The succubus of government employee unions

Stephen Meister in today’s New York Post has a strong column summing up the harm that is done to society by public sector unions. Keep in mind his opening anecdote of the famous Triangle Shirtwaist fire of 1911—he returns to it at the end, with a wallop of a metaphor.

I’ve seen numerous articles explaining how government employee unions hurt the economy and are unfair to private employees; I want to see an article explaining why government employee unions are inherently bad and unjust and should not be allowed. I seem to remember that argument being made years ago, but don’t remember the details.

Their feast, our famine
September 6, 2010

One century ago—on March 25, 1911—New York City saw the worst industrial fire in its history: 146 workers burned to death in a garment sweatshop run by Triangle Waistshirt Co. at 245 Greene St.

The tragedy triggered the rise of unions in America, and it’s easy to see why: The sweatshop owners had locked the doors to keep child laborers—girls as young 11, who worked 80 hours a week for $6—close to their sewing machines.

But things change a lot over a whole century.

Back then, unions were clearly a legitimate response to real abuses. Today, 245 Greene St. is a landmark. We have strongly enforced laws against child labor and for fair pay and safe working conditions.

That’s why unionization rates have plummeted in recent decades—in the pri vate sector.

But they’ve been soaring in the public sector. Last year, for the first time, the number of unionized public employees exceeded the number of unionized private workers—7.9 million to 7.4 million.

Now, since the country has five times as many private jobs as public ones, this was possible only because the public unionization rate (37.4 percent) was more than five times higher than the private one (7.2 percent).

Another big difference: The average federal worker is compensated at $123,000 a year, including $42,000 in benefits—more than twice what the average private worker gets. (State and local government employees don’t do as well, but still beat private-sector pay.)

And these days a public job is a lot more likely to be truly a 9 to 5 affair than a private one.

Bottom line: Public-sector unions aren’t protecting government workers against abuse; they’re inflicting abuse on the rest of us—because private workers pay for all the government jobs by losing their own jobs and with higher taxes.

We’ve seen the most extreme case of that over the last year and half, under the Obama “economic stimulus.” If that massive jolt of government spending were a real stimulus, GDP wouldn’t be growing at a feeble 1.6 percent, and unemployment wouldn’t have skyrocketed to nearly 10 percent and stayed there since Obama took office.

Instead, the “stimulus” (and much of the rest of the Obama-era explosion in federal spending) has gone to creating new federal jobs and protecting existing state and local government jobs—even though tax revenues were falling because of the private sector’s suffering.

The nearby chart shows the result: Even as private employment has plummeted, public jobs have been kept safe—and federal ones have grown at a good clip.

In the private sector, where businesses must remain profitable to survive, union reps are kept in check; they’re afraid that if they push too hard, they might just kill the goose that lays the golden egg. But governments don’t need to turn a profit, and they don’t go out of business (at least not yet), so “management” can give away the store.

Especially “managers” who owe their jobs to the unions. Andy Stern’s SEIU, the union for many federal employees, gave around $80 million to Obama and the Dems’ 2008 campaigns.

Something’s got to give. Despite massive federal bailouts, public-employee costs (not to mention the ruinous expense of pensions far more generous than in the private sector) are breaking state and local governments.

Some are having to sell off hard assets to fill in their massive budget gaps. As The Wall Street Journal recently reported, California is looking to sell state office buildings and Milwaukee wants to sell its water supply. In Chicago and New Haven, it’s parking meters. In Louisiana and Georgia, airports are on the chopping block.

So when Obama spends massive sums to boost government employment, that’s not stimulus—it’s grand larceny. And private workers—the only workers who truly produce anything—are the ones getting their pockets picked.

Private-sector jobs are lost because businesses are denied the capital they need to expand—it’s all sucked up in government borrowing—or business owners are simply too fearful to invest, given the prospect of higher taxes to pay for it all.

A century after the Triangle fire, the entire US economy is being incinerated. Only this time, the doors have been locked by power-hungry Democrats and their union masters, not by money-hungry factory owners.

And instead of a few hundred underage trapped workers paying the price, now 100 (formerly 108) million non-unionized private workers are getting “burned”: Their jobs are being eliminated to make way for public-sector jobs, with the few lucky enough to keep their jobs getting taxed to death to pay for public workers who earn twice what they do.

