Shadowbosses: Government Unions Control America and Rob Taxpayers Blind (25 page)

Here’s the sad fact: the pie that taxpayers make isn’t growing as fast as the amount of pie redistributed by government employee unions. Just like the mule in the fable, we can keep on hunting, but we are not going to get much meat for dinner with the lion hanging around.

State and local governments already spend about half their total revenues on government employee pay and benefits, and this percentage is projected to rise in future years.
⁸
How much more of the budget can government employees possibly consume?

You might ask why legislators and government officials don’t stop this nonsense. But you know by now that many legislators and government officials are supported by government employee unions, and they aren’t about to bite the hand that feeds them.

One of the reasons our government gives away so much to the unions in negotiations is that the government negotiators are themselves government employees. Sure enough, these negotiators feel a natural kinship with other government employees.
I need a raise,
the government negotiator thinks.
And I’m a government employee. That guy’s a government employee, too. He probably
also
needs a raise. Why shouldn’t I just give it to him?
As one commentator put it, “The public sector employer is also a public sector employee,” and they share similar goals about growing the size of government.
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Plus, the elected officials like governors and mayors that have the final say in approving union contracts may themselves be supported by the union on the other side of the bargaining table in their own reelection efforts.

The situation for taxpayers is the same as that of the benevolent parents of a spendaholic teenager. Let’s say little Suzie goes out and breaks the bank buying clothes and shoes, then comes home with a $1,000 credit card bill. She expects her parents to pay the bill. The credit
card company has a hold on her parents, no matter how much she runs up. Suzie keeps on spending; her parents keep on paying.

That’s the problem right now. Suzie is the unions, negotiating burdensome contracts with state and local governments; the credit card company is the state and local governments giving the unions what they ask for; and Suzie’s parents are the taxpayers who are ultimately responsible for paying the bill. But eventually, Suzie is spending so much that her parents can’t afford to keep paying her bills, yet they remain on the hook. They go into debt. Then, they go bankrupt.

That’s precisely what happens when unions represent government employees. The unions run up such a massive tab for our government that the taxpayers can’t possibly continue paying for it in the long run. And this is the principal reason that the economies of highly unionized states are faring much worse than states freer of union control.

Government employee unionism hurts states’ economies. As Chris Edwards of the Cato Institute explains, “Unions reduce the ability of government managers to cut costs and increase efficiency in many ways. They protect poorly performing workers, they push for minimum staffing levels, they resist the introduction of new technologies that threaten their jobs, and they create a rule-laden and bureaucratic workplace.”
¹⁰
And this hurts states with a highly unionized government workforce.

Lightly unionized states do much better than highly unionized states. As economist Arthur Laffer points out, “The economies in states with right-to-work laws grow significantly faster than those in forced-union states. They have higher employment growth, attract more residents, and have more rapid growth in state and local tax revenues than forced-union states.”
¹¹
Similarly, “decades of empirical research in economics shows that the
absence
of right-to-work laws hinders economic development,” commentators point out.
¹²
That is, states with forced unionism and forced dues are failing in comparison with other states.

High rates of unionization kill private sector jobs. In New Jersey, for example, where two-thirds of all public sector employees are unionized, the state’s private sector employment rate is down for the last decade.
¹³
But the politicians kept spending as if there were robust growth in the state’s economy.
¹⁴

Now take a look at Texas. Texas is a right-to-work state with far less powerful government employee unions—less than one in five public employees is a union member.
¹⁵
Job growth in Texas was nearly double the national average in recent years.
¹⁶

So, would you rather start a business in New Jersey or Texas? Unless you’re Tony Soprano, the answer’s clearly Texas.

The chart above illustrates this point exactly. Its message? The states experiencing the most personal income growth are right-to-work states. The largest right-to-work states experienced almost three times as much growth as the largest forced-unionism states. For vibrant private sector growth, head to the right-to-work states, which also are the states with low levels of government employee unionism.

Sources: Bureau of Economic Analysis, U.S. Commerce Department, Bureau of Labor Statistics, U.S. Labor Department

Courtesy: National Right to Work Committee

In 1980, Frank Sinatra covered the song “New York, New York.” Today, we hear it every time the Yankees win a ball game. “Start spreadin’ the
news,” Frankie Blue Eyes warbles. “I’m leaving today. I want to be a part of it: New York, New York!”

Unfortunately, in the ’70s and early ’80s, nobody really wanted to be a part of New York City. New York was a disaster zone. From 1965 to 1975, the city lost half of its million manufacturing jobs, rendering its increasingly bloated public sector payrolls unaffordable.
¹⁷
In 1966, the transit workers went on strike. In 1968, the sanitation workers went on strike, and huge piles of garbage bags were piled high in the streets. In the 1970s, in the state of New York, there were twenty teachers’ strikes per year.
¹⁸

Eventually, New York recovered. But overly generous union contracts and terrible pension obligations are driving the Big Apple down the road back to the mid-1970s. Unless Gotham’s elected officials change course soon and begin aggressively reining in government employee compensation costs, the dark days of three and a half decades ago are bound to be returning soon.

