Wednesday, February 24, 2010

Public Sector Unions - A Toxin, A Crisis & An Opportunity

Public sector unions are a cancer in America. They are causing a massive economic crisis and, in terms of education, are the single most significant impediment to educational reform. All of this presents an opportunity for the right to address this issue and to build new alliances that could work a sea-change to the political landscape.

To understand all the ramifications of the public union cancer, one needs to know some of the history of the union movement. With the rise of the industrial era in the 18th century, large employers became infamous for abusing their bargaining power, many paying workers but a pittance to work long hours under dangerous, sometimes deadly conditions. And with their acts came the rise of labour unions. The conflict between owners and unions led to large scale violence. Indeed, it was in the middle of this volatile era that Karl Marx, in the Communist Manifesto, penned his theory that "The history of all hitherto existing society is the history of class struggles."

Regardless of what one thinks of unions today, they played a positive role in blunting the overreach of employers of the early industrial era. That said, Milton Friedman, in a 1976 interview, attributes this evolution far more to the gradual reduction in poverty that occurred over the 19th and 20th century.

Whatever the case, the reality is that the historical core demands of the unions were met, whether because of the unions, increasing wealth, or likely some combination of the two. We are the better for it. By law, we now have a 40 hour work week with time and half if hourly employees are forced to work beyond that limit. We have work holidays. We have a minimum wage. We have work place safety rules and mine regulations. Virtually all large employers have "due process" for employees in terms of setting out a process for complaints, grievances and terminations. Employee benefits are regulated by the federal law of ERISA. Moreover, employees are far more mobile today. At least until our economy was brought to its knees, an employer who abused his or her employees in the modern era could expect to find that his employees would be short term indeed.

Thus, unions have far outlived their usefullness. Their function today is anti-capitalist. They exist to limit competition, to restrict the ability of employers to fire union employees, and to soak employers for all that they can. They drive up costs to consumers and they are parasitical, charging employees for mandatory union dues over which union members rarely if ever have any say in their use. For example, here is a short video done several years ago by Milton Friedman explaining the costs of unionized labour and comparing it to a free market system.

To the extent that private sector unions in the U.S. are still around today, it is largely a function of New Deal era legislation giving unions a lifeline. But that has not stopped the marginalization and steady decline of private sector union employment. Economic changes and the realities of the marketplace have seen unions go from their hey day in 1960, when more than 37% of all private sector employees belonged to a union, to today where unions represent only 7.6% of the private work force. That of course is why Obama and the left have been pushing the Orwellian "Employee Free Choice Act" to strip workers of their right to a secret ballot as regards unionization, opening up the process to thuggery and intimidation in an effort to reinvigorate private sector union membership.

But that is the private sector. The public sector is a different matter entirely. Unions in the public sector are a growth industry with 39% of all state and local public employees belonging to unions. What can possibly justify public sector unions in 2010? This is not the era of sweatshops and 80 hour work weeks. And indeed, today we see public sector union employees earning significantly more than their private sector counterparts.

Public unions are particularly insidious. They are not subject to market forces and they have every reason to seek growth of government. This from a 2009 Heritage Foundation article:

. . . As Heritage fellow James Sherk reported earlier this year, for the first time in history most union members work for the government, not the private sector. The days when “union member” meant an American working in a steel plant, or coal mine, or auto factory are gone. Today, unions are dependent on government, not the private sector, for their livelihood. Therefore, unions have little interest in private sector job growth. Private sector jobs don’t help fund political campaigns. But government jobs do. The change in incentives has been devastating to American taxpayers. Manhattan Institute senior fellow Steven Malanga explains why:

In the private sector … employers who are too generous with pay and benefits will be punished. In the public sector, however, more union members means more voters. And more voters means more dollars for political campaigns to elect sympathetic politicians who will enact higher taxes to foot the bill for the upward arc of government spending on workers.

