Public-Sector Unions and Their Government Bosses: Partners in Crime


The 3-day New York City transit strike is a mere eddy in a noxious swamp that is asphyxiating taxpayers in many states and localities.

While taxpayers either weren’t looking or were being taken in by phony rights rhetoric, an intolerably corrupt coalition of public employees and public employers has gained muscle in the last 35 years.

Public employee unions contribute heavily to political campaigns. They affect legislation and crucially influence who is elected. They then sit down and bargain over wages and benefits with the same units of government they have so busily bought and paid for.

Breathing in the stench, the taxpayers afterwards suffocate under the tax bills. Unions hand in hand with politicians, lobbyists cheek by jowl with statute-sellers — these faces fill the portrait of that ugly and immoral creature we name democracy. A government with the powers ours today has cannot help but fertilize fetid monstrosities assembled by their creators to devour taxpayers.

Taxpayers no doubt feel that (a) they are paying through the nose and (b) they can’t easily do anything about it. Both are true. They will not get out from under by anything less than radical downsizing and privatizing of services that they now thoughtlessly assign to local government. The swamp needs to be drained and cleared.

Trying to kill the Hydra by chopping off one head doesn’t work. Two heads replace the one cut off. Going for the jugular or the vital organs is essential. The powers of government at all levels need to be mercilessly cut back.

State and local property, income, sales and excise taxes are overflooding their banks. The partnership between public sector employees and their state and local employers is one of the many factors responsible.

State and local sales taxes have risen steeply. California’s state and local sales tax rate was 2.5 percent in 1943. Today it is 7.25 percent.

Local school taxes have risen steeply. In Jasper County, Iowa, school districts pulled in $39.1 million in 1991—1992 and $66.9 million 14 years later for an increase of some 71 percent. This outpaced the population rise of 8.6 percent and the CPI rise of some 40 percent.

State income taxes have risen steeply. Between 1937 and 1978, North Dakota’s highest bracket began at $15,000 and the marginal rate was 6.0 percent. Today, the rate is 10.5 percent for incomes over $50,000. However, in today’s dollars, $15,000 is about $200,000. Therefore, North Dakota today is absorbing the higher 10.5 percent rate at a far lower income threshold than in 1937.

A pack of cigarettes that cost 25 cents in 1955 today carries an excise tax of $3.00 a pack in New York City, encouraging not only bootlegging but the substitution of other drugs for nicotine.

The public sector union groups out to despoil the taxpayer are determined, knowledgeable, and organized. But many others are entering the public swamp by way of the thicket of laws already on the books. They include medical workers, environmental specialists, discrimination officers, child care counselors, human resource specialists, biologists, health services consultants, juvenile program specialists, claims adjudicators, family independence specialists, planning and research associates, and social welfare workers. State and Federal-supported universities provide the swell of groundwater for this swamp. They house numerous departments churning out graduates to fill the government ranks.

Helping to suffocate taxpayers are onerous levies exhaled by a syndicate composed of public sector unions and public sector employers — the school districts, towns, cities, counties, and states.

Local governments not only throw vast sums of money at activities they should turn over to private initiatives and enterprises, but also spend wastefully. They overpay public employees many of whom, unionized and sitting in more secure and easier jobs than in the private sector, also get fatter health care and pension benefits.

James Ostrowski’s Free Buffalo Policy Report No. 2 estimates that in the Buffalo area a pay cut of 28 percent will bring public sector compensation to the same level as that in the private sector. Higher public pay is the norm that studies routinely refer to as the public sector pay premium. Estimates of 5—30 percent are common. For example, one report says that the median American public school teacher has a salary of $37,000 compared to $30,000 for the private school teacher. That’s 23 percent higher. The source attributes the difference to unionization of public school teachers.

It is impossible for studies of wage differentials to replicate or establish market-determined wages. It is impossible for such studies, however complex, costly, or complete, to control for the many relevant subjective variables or their dynamic changes that determine marketplace compensation. This is one reason why comparable worth is a very bad idea, whether it’s called equal pay, pay equity, or some other benign sounding name designed to hide the inflation of pay.

To complement the empirical facts of pay, we have to consider the economic and political logic of public sector unionism.

Some history is in order. We are aided in this by the frankness, indeed boasting, displayed by the American Federation of State, County and Municipal Employees (AFSCME) on its web site.

The history of American public sector unions is reflected in the story of AFSCME, the largest public sector union with 1.4 million members. AFSCME had its start in 1932. "The union’s primary tactic was lobbying to pass or strengthen civil service laws."

AFSCME is not bashful in telling us what strong civil service laws mean. They mean making it hard to fire government employees (increasing their job security); regularizing their raises; using tests, not work or accomplishment, to measure performance; basing promotion on seniority; across the board raises and no performance bonuses, etc.

In plain English, the union wishes to tie management’s hands and encourage employee mediocrity and low productivity.

AFSCME informs us that a breakthrough for the union came in 1958 when Mayor Robert F. Wagner, Jr. of New York "granted collective bargaining rights to unions representing city employees." He did this "responding to pressure from AFSCME." Wagner remained mayor until 1965.

