Labour and the left
Oct 27th 2010, 14:41 by B.E.
ON FRIDAY the Wall Street Journal provided a wonderful bit of irony: despite the howls of indignation from the Democrats over private campaign spending, it turns out that the biggest sugar daddy is the American Federation of State, County and Municipal Employees (AFSCME), a public-sector labour union that spends almost all of its cash for the Democrats. AFSCME accounts for roughly 30% of spending from pro-Democratic groups. A piece from US News and World Report points out that, in total, “Big Labour” is spending more private cash than the Chamber of Commerce and American Crossroads (Karl Rove’s outfit) combined.
Since the WSJ article most of the commentary has involved arguments over possible Democratic hypocrisy (pro, con), but that debate misses the point. The Democrats are electorally beholden to union support, and this often leads to bad policy.
In an essay in National Affairs previously flagged by Schumpeter, Daniel DiSalvo notes some of the negative consequences of this symbiotic relationship. He focuses on public-sector unions, which have grown while membership in their private-sector counterparts has flagged. Last year there were more public-sector employees (7.9m) than private-sector workers (7.4m) in unions—the first time this has happened. And public-sector unions have a distinct advantage over private ones. “Through their extensive political activity,” says Mr DiSalvo, “these government-workers’ unions help elect the very politicians who will act as ‘management’ in their contract negotiations—in effect handpicking those who will sit across the bargaining table from them, in a way that workers in a private corporation (like, say, American Airlines or the Washington Post Company) cannot.” And the public-sector managers sitting across the table don’t have the same worries as private-sector bosses, who must answer to profit-driven overlords. The lack of competition in government services produces little pressure on management or unions to come up with the most efficient work agreement. As a result, public-sector unions have become accustomed to getting what they want.
Mr DiSalvo offers up the California Correctional Peace Officers Association (CCPOA) as a case study in how public-sector unions make the system work for them, at the expense of good policy.
Throughout the 1980s and ’90s, the CCPOA lobbied the state government to increase California’s prison facilities—since more prisons would obviously mean more jobs for corrections officers. And between 1980 and 2000, the Golden State constructed 22 new prisons for adults (before 1980, California had only 12 such facilities). The CCPOA also pushed for the 1994 “three strikes” sentencing law, which imposed stiff penalties on repeat offenders. The prison population exploded—and, as intended, the new prisoners required more guards. The CCPOA has been no less successful in increasing members’ compensation: In 2006, the average union member made $70,000 a year, and more than $100,000 with overtime. Corrections officers can also retire with 90% of their salaries as early as age 50. Today, an amazing 11% of the state budget—more than what is spent on higher education—goes to the penal system. Governor Arnold Schwarzenegger now proposes privatizing portions of the prison system to escape the unions’ grip—though his proposal has so far met with predictable (union supported) political opposition.
Elsewhere the story is the same. Overgenerous contracts, promising lavish pensions, benefits and early retirement, have put states in dire fiscal straits. Mr DiSalvo cites Joshua Rauh, a professor at Northwestern University, who predicts that the pension funds of seven states—Connecticut, Indiana, New Jersey, Hawaii, Louisiana, Oklahoma and Illinois—will go broke by the end of fiscal year 2020.
And yet in a state like New Jersey, Chris Christie, the governor, has been villainised by the local teachers’ union for proposing a one-year pay freeze on instructors and suggesting that they make some contribution to their health-insurance plan. (As Mr DiSalvo notes, currently 88% of New Jersey public-school teachers pay nothing toward their insurance premiums. Not a bad deal.) Mr Christie, who has won acclaim in conservative circles for his actions, has also sought to limit political contributions from state-workers’ unions and scrapped a commuter rail project, citing rising worker costs among other things (local unions are now trying to save the project).
The Obama administration has been more generous. Amid savage private-sector job cuts, one-third of the funds from the 2009 stimulus bill went to state and local governments, mainly to rescue public-sector employees. An executive order last spring strongly encouraged government agencies to use construction companies with unionised workforces for any federal construction project over $25m. That followed three other union-friendly orders. In his bail-out of Chrysler and GM unions won some special favours. And Mr Obama imposed tariffs on imports of Chinese tyres at a union’s request.
So the president has done little to change his party’s relationship with organised labour. And that is because the Democrats, more so than ever perhaps, are dependent on union support. On top of the hefty financial backing the unions are providing, a recent Pew study showed that, unlike independents, unions are holding firm in their support for the Democrats. But the favourability rating of unions has fallen sharply in recent years, especially among independents (dropping from 54% in 2007 to 38% this year), and the public’s appetite for smaller, more efficient government has grown quite large. Bad policy is turning into bad politics, which may finally compel the Democrats to change the tenor of their dealings with the unions at both the state and federal level. Unions, facing alternatives like Mr Christie, might also be more amenable to compromise. Or perhaps this all just so much wishful thinking.
Regardless, as Mr DiSalvo notes, even the recent state efforts to cut union pensions and limit benefits “deal only with the symptoms of the looming state fiscal crisis—not with its underlying causes.” It may take a state default before the very existence of public-sector unions is debated more vigorously.
(Photo credit: AFP)
Source: The Economist