This is why you see big labor supporting Obamacare and cap and trade taxes. Private sector job growth does nothing to increase union dues … only the further expansion of government does.

As to how we got to this point and what is at stake, this from Daniel Henninger at the WSJ:

. . . The central battle in our time is over political primacy. It is a competition between the public sector and the private sector over who defines the work and the institutions that make a nation thrive and grow.

In 1962, President John F. Kennedy planted the seeds that grew the modern Democratic Party. That year, JFK signed executive order 10988 allowing the unionization of the federal work force. This changed everything in the American political system. Kennedy's order swung open the door for the inexorable rise of a unionized public work force in many states and cities.

This in turn led to the fantastic growth in membership of the public employee unions—The American Federation of State, County and Municipal Employees (AFSCME), the Service Employees International Union (SEIU) and the teachers' National Education Association.

They broke the public's bank. More than that, they entrenched a system of taking money from members' dues and spending it on political campaigns. Over time, this transformed the Democratic Party into a public-sector dependency.

They became different than the party of FDR, Truman, Meany and Reuther. That party was allied with the fading industrial unions, which in turn were tethered to a real world of profit and loss. . . .

Exhibit one in understanding just how insidious this devil's compact is - the Stimulus. Supposedly designed to stop the growth of unemployment, only 2.6% of the $786 billion Stimulus - a paltry $21 billion - actually went to the private sector for small business loans. Small businesses are the job creating engine of our economy and it is they who create wealth. Yet fully a third of the stimulus went to state and local governments to keep public sector employees in their jobs. They create no wealth - but they do pay union dues that are then returned to the Democrat party. Exhibit two would be the Obama's extortion of Chrysler secured bond holders to give up their property rights in favor of unions, potentially damaging investment in U.S. companies for years to come. Exhibit three would be Obama's outrageous stated intent to place SEIU President Andy Stern on the his Deficit Reduction Commission. Democrats are, as Democratic strategist Pat Caddell points out, wedded to unions.

The reality today is that public sector union employees are economically far better off than the majority of their private sector counterparts. According to a recent CATO study using Bureau of Labor statistics, total compensation for the average public sector worker is close to $40 an hour, while in the private sector, the average is about $27.50. In California, whose government George Will has characterized as a "unionocracy," a public employee can retire at age 50 receiving 90% of his last year's pay for life, along with medical benefits. The situation is not too dissimilar from that of New Jersey and to a lesser extent in many other parts of the country. You can follow these links for some of the state specific horror stories for New Jersey, New York, and California. Update: Detroit (h/t Instapundit).

[Update: And see this from Newgeography on the state of the State of California:

. . . California’s schools now rank 49th in the nation. They no longer generate the brilliant minds that fueled past economies. California’s 11.6% income tax has forced many high income earners to no income tax states like Florida or Nevada. The housing industry that created 212,960 units in 2006 was only able to build 36,000 units in 2009.

Former state librarian and California historian Kevin Starr talks about the potential of California being the nation’s first failed state. John Moorlach, Orange County Supervisor says, “We better start talking about this. What are we going to do when the entity (state government) above us crumbles? I think we are already technically bankrupt.” He should know: Orange County went bankrupt in 1994. The City of Vallejo, population 120,000, was forced into bankruptcy in 2008 by commitments by its politicians to pay its City Manager $400,000 per year and its fireman an average of $175,000 annually.

The biggest obstacle facing California’s recovery is a dysfunctional pension system created by politicians indebted to the public employee unions. The pension obligation is now $17 billion per year. California has 260,000 state employees and 38,000 are paid more than $100,000 per year. The University of California employs another 250,000 and 19,000 are paid over 100,000 annually. These generous salaries have been converted into lifetime annuities. The Legislative Analyst’s Office estimates the unfunded pension obligations of California to total $237 billion. In an era of retiring baby-boomers, this trajectory is clearly unsustainable. With tax receipts down, huge pension obligations and a state budget deficit of $20 billion, the vast majority of municipalities in California are suffering deficits and facing the prospect of Chapter 9 municipal bankruptcy.]