It was Wagner who, just before election day in 1960, ended a 1-day strike of the United Federation of Teachers by setting up a fact-finding committee dominated by the leaders of the city’s labor movement. Later, after Wagner and the UFT helped replace the old school board with members friendly to labor, collective bargaining by teachers became a fact.

Wagner also promoted public housing, a City University system, and brought Shakespeare to Central Park. Thus he is lauded as an outstanding public servant. Wagner’s father, Robert F. Wagner, Sr., four-term U.S. Senator, was a progressive democrat who fathered the Wagner Act of 1935, which is the National Labor Relations Act that set American unionism on its feet.

Forty-five years later, Eliot Spitzer, cut from the same mold, calls for higher teacher pay and more money to be spent on education while lauding labor rights. The median teacher pay in New York City is $53,000 for 181 school days, or $36.60 an hour for an 8-hour day. The median full-year dentist in the U.S. makes $117,000.

In New York State, no matter how much any governor proposes for education, it is never enough. When Republican Governor Pataki delivers his proposed increased education budget, Republicans and Democrats both criticize it!

President Kennedy, a natural ally of Mayor Wagner, by Executive Order 10988, legitimized collective bargaining for federal employees in 1961. From the 1960’s onwards, more and more states also passed laws allowing collective bargaining of state employees.

AFSCME pushed and pushed. It found a strong weapon by piggybacking on and aligning itself with the civil rights movement. It used the misleading and erroneous ideology of "fair and equal treatment" to help accomplish its goal. Fairness and equality sink to the bottom when unions, facing the competition of immigrants or domestic minorities, jettison them.

AFSCME is no different from any of hundreds of other lobby groups whose rotten activities comprise our democracy in action. AFSCME, however, unmuddies how this foul system works. I quote:

"Power Through Political Action. AFSCME turned to increased political action for two reasons: as an instrument to help organize new members; and, as a way to increase AFSCME’s clout on behalf of its members. Over the next two decades, AFSCME applied the lessons it had absorbed from years of dealing with state legislatures. A Political Action Committee (PEOPLE) was created in the 1970’s and today is one of the largest PACs in America. All across the country, at every level of government, candidates for public office learned they had to pay attention to AFSCME’s political muscle."

The contract of the New York City transit workers contains a no-strike clause as many labor contracts do, but this does not stem the cozy arrangements between political employees and employers. If a private company overpays its employees, it eventually finds itself out of business. If a government overpays its employees, it sticks taxpayers with the bills. Since their cost of organizing against the system is high, they usually hold their noses and pay.

Decades ago, many large and renowned U.S. companies and industries that produced quality products gave in to trade union demands. Sometimes they felt the State’s pressures. Sometimes they blundered. Sometimes they had government contracts. Sometimes they enjoyed isolated domestic markets or believed they had monopoly powers. Sometimes they took comfort if the whole industry had to pay higher wages and pensions. But, in the end, the industries either went overseas in search of lower-cost labor or else started non-union companies. America lost many manufacturing enterprises. The older businesses restructured, merged, limped along, failed, or passed major liabilities through to government. Today, the strength of unions organizing private business has fallen markedly.

Meanwhile the strength of unions organizing the public sector rose sharply. Competition and mobility work far less effectively here. School districts, state and city departments do not move overseas. They deliver their services on the spot. The only way to get out from under (apart from privatizing) is for the taxpayer to move. This is costly.

Another extremely potent driver is at work. Have you ever noticed that an attractive low-tax locale turns into a higher-tax venue after awhile? This happens because the built-in and systematic roots of power allow it to happen. When a political system legally allows one group to exploit another as ours does, it is only a matter of time before the natural human drive for gain channels into and exploits politics. Interest groups and lobbies form. Money flows. Politicians get elected and pay off their constituents. People work out the logic inherent in the established rules of the game.

The rules of the game do change too, as when collective bargaining by public employees becomes acceptable. Old and destructive ideologies dressed up in new language change them, ideologies that claim to bring peace, prosperity and justice at the point of a gun. Supreme Courts change them. Politicians change them. Human frailties change them. Individuals and groups have a hand in changing them.

The main rule of the current game is that we have government rules of the game. The main belief is that government is a servant of the people that evolves and changes to secure peace, prosperity and justice to a society. This fundamental axiom or article of faith undergirds the process of expanding and altering the government’s rules. Once society accepts a Constitution, it is altered and corrupted by degrees until the original is no longer recognizable.

History is teaching us a difficult lesson, that government is the enemy of society, that it directly and of necessity undermines peace, prosperity and justice. We live better without government rules in our lives. This is possible. For a time, Americans lived with a higher degree of peace, prosperity and justice under far fewer government rules than today prevail. America was the beacon of the world. If we hold out the objective of no government rules as an ideal, one that in our current situation seems difficult or even impossible to attain, it will at least provide us with a proper direction.

December 26, 2005