Why We Need a New Approach to Public Unions

Scott Walker's Wisconsin recall win shows the private sector shouldn't have to subsidize expensive public unions.

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It's hard to dodge downpours in a wet season, and it is proving remarkably wet for the Democrats and public sector unions. Since losing the big effort to recall the Republican governor of Wisconsin, they have been trying hard to explain away the 1,334,450 raindrops Wisconsin voters deposited on their pro-union campaigners. The rain on their parade, we are told, is not really a protest against the disproportionate political power accumulated by public sector unions. It's because voters dislike the idea of recalling someone they not so long ago voted into office. It's because the Democratic candidate, the worthy mayor of Milwaukee, wasn't as gifted an orator as the governor. It's because big corporate money poured in from out of state thanks to the Supreme Court ruling in the Citizens United case, which opened the floodgates for wealthy donors to exert undue sway. It's because….

Well, let's concede there's something in all these arguments, maybe adding up to as much as 46 percent of the vote against Gov. Scott Walker's 53 percent. But you'd have to be remarkably impervious to being soaked to say, as a White House spokesman did, that the massive defeat of the recall has no implications for anywhere outside of Wisconsin (which went for Barack Obama by 14 points in 2008).

[See a collection of political cartoons on the Democratic Party.]

The central issue was the political power of the public service unions, which translates into salaries, benefits, and pensions far above those received by the median wage earner in the state. Wisconsin taxpayers understood that the state's $3.6 billion deficit posed a mortal danger to continuing public services such as education and necessary infrastructure. So they said: Enough! They demanded that everybody contribute to putting the state back on track. In state after state, lavish, unaffordable over-promises have been made to public service employees; in fact, the cost of healthcare benefits and pensions is rising so fast that it is producing a fiscal crisis in virtually every state in the union.

How did the balance of power in the public sector become so out of whack? The public unions often elect the management that they negotiate with. They organize voting campaigns for politicians who, upon election, repay their benefactors by approving salaries and benefits for the public sector employees, irrespective of whether they are sustainable, and the unions don't worry about bankrupting those sitting opposite them at the table. The taxpayer-funded public service unions have essentially dictated the terms of their employment to the taxpayers they are supposed to serve.

Government employees are better off in almost every area than private sector employees, be it in paid benefits, time off, or job security. Pensions are particularly irritating, for many state workers can retire in their mid-50s at close to full pay and receive pensions for far more years than they have worked, even though they are young enough to take another job. If you take their pensions' present value in terms of the cash you would need to buy an annuity making payments equal to the pension, we have created a new class of millionaires.

[See a collection of political cartoons on the economy.]

Just think, in 2008, the average wage for the 1.9 million federal civilian workers was more than $79,000, compared to an average of slightly over $50,000 for the nation's 108 million private sector workers (measured in full-time equivalents), even though most federal workers cannot bargain over their pay and benefits. Ninety percent of government employees receive lifetime pension benefits versus 18 percent of private employees, not to mention annual salary increases and earlier retirement with instant, guaranteed benefits paid for with the taxes of the very same private sector workers. About 84 percent of state and local government employees have access to defined-benefit plans that are no longer widely available in the private sector.

The voters in Wisconsin supported Walker's insistence that public employees make substantial changes in the way they negotiate labor contracts. He has made it much more difficult for public unions to collect dues via automatic payroll deduction, which had its effect: It reduced membership in the American Federation of State, County and Municipal Employees by almost 50 percent. They simply did not feel that union membership was worth the cost of union dues when taken directly out of their own pockets.