The economic harm of public sector unions is extensive and poses a particularly grave threat to our nation. The states with a history of Democrat majority have allowed the greatest public unionization - and importantly, they also suffer from some of the most significant unfunded pension liabilities. The sum total of those unfunded liabilities today is estimated at an incredible $2 trillion. This from a witch's brew of public unions who donate heavily to candidates who then in turn are expected to agree to soaking the taxpayers for the union's support, the fact that the fiscal problems posed by these promises come due decades down the road, and lax government rules for public pensions that invite underfunding. This from Diana Furchtgott-Roth at Real Clear Markets:

. . . Pension plans for employees of state and local governments are not governed by the U.S. Labor Department-administered Employee Retirement Income Security Act, which specifies investments that can be made by private employer pension plans and minimum levels of funding. Rather, public pension funds operate under guidelines of the Government Accounting Standards Board, which has different criteria.

Whereas gains and losses from private pension funds must be smoothed over seven years under the Pension Protection Act of 2006-ten years upon request-gains and losses for public plans only have to be smoothed over a 30-year period. This means that public funds can incur greater deficits than private plans, because projected gains 30 years hence can be used to offset near-term losses.

Although private plans can reduce employee benefits and increase contributions to bring under-funded plans into financial health, many public sector plans have been prohibited by the courts from doing this. New employees can be charged a higher contribution rate for lower benefits, but not current employees who were hired under more favorable terms.

Underfunded public pension plans are legal obligations of the state, and have to be paid . . . .

And unlike the federal government, state and local governments can't print money. Could we be duplicating Greece on this side of the Atlantic? Who is going to have to pay for this combination of profligacy and underfunding? Either state tax-payers or tax payers nationally if, as many expect, states come with hat in hand asking for a bail out. But it does not end there. The unions, unless broken through a combination of bankruptcy, legislation and repeal of Kennedy's infamous executive order, show no intention of doing anything but asking for more.

And that is what makes this even more scandalous. The attitude of the public sector unions displayed during this massive recession is arrogance personified even though it is crystal clear that the house of cards they have created is wholly unsustainable. The public sector unions are riding the gravy train for all its worth. Not being subject to market forces, they expect the taxpayors to be continually soaked. For example, this from

Teachers in New Jersey are due, on average, raises of four percent this year and next, but the ongoing recession is taking a toll on tax revenue at all levels of government throughout the state. Christie is grappling with what he says will be a $1.3 billion shortfall in the current budget and a looming structural deficit of at least $9.5 billion in the budget year that begins this July.

But a spokesman for the New Jersey Education Association, which represents 200,000 teachers statewide, called the pay-freeze proposal a “direct violation of collective bargaining.” Most districts are in the middle of current contracts, said spokesman Steve Wollmer.

“There are a lot of legal questions,” he said. “These agreements were legally negotiated under collective bargaining.”

Peter Tirri, president of the 3,700-member teachers union on Paterson, called the pay freeze idea an “incredible slap in the face.” . . .

Another example comes from a now well publicized incident in Rhode Island. This from Hot Air:

The situation already looked explosive. A Rhode Island high school had a 50% failure rate in a depressed town with high unemployment and a median wage of $22,000 per family. The union representing the teachers, who averaged over $70,000 per year in income, refused the superintendent’s plans to improve the school by extending the work day by 25 minutes and requiring teachers to provide tutoring on a rotating basis. The superintendent summoned her inner Reagan and fired them all, from the administrators to the last instructor (via Instapundit):

Her plan calls for teachers at a local high school to work 25 minutes longer per day, each lunch with students once in a while, and help with tutoring. The teachers’ union has refused to accept these apparently onerous demands.

The teachers at the high school make $70,000-$78,000, as compared to a median income in the town of $22,000. This exemplifies a nationwide trend in which public sector workers make far more than their private-sector counterparts (with better benefits).

