Public Sector Unions – The Other Deep State

When government fails, public-sector unions win. When society fragments, public-sector unions consolidate their power. When citizenship itself becomes less meaningful, and the benefits of American citizenship wither, government unions offer an exclusive solidarity.

Government unions insulate their members from the challenges facing ordinary private citizens. On every major issue of our time; globalization, immigration, climate change, the integrity of our elections, crime and punishment, regulations, government spending, and fiscal reform, the interests and political bias of public-sector unions is inherently in conflict with the public interest. Today, there may be no greater core threat to the freedom and prosperity of the American people.

In the age of talk radio, the Tea Party movement, internet connectivity, and Trump, Americans finally are mobilizing against the uniparty to take back their nation. Yet the threat of public-sector unions typically is a sideshow, when it ought to occupy center stage. They are the greatest menace to American civilization that nobody seems to be talking about. Ask the average American what the difference is between a government union, and a private sector union, and you’re likely to be met with an uncomprehending stare. That’s too bad, because the differences are profound.

While America’s labor movement has always included in its ranks varying percentages of crooks, Communists, and thugs, it derived its mass appeal based on legitimate and often compelling grievances. Most of the benefits American workers take for granted—certainly including overtime pay, sick leave, and safe working conditions—were negotiated by private sector unions.

Over time, private sector unions overreached, negotiating pay and benefits packages that became unsustainable as foreign manufacturers slowly recovered from the devastation of World War II and became competitive. The diminished influence of private sector unions parallels the decline in American manufacturing, a decline only partially caused by insufficient flexibility on the part of union negotiators in a changing world. Properly regulated, private sector unions may still play a vital role in American life.

Differences Between Public and Private Sector Unions

Public-sector unions are a completely different story. If Americans fully understood the differences between public and private sector unions, public-sector unions would probably be illegal.

Public-sector unions do not negotiate with management accountable to shareholders, but instead with politicians whom they help elect and, therefore, are accountable to the unions. Moreover, politicians, unlike corporate executives, typically occupy their offices for shorter periods of time. And politicians, unlike corporate executives, don’t own shares that might be devalued after they leave office due to decisions they made while in office.

Not only are politicians far more accountable to the unions they negotiate with than to the people they serve, but the consequences of giving in to outrageous demands from public-sector unions are much less immediate and personal for the politicians. When a corporate executive gives in to union demands that are unsustainable, the corporation goes out of business. Union negotiators know this, and in the private sector, the possibility of business failure tempers their demands. But the survival of government agencies doesn’t depend on efficiently competing in a market economy where consumers voluntarily choose to purchase their product or service. When government agencies incur expenses that exceed revenues, they raise revenues by increasing taxes. Consumers have no choice but to pay the higher taxes or go to jail.

If electing their own bosses and compelling taxpayers to guarantee revenue sufficient to fulfill their demands weren’t enough, public-sector unions have another advantage denied private sector unions. They operate the machinery of government. Their members run our public schools, our transportation agencies, our public utilities, our administrative bureaucracies including code enforcement and construction permitting, our public safety agencies; everything. This confers countless unique advantages. Depending on the intensity of the issue, the percentage of unionized government employees willing to use their positions as influencers, educators, gatekeepers, and enforcers may vary. But within the permanent bureaucracy of government, it doesn’t take a very large minority of committed operatives to wield decisive power.

Public-sector unions epitomize the establishment. Politicians come and go. But like the deep state, public-sector unions are permanent, embedded in the bureaucracy, running the show.

How Public-Sector Unions Arose

While the rise of public-sector unions paralleled the rise of the private sector labor movement in the United States, it lagged behind by decades. Apart from the postal workers’ unions that emerged in the late 19th century, or the Boston police strike of 1919—which was decisively suppressed by then-Massachusetts Governor Calvin Coolidge—there wasn’t much support for public-sector unions in the early 20th century.

During the 1930s, as private sector unions acquired federal protections via the Wagner Act of 1935, public-sector unions remained unusual apart from the postal workers. Historians disagree about President Franklin D. Roosevelt’s position on public-sector unions, but it is reasonably clear that even if he did support them, he did not think they should have the degree of protection afforded private sector unions. His most quoted remark on the topic was in a 1937 letter to the president of the National Federation of Federal Employees:

“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters. 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.”

