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What Government Unions Want: One, Two, Many Californias

That the large Republican gains in the 2010 midterm elections pose a setback for organized labor's agenda is hardly news. What will be newsworthy is how incoming policy makers at both the federal and state level will fight back against union power -- especially government union privileges -- over the next couple of years, and to what extent they succeed.

The Economist sums up the challenge elected officials face as they stare down the government union political machine (and offers a good overview of the global nature of this problem):

It would be a mistake to write off the public-sector unions. They are masters of diverting attention from strategic to tactical questions. Undoubtedly the unions will lose some of their privileges over the coming years; the scale of the debt crisis makes this inevitable. But will governments have the courage to tackle the root causes of the problem (such as pensions) rather than dealing with secondary problems (such as wages)? And will they dare to tackle questions of power rather than just pay and perks? If they are to claim victory in the coming fight, they need not just to restore the public finances to health. They also need to breathe the spirit of innovation into Leviathan.

And not all politicians challenging government unions are Republicans. As The New York Times reported this week:

State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

Indeed, as I noted recently, the longstanding alliance between government employee unions and Democratic politicians has become strained. Public sector unions may be among the Democratic Party's most loyal constituencies, but the gaping budget deficits to which unionized government employees' generous compensation packages have substantially contributed bear no party label.

And it's not as if bloated state budgets guarantee a high quality and adequate supply of public services. As Arnold Kling puts it so well in EconLog blog:

If you do not have enough sanitation workers because you cannot fill job openings at the current level of pay, then those government workers are underpaid.

On the other hand, if you do not have enough sanitation workers because your budget is busted by the ones you have, then those government workers are overpaid.

Thus, the bipartisan nature of this pushback should not be that surprising -- yet it has taken government union leaders by surprise, being unaccustomed as they are to finding themselves on the defensive. Naturally, they plan a response.

And what the unions want should worry anybody who cares about fiscal sanity. As Politico reports:

Labor leaders take hope in the story of California, where Schwarzenegger arrived after a recall with an apparent mandate for dramatic change and, in 2005, moved to shift state employees from a defined benefit to a defined contribution pension plan — the goal of many Republicans, but anathema to unions that see it as a threat to traditionally secure retirements.

Instead, Schwarzenegger found himself stymied by a state Legislature whose Democrats were tightly tied to labor, as well as by failures at the polls. Most public workers ultimately negotiated new benefit “tiers” with Schwarzenegger, but the changes fell far short of the Republican wish list, and the governor leaves his Democratic successor, Jerry Brown, a large budget gap.

We all know how that turned out.

(Hat tip: F. Vincent Vernuccio)

For more on public sector unions, see here and here.