The school superintendent has responded to the union’s stubbornness by firing every teacher and administrator at the school.

One wonders how many teachers at the school would have been quite willing to comply with what seem to be quite reasonable requests of the superintendent - and how many today would like to tar and feather their union representatives today.

At any rate, this highlights that it is not merely an economic cost that we pay for public unions, it is also deeply problematic for performance in sectors where employees are unionized. This is of particular importance in the area of education. In the words of Al Shanker, former president of the American Federation of Teachers, "I don’t represent the children. I represent the teachers." Those words highlight virtually all that is wrong with teachers unions.

They exist to prevent competition, irrespective of the results being achieved. Their answer to all problems is more money for more teachers - which of course means more union dues. Bad teachers are protected through the work of the unions and contracts that provide for "tenure." Tenure is a practice common to higher education. It grants university professors job security in order to allow them to opine on controversial subjects or to take contrarian positions. Theoretically, it is meant to fan the flames of classical liberalism. None of that remotely applies to teachers in K-12 who are expected to be teaching our children the basics of reading, writing, math, science and history. "Tenure" for public school teachers is ludicrous. Yet this from an article, Bad Teachers Are Rarely Fired:

In most states, teachers are awarded tenure after only a few years, after which they become almost impossible to fire. Union leaders insist that they support archaic tenure laws because they ensure “due process” for teachers. But these laws actually help bad teachers keep their jobs.

In 2003, one Los Angeles union representative said: “If I’m representing them, it’s impossible to get them out. It’s impossible. Unless they commit a lewd act.” Between 1995 and 2005, only 112 Los Angeles tenured teachers faced termination -- eleven per year -- out of 43,000. And that’s in a school district whose 2003 graduation rate was just 51 percent.

One New Jersey union representative was even more blunt about the work his organization does to keep bad teachers in the classroom, saying: “I’ve gone in and defended teachers who shouldn’t even be pumping gas.”

In ten years, only about 47 out of 100,000 teachers were actually terminated from New Jersey’s schools. Original research conducted by the Center for Union Facts (CUF) confirms that almost no one ever gets fired from New Jersey’s largest school district, no matter how bad. Over four recent years, CUF discovered, Newark’s school district successfully fired about one out of every 3,000 tenured teachers annually. Graduation statistics indicate that the district needs much stronger medicine: Between the 2001-2002 and the 2004-2005 school years, Newark’s graduation rate (not counting the diplomas “earned” through New Jersey’s laughable remedial exam) was a mere 30.6 percent. . . .

This is especially egregious when one considers how teachers unions also fight tooth and nail against any competition. Possibly the most disgusting example of this came with the Obama administration's decision to end the Opportunity Scholarship Program in Washington D.C., a place where the public school system is the best funded in America, yet achieves the worst results. He did it at the behest of the National Education Association (NEA). Juan Williams has opined extensively on this topic:

The cause of my upset is watching the key civil rights issue of this generation — improving big city public school education — get tossed overboard by political gamesmanship. If there is one goal that deserves to be held above day-to-day partisanship and pettiness of ordinary politics it is the effort to end the scandalous poor level of academic achievement and abysmally high drop-out rates for America’s black and Hispanic students….

In a politically calculated dance step the Obama team first indicated that they wanted the Opportunity Scholarship Program to continue for students lucky enough to have won one of the vouchers. The five-year school voucher program is scheduled to expire after the school year ending in June 2010. . . .

And all along the administration indicated that pending evidence that this voucher program or any other produces better test scores for students they were willing to fight for it. The president has said that when it comes to better schools he is open to supporting “what works for kids.” That looked like a level playing field on which to evaluate the program and even possibly expanding the program…

And now Secretary Duncan has applied a sly, political check-mate for the D.C. voucher plan. . . .