Stephen B. Meister is a partner at Meister Seelig & Fein LLP.

- end of initial entry -

James N. writes:

One of my favorite subjects.

These unions were illegal until recently, and for good reason.

First, their “contracts” are with the government of the day. It is a general rule that the power to legislate (within constitutional limits) is absolute, and that because this power derives from the sovereign, one legislature cannot bind its successor. What one government promises, the next may refuse. Otherwise, the sovereign is undermined. Multiyear contracts which require appropriations of money from future legislatures are invalid for this reason alone.

Second, because public employees are paid with tax money, and their required dues come out of tax money, a union acquires the power indirectly to tax the public for the purpose of lobbying for the election of persons who will act against the public interest. This is tyrannical.

Jonathan W. writes:

I haven’t seen an entire article that focuses solely on why public sector unions are inherently unjust, but for me, it all comes down to the following. Any organization, whether a private company or government, only functions effectively when the interests of the managers are aligned with the interests of the owners. In the case of a private company, if a CEO grants the company’s employees overly generous compensation packages, the company’s profits will suffer, eventually leading to the owners (the shareholders) will remove him from his position. This is not to say that this functions perfectly (as evidenced by Wall Street investment banks engaging in risky business endeavors that led to short term profits and consequently, high bonuses for the managers), but it works far better than in government. In government, not only are the interests of the managers and owners (being the taxpayers) not aligned properly, but they’re aligned in the exact opposite way they should be. Politicians, in exchange for campaign contributions and union votes, are provided with an incentive to act in ways that directly harm the taxpayers. And to make matters worse, much of the compensation to which they agree comes in the form of retiree health benefits and pensions, the effects of which do not manifest themselves for years after the politician responsible for them leaves office. Thus, these politicians get the short term benefit while the long term harm becomes someone else’s problem. The unions are in effect on both sides of the bargaining table, with no one representing the interests of the taxpayers who must foot the bill for these salaries and benefits.

The problem, while different in scope, is not different in kind from other wealth redistribution schemes, like Medicare, Social Security, Temporary Assistance to Needy Families, and Section 8 Housing. As long as we cling to the liberal fantasy that the universal franchise leads to an effective form of government, I don’t see any solution to this problem. In a better system, those receiving government wealth transfers, of which government jobs are clearly a form, would be prohibited from voting so long as they are not net taxpayers. It’s as Alexander Tytler said hundreds of years ago:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.

Ortelio writes:

Your correspondent’s quotation from Tytler is plausibly described by the Wikipedia article on that Scottish author as a fabrication dating from the the early 1940s. But it’s good to learn about Tytler en route.

Dan K. sends this article, from the blog Grey Swan:
Public Sector Unions Must be Banned
Jan 30, 2009

There is a major underlying theme with the rapidly growing state and federal debt—unions. Over the past 30 years unions have won lucrative defined benefits contracts that placed affordable benefits in the present (e.g. 1978), but pushed off unafordable benefits to the future. Police officers could work for 20 years, and then retire with nearly full salary for those next 45 years. Similar schemes have been put in place for MANY other institutions that the tax payer funds (including, the big three auto makers). Of course, to believe that a policemen creates enough value in 20 years at a salary of ~$100K/year, to then live off of ~$90K/year for the next 45 years is ludicrous. Add to this the growing health benefits that many workers have and you have a recipe for disaster.

Unfortunately, the impact of transfering wealth from tax payers to overpaid union employees damages future growth as well as present consumption. Consider that NYC will have to cut its present police force so it can pay for its retired police force. Thus, crime rates will go up, and it will be tougher for businesses to do businesses, not just because of high taxes, but because of a more dangerous environment. The same concept is true with service cuts in the MTA and other vital industries.

The solution of course, is to ban public sector unions and to ban defined benefits. It is one thing if a private sector’s union forces them to go out of business. A better company will grow. However, the public sector can’t go out of business, so it’s costs can only grow. In the last 6 years entitlement spending in the country has increased about as fast as tax receipts, and this is in a period of dramatic growth. Now that most of this growth has proven illusionary, so should these benefits. My 401K went down by 30%, and so should the benefits of retired union workers. Just because union workers feel like they are very valuable, does not mean they are—this is proven by the fact that they must form a union to receive their excessive wages.

