Collective Bargaining Doesn't Work In the Public Sector

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Shortly after California voters passed Proposition 13 in 1978, open warfare broke out in the union movement between leaders of public and private worker groups.

In the Washington Post, an anonymous lieutenant of AFL-CIO president George Meany criticized the aggressive stance of Jerry Wurf, head of American Federation of State County and Municipal workers, in trying to defeat Prop 13, which capped property taxes. The problem, the Post pointed out, was that the AFL-CIO's members were the "taxpaying employers" of Wurf's workers and favored the tax and spending limitations of Prop. 13. "Jerry's big problem with the tax thing lies in convincing the rest of the trade union movement of the legitimacy of the positions he has taken," said the AFL-CIO official.

What a difference a few decades makes. Today, public sector unions dominate the union movement, including the AFL-CIO, and have become the chief lobbyists for higher taxes and more government spending in America. Meanwhile, defenders of government unions argue that any attack on them is an attack on unionization in general. So Wisconsin Gov. Scott Walker's efforts to trim collective bargaining for state workers has elicited a host of apocalyptic declarations from politicians heavily supported by government unions, including President Obama, who called Walker's agenda, "an assault on unions."

(The president conveniently failed to note, as Josh Barro has pointed out on, that federal workers have fewer collective bargaining rights than what Walker is proposing in Wisconsin and that the President used his power over wages to impose a freeze on federal employees.)

But Walker's proposals to severely limit government union prerogatives are simply a recognition of something that political leaders and union officials across the ideological spectrum recognized for decades in America before the 1960s, which was that, as Franklin Delano Roosevelt wrote, ‘the process of collective bargaining, as usually understood, cannot be transplanted into the public service."

It's that larger understanding that motivates Walker. His critics are right to point out that he could balance this year's budget without going so far as rescinding collective bargaining. He could do so by simply employing the techniques, including gimmicks like refinancings and dubious actuarial formulas, that politicians have been using over the years to push off obligations further into the future and make state and local liabilities seem less bankrupt than they actually are. But Walker sees this as a decisive moment to end an unworkable system.

Walker's proposals are a recognition that five decades of public sector unionization have given us a system where, as a labor leader in New York presciently observed in the 1970s, unions have had ability to elect their own bosses, so that every taxpayer effort at reform and restraint over the years has dissolved eventually into new rounds of benefits and perks for government workers. It's a system without the competitive restraints on both management and labor that exist in the private sector.

George Meany himself once declared that "you can't collectively bargain with government,' and as government workers lobbied increasingly for unionization throughout the 1950s some private sector labor leaders resented the argument of their public sector counterparts that government workers were somehow oppressed and desperately in need of union protection. The period was one of reform, in which cities were already enacting civil service laws protecting government workers from being summarily fired, and employee associations rose to testify for public worker rights even, though these groups didn't have bargaining rights.

But the public sector union movement gained traction because of changing political currents. Unionization came to be associated increasingly during that period with the Democratic Party thanks to legislation like the 1935 Wagner Act, sponsored by New York Democratic Senator Robert F. Wagner, which gave private sector workers the right to bargain. As unions played an increasingly important role in the Democratic Party in the 1940s and 1950s, their political value became apparent to elected officials like Sen. Wagner's son, New York City Mayor Robert F. Wagner, Jr. Mayor Wagner jolted the public sector union movement into life when in 1958 he gave city employees the right to collectively bargain, in the process making them valuable political allies in his reelection bid and igniting a series of similar moves by other politicians in cities and states across America.

What happened next confirmed the fears of many critics. The 1960s were a time of government strikes, including several dozen in September of 1966 by teachers that shut down school systems in some of our largest cities. When cities and states responded with laws outlawing strikes among government workers, unions developed a new strategy, concentrating their firepower in state capitals and city halls to elect leaders sympathetic to their cause. Over time they've become the biggest players in places like Sacramento, Albany and Madison, and such a permanent presence that every effort at reform is eventually undermined.

In the late 1970s, for instance, New York State enacted changes to its pension system for state and local workers after rich employee perks played a role in New York City's near bankruptcy. But over time public workers clawed back their benefits so that today, as Gov. Andrew Cuomo said during his election campaign, public pensions are unsustainable in the Empire State. In New York City alone pension contributions in one decade have gone from $1.5 billion annually to $7 billion, straining the city's budget.

California enacted pension reforms in 1991 which limited the impact of pensions on the state budget. But in 1999, Gov. Gray Davis and the state's Democratically controlled legislature wiped out those reforms, retroactively putting everyone who had joined the state's workforce in the 1990s into a new, richer system so that today California has unfunded pension liabilities ranging from $200 billion to $500 billion.

That's become a strategy of public worker unions. They fight reforms, but if they lose they wait 'till they can elect a new set of more sympathetic legislators and then reclaim their gains.

Public unions are bolstered by the fact that government never goes away, unlike private businesses where unions overreach. In the public sector, there are always taxpayers to turn to when a pension system or health care plan needs to be bailed out thanks to rich giveaways to unions.

Although Walker is being demonized as a union buster, in truth he's only asking for the same powers to manage his budget and workforce that President Obama already enjoys.


Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

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