The National Education Association and other teachers’ unions have put millions into Democrats’ congressional campaigns because they oppose Republican efforts to challenge unions on their resistance to school reform and specifically their refusal to support ideas such as performance-based pay for teachers who raise students’ test scores.

By going along with Secretary Duncan’s plan to hollow out the D.C. voucher program this president, who has spoken so passionately about the importance of education, is playing rank politics with the education of poor children. It is an outrage.

And here is Mr. Williams opining on this issue at Fox News.

As Juan Williams points out, improving our education should be a non-partisan issue. It is not because most - but not all - Democrats are wedded financially to public unions. A fascinating article on the national issue of how the Teachers Unions are the major impediment to bettering public education appeared in a City Journal article a few weeks ago, We Are All Rightwing Bastards Now. It discusses how many liberals and former teachers union employees agree that the teachers unions are antithetical to the highest quality of education we can provide to our children:

. . . People of all political stripes—not just right-wing “bastards”—are starting to realize that the single biggest impediment to education reform is the NEA itself.

. . . A study of charter schools in Boston by Harvard economist Tom Kane found that “students accepted by lottery at independently operated charter schools significantly outperformed students who lost the lottery and returned to district schools. But students accepted by lottery at charters run by the school district with unionized teachers experienced no benefit.” . . .

The NEA fights school vouchers even more fiercely than it opposes charters. . . .

. . . the Citizens’ Commission on Civil Rights released a report, National Teachers’ Unions and the Struggle over School Reform, maintaining that the teachers’ unions consistently blocked meaningful education reform and accusing the NEA of trying to end enforcement of the No Child Left Behind act. The unions “almost uniformly call for the spending of more money and the creation of more teaching positions which, of course, result in an increase in union membership, union income and union power,” wrote one of the authors, David Kilpatrick. Perhaps the report’s authors are the “right-wing bastards” Chanin was talking about? The problem is that Kilpatrick spent 12 years as a top union officer, while the study’s other authors include former senators Bill Bradley and Birch Bayh, D.C. congresswoman Eleanor Holmes Norton, and civil rights leader Roger Wilkins — all liberals.

That Democratic leaders and poor African-Americans in Washington have found common cause with the Wall Street Journal and Fox News shows that school reform is neither a liberal nor a conservative issue. While Chanin champions the power of an entrenched union and belittles those who oppose it, people of goodwill across the political spectrum fight back for real education reform.

While this presents a great challenge to America, it also, as Thomas Sowell points out, presents a great opportunity for the Republican Party:

. . . The black vote was once consistently Republican, from the time of Abraham Lincoln to Herbert Hoover. Even after Franklin D. Roosevelt won over the black vote to the Democrats, it was not considered remarkable when Eisenhower got a higher share of the black vote than any Republican president in recent times has.

It may be years before Republicans can again get a majority of the black vote. But Republicans don’t need to get a majority of the black vote. If they get 20 percent of the black vote, the Democrats are in trouble — and if they get 30 percent, the Democrats have had it in the general elections.

In some close congressional elections, if the Republicans increase their share of the black vote by even modest amounts, that will be the difference between victory and defeat.

There is no point today in Republicans’ continuing to try to win over the average black voter by acting like imitation Democrats. Those who like what the Democrats are doing are going to vote for real Democrats.

But not all black voters are the same, any more than all white voters are the same. Those black voters that Republicans have any realistic chance of winning over are people who share similar values and concerns.

They want their children to get a decent education, which they are unlikely to get so long as public schools are a monopoly run for the benefit of the teachers’ unions, instead of for the education of the children. Democrats are totally in hock to the teachers’ unions, which means that Republicans have a golden opportunity to go after the votes of black parents by connecting the dots and exposing one of the key reasons for bad education in inner cities and the bad consequences that follow.

But when have you ever heard a Republican candidate get up and hammer the teachers’ unions for blocking every attempt to give parents — black or white — the choice of where to send their children?