The fact that FDR, a pro-labor Democrat, had a nuanced position on public-sector unions, believing that collective bargaining had “distinct and insurmountable limitations when applied to public personnel management,” ought to be strong evidence that they are problematic. Not quite 20 years later, in 1955, none other than George Meany, founder and long-time president of the AFL-CIO, flatly stated that it was “impossible to bargain collectively with the government,” and that the AFL-CIO did not intend to reach out to workers in that sector.

But where common sense and propriety inhibited some of the most illustrious supporters of organized labor from unionizing the public sector during the first half of the 20th century, circumstances changed during the century’s latter half. Corruption, opportunism, and a chance to achieve decisive power for the Democratic Party gave rise to new laws that enabled unionized government.

The modern era of public sector unionism began in the late 1950s. Starting in Wisconsin in 1958, state and local employees gradually were permitted to organize. Today, there are only four states that explicitly prohibit collective bargaining by public employees, and only 11 additional states place any restrictions on collective bargaining by public employees.

According to the U.S. Bureau of Labor Statistics, 7.2 million employees in the public sector belonged to a union in 2018, compared with 7.6 million workers in the private sector. Union membership among public-sector workers is more than five times higher (33.9 percent) than that of private-sector workers (6.4 percent). After a slow start, public-sector unions now wield far more power than their private-sector counterparts.

How Public-Sector Unions Fought for Clinton in 2016

Everyone knows that in 2016, Donald Trump—and Bernie Sanders, for that matter—were not “establishment” candidates. But what is that? America’s so-called establishment today is a political alliance favoring bigger, more authoritarian government at all levels—local, state, federal and international. It unites transnational corporations, global financial interests, and government unions. It is an alliance that finds its primary support from members of these elites and the professional classes who serve them, and acquires a critical mass of additional popular support by pandering to the carefully nurtured resentments of anyone who is deemed a member of a “protected status group.”

While “protected status groups” now include nearly everyone living everywhere in America, those people living in urban areas are more susceptible to the union-sponsored propaganda of identity politics, because they are more exposed to it.

For over a generation, especially in California’s urban centers, but also in Chicago, Seattle, Miami, New York City, and hundreds of other major American cities, government unions have exercised nearly absolute control over the political process. This extends not only to city councils but also to county boards of supervisors, school boards, and special districts ranging from transit systems to departments of water and power. Most government funding is spent at this local level. Most government jobs are at this local level. And the more local these jurisdictions get, the more likely it is that only the government unions have the money and the will to dominate the elections.

In America’s cities, where the union agenda that controls public education trains Americans to be hypersensitive to any alleged infringements on their “identity,” big government is presented as the guardian of their futures and their freedoms. In America’s cities, where poor education combined with over-regulation has resulted in a paucity of good jobs, welfare and entitlement programs are presented as the government’s answer. And the more poverty and social instability we have in America, the bigger government gets.

Take another look at this map that depicts the absolute vote margins by county in 2016. From viewing this map, it is evident that the split that was exposed on November 8, 2016, was not simply urban versus rural. It was government union-controlled areas versus places relatively free of government union influence.

From the above map, only a few places stand out as decisive factors in Clinton’s popular vote victory—Seattle, Miami, New York City, and most prominently, Los Angeles and Chicago.

In Los Angeles County, Clinton received 1,893,770 votes versus 620,285 for Trump. In Chicago’s Cook County, Clinton received 1,528,582 votes versus 440,213 for Trump. Let that sink in for a moment. If just a few blue counties—not blue states, blue counties—were taken out of the equation, the popular vote would have been a toss-up. The political systems and the public schools in all of these blue counties are controlled, many informed observers would say absolutely, by public-sector unions.

Government Union Agenda vs. the Public Interest

It would be cynical and unfair to suggest that politically savvy members and leaders of public-sector unions are consciously supporting policies that undermine America’s democracy, prosperity, freedoms, and culture. But that’s what’s happening.

It doesn’t matter all that much what union members and leaders think; the institutional momentum of their organizations have this effect. The primary agenda of a government union, like any organization, is to survive and thrive. For government unions, this means to acquire more members, collect more dues, and acquire more power and influence. The only way this can be accomplished is for government to expand.

