What produced the enormous expansion of public-sector unions?

A significant boost was President John F. Kennedy’s decision to mobilize public-sector workers as a new source of political support. In mid-January 1962, he gave federal workers the right to organize, though not to collectively bargain. Kennedy’s action helped spark a wave of local union activity across the nation’s major cities.

Like entitlement programs, the expansion of public-sector unionism produced a self-generating dynamic for continual expansion. Public-sector unions would occasionally experience temporary setbacks — as in the New York fiscal crisis of 1975 - but they had the political clout to claw back any concessions made under duress.

The recent downturn has been very tough on private-sector workers. But the public sector, particularly when it comes to pensions for uniformed workers, has been a different matter. In New York City, where public-sector union benefits have grown twice as fast since 2000 as those in the private sector, firefighters may retire after 20 years at half pay. Pension benefits for a new retiree averaged just under $73,000 (all exempt from state and local taxes). To top it off, retirees receive a health insurance policy that is worth about $10,000 annually.

Such cases abound. According to the Boston Globe, 225 of the 2,338 Massachusetts state police officers made more than Gov. Deval Patrick’s $140,535 annual salary in 2006. The Chicago Sun-Times reports that in suburban Chicago, there are school administrators — a unionized profession — who are making more than $400,000. California teachers are represented by one of the country’s most powerful teachers’ unions and earn 25 percent more than the national average.

While the wage parity between public- and private-sector workers is largely unchanged since 2002, public-sector benefits are a different matter. For every $1-an-hour pay increase, Dennis Cauchon reported in USA Today, public employees have gotten $1.17 in new benefits. Private workers have gotten just 58 cents in benefits for every $1 raise. The cost of state and local public services increased 41 percent nationally between 2000 and 2008.

In the states and cities where government workers’ unions are strong, they have formed alliances with nonprofit advocacy groups such as ACORN and foundations committed to greater government involvement in the economy and society. The Manhattan Institute’s Steven Malanga argues that this constellation of forces is in effect a new Tammany Hall. The old Tammany, however, was subject to electoral defeats. The new Tammanies have proved self-perpetuating.

In California, Gov. Arnold Schwarzenegger’s ill-organized effort to roll back public-sector union power in 2005 led to his first defeat, then his political evisceration, and now the Golden State’s fiscal humiliation. New York City and state are on a similar course. Across the country, the new political machine has mostly been aligned with the Democratic Party, but some unions have had their interests advanced by Republicans.

Public-sector unions are beginning to strike out on their own, too. If the recent primary elections in New York are any indication, it is only a matter of time before, using the vehicle of the Working Families Party, they take control of New York City government. Candidates of WFP — organized in 1998 as an alliance between labor unions and ACORN — for City Council won easily, as did the party’s candidates for comptroller and public advocate. Those are the best platforms from which to make a run for mayor when Bloomberg finally gives up his post.

Public-sector unions bring to the fore what James Madison called “the violence of faction” and its threat to the “permanent and aggregate interests of the community.” The unions cannot be blamed for this; they’re advancing their members’ interests. The fault lies with politicians, particularly those governors and mayors who have been willing to sabotage the public interest to smooth the path to their own reelections.

In the absence of tough-minded leaders who will take on the public-sector unions, the fiscal future of states and localities is bleak.

Original Source:



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