The teachers’ unions are going to be against the Republicans, whether Republicans hammer them or keep timidly quiet. Why not talk straight with black voters about the dire consequences of the public-school monopoly that the teachers’ unions and the Democrats protect at all costs, even though many private and public-charter schools — notably the KIPP schools in various states — have achieved remarkable success with low-income and minority youngsters?

Blacks have been lied to so much that straight talk can gain their respect, even if they don’t agree with everything you say. . . .

And, in what can only be seen as perfect timing, we now see anti-union sentiment being reflected in the polls. This from Hot Air:

A new poll by Pew Research shows that the labor movement’s popularity among Americans has plummeted over the last three years. In January 2007, unions had a favorability gap of 27 points with a solid majority (58%) approving of them. Today, that advantage has entirely dissipated:

Favorable views of labor unions have plummeted since 2007, amid growing public skepticism about unions’ purpose and power. Currently, 41% say they have a favorable opinion of labor unions while about as many (42%) express an unfavorable opinion. In January 2007, a clear majority (58%) had a favorable view of unions while just 31% had an unfavorable impression.

The latest nationwide survey by the Pew Research Center for the People & the Press, conducted Feb. 3-9 among 1,383 adults reached on cell phones and landlines, finds that favorable opinions of unions have fallen across demographic and partisan groups. Still, far more Democrats have favorable views of unions (56%) than do independents (38%) or Republicans (29%).

Public unions have caused a crisis in America politically, economically, and substantively. And this comes at a time when unions are fading in favorability. As someone once said, "never let a crisis go to waste." I think that sage advice in regards this matter. It is long past time to dust off Ron's old playbook and to take Prof. Sowell's advice.

Welcome Larwyn's Linx readers.

Related Posts:

1. Public Sector Unions: A Toxin, A Crisis & An Opportunity
2. Read'n, Writ'n & Unioniz'n
3. What, Marx Or Lenin Weren't Available?
4. Gov. Chris Christie, What Leadership Looks Like
5. California: From Riches To Public Sector Unions To Ruin
6. Detroit's Public School System, School Board & Teachers' Union
7. Unions & Teachers: The Alpha & Omega
8. Living With Public Sector Unions
9. Public Sector Unions
10. Obama, The Stimulus & Teachers' Unions
11. Yet Another Reason Why Public Sector Unions Should Be Done Away With
12. Grand Theft Democrat
13. Another Win For Teachers Unions, Another Defeat For DC Students
14. Reason 10,001 Why Public Sector Unions Need To Be Outlawed
15. Public Sector Unions Go To War To Prevent Democratic Change In Wisconsin
16. Change You Can't Have: Obama & The DNC Interfere In Wisconsin State Politics
17. Do Public Sector Workers Have A Fundamental Right To Organize?
18. An Instant Classic
19. Boehner, Obama & The DNC: The State Public Sector Union Issues Gets Nationalized
20. Wisconsin - What's At Stake 21. A Democrat & Former NYC Schools Chancellor Condemns Teachers' Unions
22. For The Children? Really?
23. All Of The Stars Align - Time For Republicans To Court The Black Vote
24. NYC & The Benefits Of A Unionized Public School Education


OBloodyHell said...

> Virtually all large employers have "due process" for employees in terms of setting out a process for complaints, grievances and terminations.

Except in matters PC. Thanks to government meddling, it is possible to have a complaint made about comments which may or may not have been made, in a context which may or may not be appropriate to interpret, which may or may not be racist or sexist, and to be summarily fired for same without any hearing or due process of any kind, indeed, never being even informed as to the exact nature of the claimed comments and allowed to respond regarding the claims.

I've seen it happen.

OBloodyHell said...

> The school superintendent has responded to the union’s stubbornness by firing every teacher and administrator at the school.

Let us hope she keeps her job.

Much more than the PotUS, she's beholden to various federal, state and local interests that can bring great pressure to bear on her.