We need to ban public sector unions so that they stop strangling the tax payer. The government has little incentive to fight the unions because they use other people’s money to pay them. Union employees need to get paid less, and work harder. And those retired policemen need to get back to work like everyone else in this country.

Roland D. writes:

The problem with public sector unions—in fact, with any bureaucracy—is neatly summed up in Pournelle’s Iron Law of Bureaucracy, formulated by Dr. Jerry Pournelle.

Pournelle’s Iron Law of Bureaucracy states that in any bureaucratic organization, there will be two kinds of people—those who work to further the actual goals of the organization, and those who work for the organization itself.

The Iron Law states that in all cases, the second type of person will over time always gain control of the organization, and will always write the rules under which the organization functions.

Examples in education would be teachers who work and sacrifice in order to actually teach children, vs. union representatives who work to protect any teacher, including the most incompetent.

September 7

Andrea C. writes:

Here is a great open letter to the Greek protesters. It’s a good message for us as well. The Greek protesters earlier this year were people getting their short work weeks and long vacation time, and other cush benefits, at the expense of the taxpayer, the productive sector of the economy. But there’s no money left, and instead of the money that was blown by bureaucrats being reinvested back into the businesses or in goods and services which would have created more economic activity, it was wasted. (Example: having a law against working more that 35 hours a week is absolutely ridiculous and foolish.) This is the perfect illustration of what’s going on in the U.S. with our unionized public sector employees, a sector that produces nothing. (That they produce nothing is not a put down—it’s the nature of the sector: hiring firefighters does not boost the economy; their work is necessary but it is a net loss not to mention the loss of caused by the fire itself, the same is true of other gov’t jobs: plug in any gov’t job and figure out its cost and return.) This is why we need to get a handle on spending and then keep our eyes on it. And this is boring work!!! But it is necessary. In the words of Ted Nugent in the September 3 Washington Times, “We the people dropped the ball and became far too lax in our duty to monitor just what in the hell has been going on in Washington and in city halls for at least the past 40 years.”

Andrea C. writes:

Here’s another bit on the destructive role of public sector unions. In “The New Currency is Obedience,” they are described as the foot soldiers of a tyrannical government. They hate the Tea Party and its other tax-policy-concerned offspring which threaten to cut off their lifeline. Andrea

Obedience to the just laws of a minimal government doesn’t replace the currency of freedom—it enhances its value, by creating an environment of trust and cooperation. Your time is made more valuable by the knowledge you are protected from murder, theft, and fraud. This broadens the options available to you in life.

When the economy falls under political control, the practical value of your freedom shrivels. Success becomes determined by the favor of the State, and the exercise of political power. For example, labor unions are rewarded for their loyalty to the Democrat Party, including proposed public bailouts of their unsustainable pension plans, and exclusive access to government contracts. Such transactions work both ways, as powerful constituencies trade votes for obedient service from politicians. [Andrea says: the original Boston Tea Party was staged for far lesser abuse than this!]

The Tea Party is the living incarnation of disobedience. It is driven by the words and deeds of people who refuse to submit [to subsidizing this arrangement]. Its members demand the return of money and power appropriated by an out-of-control federal government. They won’t allow their lives to be sculpted by the knives and chisels of penalties and subsidies. They speak out against an ugly reality that President Obama’s supporters don’t like to confront: political control of the economy consists of directives, which require submission, which can only be assured through punishment. No matter how benevolent the stated goals of such a system might be, there is nothing benevolent about the methods it must use to attain them.

A Russian dissident once said that the gulags weren’t an unfortunate side effect of Communism—they were the point. The Anti-Tea-Party minions understand this because they hate the people who will be ground into fertilizer to support big government. By helping to suppress a powerful enemy of the regime, they enjoy the exhilaration of despite, while also serving as volunteer guards for the Treasury where our new currency of obedience is stored.

Posted by Lawrence Auster at September 06, 2010 02:58 PM | Send

Email entry

Email this entry to:

Your email address:

Message (optional):