It isn’t just New York. It is the same in many states with a heavily unionized government workforce.

“But,” you ask, “how can you be sure that it’s the unions that create this problem?”

Well, let’s take a look at two counties that border each other: Montgomery County in Maryland and Fairfax County in Virginia. Both are home to many federal contractors and federal employees. Both are dominated by Democrats.

One of these counties is not like the other, though.

In May 2010, the
Washington Post
declared, “Montgomery County has just completed a nightmarish budget year.”
¹⁹
Montgomery County in Maryland was forced to jack up taxes because its deficit amounted to one-quarter of its budget. Meanwhile, Fairfax County in Virginia was “all sweetness and light by comparison.” Fairfax erased its far-smaller deficit much more easily.

These counties not only border each other, but also have similar populations with similar demographics. So, what was the difference between Montgomery and Fairfax Counties? In Montgomery County, government employee unions wield great influence and hold collective bargaining power over teachers, police, firefighters, and other government employees.
²⁰
In Montgomery County, the teachers unions in particular
are so powerful that “politicians who received the teachers’ endorsement in the most recent elections reached into their pockets and wrote checks to the union,” instead of the other way around. And elected officials in Montgomery County can’t make budgetary policy unless their union masters agree to it. Even the far-left
Washington Post
was forced to admit that Montgomery County’s collapse was due to “irresponsible governance, unsustainable commitments and political spinelessness—particularly in the face of politically powerful public employee unions.”

In Fairfax County, Virginia, in contrast, there is no collective bargaining for government employees. And that has made all the difference. As the
Post
confirms, “Fairfax, though facing tough choices and further cuts in an economy clouded by recession, has a brighter future.”
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Not every place has to end up like Montgomery County, Maryland.

America is still a country that believes in letting states decide their own policies, at least on the issue of government employee unions. Unfortunately, the trends show that our future looks more like Montgomery County than Fairfax County.

In 2011, in eighteen states, more than half of public servants were covered by a union contract.
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If you’re in one of these heavily unionized states which we call “Union” states, you’re in serious trouble: Alaska, California, Connecticut, Hawaii, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin.

That same year, fewer than 30 percent of government employees were under a union contract in twenty-two states. If you’re in one of the lightly unionized states, which we call “Free” states, you still have hope: Alabama, Arizona, Arkansas, Colorado, Georgia, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, and Wyoming.

Ten states fell in the middle, with a public sector union density of between 30 and 50 percent. If you live in these states, which we call “Halfway” states, you can expect your state to do better than the Union states and worse than the Free states. These Halfway states
are Delaware, Florida, Indiana, Iowa, Maryland, Montana, Nebraska, Nevada, Ohio, and West Virginia.
²³

In each of the Union states, public servants can be fired for refusing to pay dues or fees to an unwanted union—except Wisconsin, which has banned the practice recently for almost all government workers except public safety workers. And just one of the twenty-two Free states, New Mexico, authorizes such firings.
²⁴

So, what’s the effect?

Quite simply, the Union states are worse off than the Free states, and the Halfway states fall in the middle.
²⁵
On a 2010 list of the nine states “most likely to default” determined by the Business Insider,
²⁶
all are Union or Halfway states. And the average unionization rate for government employees for the most-likely-to-default states was
20 percent higher
than the average for all other states.
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And it almost goes without saying, but let’s say it anyway:
not one
of the twenty-two Free states was on the “most likely to default” list.
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Correlation doesn’t always equal causation. But in this case, we think it does. The Union states have experienced slow private sector job growth, while government job growth has been brisk.
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The Union states have higher amounts of state debt per person than less unionized states. Among states with more than 60 percent of the government workers unionized, the median debt per person was a whopping $6,380. This is
double
the level of debt per person of the middling-unionized states, and
triple
the level in less-unionized states.
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Okay, you say, that’s still not proof. Doesn’t the higher cost of living in the Union states account for the higher debt per person? California is expensive territory. So’s New York. So it should cost more for government services there, right?

It certainly does cost more, but let’s look at why it’s more expensive to live in these states. One of the main drivers for the high cost of living in California or New York seems to be all the superfluous regulations on housing construction, energy generation, and land use, usually passed by pro-union politicians.
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And the more regulated a state is, the more government employees it needs to ensure regulatory compliance, which drives up cost. And as we know by now, more government employees means more union members and more union dues. Cause or correlation?

For years, tax burdens in the United States have been substantially greater in the Union states than in the Free states. The average tax burden on individuals in New York is 12.1 percent, New Jersey is 12.2 percent, and California is 10.6 percent.
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The average tax burden in the Free states is only an average of 8.8 percent.