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The Good, the Bad, and the Public Sector Unions

Writing in The Wall Street Journal, Steve Malanga has commented on the growing differences between private and public sector unions. Malanga describes the various instances where the different types of unions have clashed and how they have found themselves supporting candidates on different tickets. Take Wisconsin: private blue collar unions such as the Wisconsin Pipe Trades and the Milwaukee Buildings and Trades Council support Governor Scott Walker while many public sector unions are anything but supportive of Walker after he limited public sector bargaining with Act 10. That measure flipped Wisconsin’s $3.6 million deficit into a surplus without raising taxes and providing taxpayers with $2 billion in new tax relief. The growing divide between public and private sector unions is interesting for a number of reasons and the differing recipients of their political spending is unusual since unions have long been staunch Democratic allies and ground troops for their local campaigns. The growing difference in the political support of public and private sector unions is noteworthy because of the fundamental difference between the source of the benefits they obtain for their members: private sector unions engage in collective bargaining to gain higher wages and benefits from an employer’s self-generated funds but public sector unions engage in collective bargaining to gain higher wages and benefits from taxes, which fund public agencies. In this sense, the employer of public sector unions is the body of people that they are supposed to be serving – yet they make demands, not requests, from those people for higher wages and benefits. Worst of all is the fact that they don’t bargain directly with the people for their higher wages, but with elected officials who foist public union demands on citizens in the form of higher taxes. Private unions made of taxpayers who bear the cost of higher taxes to pay higher government salaries will inevitably support officials who limit generous, taxpayer-funded benefits. Unions in the public sector represent an inherent conflict of interest because of the fact that they allow government employees to demand higher wages from the taxpayers they are supposed to serve. Nowhere is this conflict of interest better illustrated than in the public pension debate. A study from the Competitive Enterprise Institute suggests that generous, public union-controlled pensions are dangerous to taxpayers because of questionable accounting techniques which leave them prone to underfunding. Whenever a public pension becomes underfunded, the cost of returning the pension to solvency inevitably takes the form of higher taxes. Yet public sector unions always push for costly pensions. Joe Gordon, Managing Partner at Gordon Asset Management, LLC, says, “Public pensions are popular because public employee unions pay to elect their chosen politician...When elected, he turns around and rewards them with lavish pensions. It is a pay-to-play scheme of the worst type because the victims, local or county, city, and state taxpayers have no clue they are on the hook. The only recourse is to vote with your feet, and move. Witness Detroit’s bankruptcy..." This public union political spending is not only costly and unfair to taxpayers, it can also be costly and unfair to other union members since those of a different political persuasion than the one supported by their union will helplessly watch portions of their dues money go to supporting politics they don’t. This use of union funds for partisan politics raises another question: are there safeguards in place to keep unions from writing blank checks for political activity? Unfortunately, Terry Pell of the Center for Individual Rights tells us that, while some safeguards exist, these safeguards are practically useless since unions go to great lengths to hide the partisan nature of their political spending and even misreport political spending as “contributions, gifts, and grants.” All this goes to show that, as many have said before, public sector unions, and especially federal employee unions like the AFGE (which spent at least $4,653,485 for political purposes in 2013), are completely inappropriate. The massive benefits that Wisconsin taxpayers have reaped from Act 10 prove how much unionized government agencies cost us. I’ll conclude with the words of FDR:
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service…The employer is the whole people, who speak by means of laws enacted by their representatives in Congress...Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.   Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.
With Republicans in control of Congress, there is hope that public sector unions will be checked or, more appropriately, prohibited. At the very least, Congress should more clearly define spending reporting guidelines for public sector unions including teachers’ unions since the NEA just spent $24 million for political purposes this year.