This is where government union reform should be a nonpartisan issue. Because even big-government advocates have the expectation that expanded government programs will be effective. But government unions actually become more prosperous and more powerful when government fails—and, for that matter, when society fails. The worse things get, the more calls there are for new government programs to solve them. The bigger the crisis, the greater the opportunity. And at the forefront of these calls for bigger government to solve every problem are the government unions, using all of their considerable power and influence to make the call.

We see this at the local level all the time. Thousands of local tax and bond measures are placed on ballots across the nation every election cycle, as well as between elections, during primary season, and in special elections. Opposing these proposed new taxes and bonds are the usual hardscrabble assortment of local anti-tax activists; typically a handful of volunteers with almost no money. Supporting these new taxes and bonds are public-sector unions, with standing armies of professionals and, for all practical purposes, unlimited funds. Also supporting the new taxes are the private contractors that stand to gain from the increased spending, as well as the government bureaucrats themselves, who use municipal budgets to fund “information outreach” to voters. But for these unions, the victory is sealed when the new taxes and bonds are approved. If the new revenue they collect and spend fails to solve the problem, it doesn’t really matter.

At the state and national level, it is easy to see the influence of government unions corrupts public policy.

Immigration and climate change are core issues where the inherent interests of government unions are in conflict with the public interest. Immigration to the United States in the 21st century should consist of highly skilled and highly educated immigrants, since America already has millions of unskilled residents who need to choose jobs over welfare. But while the American people would benefit by inviting scientists, engineers, and doctors to immigrate and fill advanced positions for which there is a shortage of qualified applicants, it would not benefit government unions.

The more difficulty America has in assimilating newcomers, the more government jobs are created. If immigrants don’t speak English, public schools must hire teachers with foreign language certifications. If they live in poverty, public schools must develop free-meal programs. If these immigrant communities fail to achieve the educational results that make them employable, the government will need more social workers and welfare administrators. If the ongoing poverty breeds higher crime rates, more police, judges, bailiffs, prison guards, and probation officers are the answer. The worse things get, the more government employees and government benefits become necessary.

And, of course, as these communities fail to become prosperous, they are taught by leftist, unionized social studies teachers that it’s not their responsibility, but rather the fault of their white male oppressors, and they’d better vote for Democrats in order to guarantee their reparative handouts. And to enforce “diversity” quotas—unionized government bureaucrats.

With climate change, the conflict between government unions and the public interest is equally stark. Here again, there is also a strong connection between connected government contractors and the public-sector unions. Instead of building subsidized housing, special needs school facilities, and more prisons—which come with marginally assimilable immigrants—these contractors supply solar farms, wind farms, “smart” appliances, and everything else that comes with mandated climate change mitigation. It doesn’t matter if any of these mandates accomplish anything, so long as profits are made. And overseeing it all are the government unions, who hire more code inspectors, environmental consultants, and a byzantine monitoring and enforcement bureaucracy.

While immigration and climate change are core drivers of government union endorsed government expansion, they aren’t the only factors. In every area of policy and spending, government unions benefit when things are harder for ordinary families and small businesses. In all areas, taxes, borrowing, spending, and regulations, the more there is, the more the government unions benefit.

The Financial Power of Public-Sector Unions

One of the primary reasons government union activists exercise influence disproportionate to their numbers is because behind these activists are billions of dollars in annual dues, collected from government payroll departments across the nation.

In California alone, government unions collect and spend nearly $1 billion a year. Nationwide, government union revenues are estimated to total at least $6 billion per year. Apart from private sector unions, no other political special interest enjoys access to a guaranteed, perennial torrent of money of comparable magnitude. This money is not just spent on federal elections; most of it is directed at tens of thousands of state and local election campaigns.

With this perpetual torrent of funding, fueled almost exclusively through membership dues, government unions engage the permanent services of the finest professionals money can buy. While much of their spending is explicitly political, even more is spent on community organizing and “educational” advocacy which is not reportable as political spending. Thousands of lobbyists, political consultants, grassroots organizers, public relations firms, opposition researchers, academic researchers, and other freelancers are on-call to these unions.

