Fill out the brief form below for access to the free report.

Public-Sector Unions Threaten Safety and Growth

Article by Robert Asahina February 1, 2013 //   3 minute read

Guards at New York’s JFK airport held off their threatened Christmastime strike — to the immense relief of holiday travelers, the Port Authority of New York and New Jersey, and the nation as a whole, understandably concerned about security at one of the world’s busiest ports of entry. But as Amity Shlaes writes in her Bloomberg column, even the threat of a strike represents the breakdown of “an old grand bargain made in the very name of safety,” as well as “egregious labor costs generated by top union jobs” in an economy that has grown “far more slowly than predicted, rendering such payments prohibitive.” Shlaes points out that it was Franklin D. Roosevelt, “the father of our most aggressive labor law, the Wagner act,” who originally “drew the line at public-sector unions.” “The process of collective bargaining as usually understood cannot be transplanted to public service,” Roosevelt said. “A strike of public employees manifests nothing less than an intent on their part to obstruct or prevent the operations of government until their demands are satisfied,” which he regarded as “unthinkable and intolerant.” Yet by 1962, the idea of public-sector unions had become so acceptable, as Shlaes notes, that “John F. Kennedy signed an executive order affirming the rights of federal workers to bargain collectively.” This legitimated disruptive strikes at all levels of government (such as the lengthy and bitter strike of New York public school teachers in 1968) and eventually led to what Shlaes describes as a “bargain” between organized labor and government:

Public-sector employees would reduce disruption at schools, police stations and fire stations. They wouldn’t leave cities to riot. And the government employers, whether federal, state, city or town, would pay them a premium for that: a little more pay, a little extra overtime, more job security…

But the immediate result was that “politicians in office and public-sector union officials both had an interest in pushing compensation to the heavens” during the following decades, as “public officers deluded themselves into believing that future economic growth and the attendant revenue would pay for dream packages.” And the long-term consequence has been the near-bankruptcy of many states, such as California and Illinois, which find themselves locked into pension and other obligations to public employees that drag down not just government budgets but the salaries and benefits of all non-union public-sector workers. “The taxpayer can ‘afford’ to pay public-sector wages higher than $8 an hour,” Shlaes notes, “but not $200,000 a year,” which is what some longtime public-sector union officials make, at taxpayer expense. Her conclusion: “The bargain no longer functions — and we may not be safe.”