How State Governments Can Stay in the Black

A study by the University of California, Berkeley’s Sarah F. Anzia and Stanford University’s Terry M. Moe finds that public sector unions greatly increase costs to state and local governments by dramatically driving up wages and benefits.

The study concludes,

We find that unions and collective bargaining increase the costs of government, and that the effects are substantively significant. …from 1992 through 2010, we find that municipal police and fire departments with collective bargaining spend more on salaries, but more still on their employees’ health, hospital, disability, and life insurance benefits—on the order of 15 to 25% more…

Providing public employees with increased wages and benefits is not a bad thing, but increasing one group’s wages and benefits to the point where the state’s budget is being stretched hurts taxpayers and, in a society where different groups’ interests inevitably conflict, there has to be some kind of mediating force to keep public sector unions from running roughshod over those taxpayers.

Rising costs associated with collective bargaining has forced Fort Wayne, Indiana, to completely repeal collective bargaining for most public employees. This of course sparked intense controversy, with some union members claiming that unions were needed because they take politics out of the workplace. That assertion is laughable since many unions spend more on politics than representation, support Democratic political candidates with conservative union members’ dues money, and deceive their own members about how much of their dues money goes to political activity.

Wisconsin also scaled back costly collective bargaining and, as a result, has reaped tremendous benefits from Act 10, which has saved the state $2 billion by cutting back on public sector unions’ privileges.

The Mackinac Center highlights another tactic for local governments to stay in the black by using an emergency manager in times of financial hardship to trim some of the budget-breaking benefits that unions grant themselves in their collective bargaining contracts. A state emergency manager’s alteration of collective bargaining contracts has saved Flint, Michigan, an impressive $7.9 million annually!

More state governments should make use of emergency managers to keep down the taxpayer-borne costs of public sector collective bargaining. The necessity of proactively curtailing union privileges is evident across the country: from the Missouri union that placed a giant inflatable rat in front of a funeral home to protest the funeral home’s selection of a non-union company for work on their parking lot, to the Wisconsin union that withheld federal funds from schools that chose not to use its health insurance program, unions tend to be tragically incapable of breaking free from a prison of their own unbridled self-interest.

Nowadays, it seems that unions have outlived their purpose, since private sector union membership is anemic. Labor leaders have thus focused on unionizing the public sector, which is a strange phenomenon, considering that major labor leaders like FDR and Samuel Gompers were adamantly opposed to collective bargaining in the government.

Public sector unions are inappropriate, but unless Harris v. Quinn reduces public sector collective bargaining, those unions are unlikely to release their vice grip on local government agencies anytime soon. Local governments must be proactive about keeping union privileges at an appropriate level. State and local governments can prosper by limiting union privileges; and they must, unless they wish to go the route of Detroit.