If you study money in politics, you soon realize there is a rough parity between major political donors who contribute to causes and candidates on the Right versus those who contribute to the Left. But the election of Donald Trump in 2016 revealed the so-called Right to be nearly as bad as the Left, as libertarians and NeverTrump Republicans abandoned their base. This abandonment was especially obvious among donors, whose only apparent unifying political theme was lower taxes for wealthy people. Trump and his supporters exposed the libertarian and NeverTrump Right for being just as committed as the establishment Left was to importing workers to drive down wages and exporting jobs to increase corporate profits. As a result, donations to Republicans, while remaining roughly at parity with donations to Democrats, were for the most part not supporting an America First agenda.

An illustration of how this schism within the American Right, and especially among big libertarian donors, persisted into the 2018 midterms is exemplified by their withdrawal of key financial support for pro-Trump candidates. And here’s where the union money becomes decisive. Into the political conflict between Left and Right, between Democrat and Republican, into a battle for financial supremacy already skewed, because half the Republican donors are now exposed as being more committed to a uniparty establishment than to Republican voters, ride the unions. And almost all of the union money goes to Democrats.

The lack of parity in political power and political advocacy becomes further lopsided when accounting for the role of nonprofits and government bureaucracies. Much has been made of the educational nonprofits supposedly beholden to right-wing donors. Their collective spending is indeed impressive, led by heavyweights like the Heritage Foundation, along with well-known stalwarts such as the Cato Institute, the Reason Foundation, and several others at the national level along with a growing number of state focused organizations such as the many member organizations of the State Policy Network.

But contrary to the wailing of the establishment media and left-wing pundits, the influence of these organizations is overstated.

First, many of them must adhere to orthodox libertarian principles in order to keep their donors. This makes them useless on immigration and trade, which are two of the defining issues of our time.

Second, because arrayed against these organizations is the entire rest of the nonprofit universe, which while mostly self-declared as nonpartisan, is in reality a part of that great mass of establishment organizations that have reached a consensus on open borders, “free” trade, and climate change activism consistent with the big government coalition: corporations, government unions, and the financial sector.

To provide one example, the combined budget of just a partial list of the major U.S.-based environmentalist nonprofits and foundations totaled over $4 billion per year as of 2018.

The Financial and Cultural Consequences of Unionized Government

Spokespersons for government employee unions perpetuate a myth of staggering absurdity and tragic consequences—that they are protecting hard-working Americans from wealthy corporations and wealthy individuals.

The reality is that government employee unions are focused on one thing: expanding government employee pay, benefits, and privileges. This requires expanding government, and that priority comes in front of everything else, including the cost to society at large. In states where government unions have taken control, such as California, expansive environmentalist regulations have made prices for housing and utilities the highest in the nation. In California, America’s poster child for union control, excessive compensation packages for unionized government workers have resulted in chronic deficits and accumulating state and local government debt that by some measures already exceeds $1.5 trillion. High taxes and over-regulation have made California consistently rank as the most inhospitable place in the nation to run a small business.

Exactly how does any of this protect the poor from the wealthy?

It doesn’t, of course. But the deeper story is how government employee unions are not only failing to “protect” the aspiring multitudes in California, or anywhere else in America, but are in fact enabling the wealthy special interests they claim to protect us from. The most entrenched and massive corporate entities are not harmed by excessive regulations, because they can afford to comply. An obvious example would be calls to increase the minimum wage– a movement almost exclusively restricted to states with powerful public-sector unions. Large corporate entities like McDonald’s will simply automate a few positions, tinker with the menu and recipes, incrementally raise prices, and go forward. Large corporations can hire attorneys and lobbyists, they have access to capital, and when the smaller players go out of business they gain market share. They benefit from over-regulation, but the consumer and workers suffer.

Less obvious but far more consequential is how the financial sector also benefits from an overbuilt, financially irresponsible, unionized government. When excessive rates of pay and benefits consume government budgets, financial institutions step up to extend debt. Bond underwriters collect billions each year in fees to issue new debt and refinance existing debt. When excessively generous pension plans are granted to unionized government employees, pension funds pour hundreds of billions into Wall Street investment firms, earning additional billions in fees. As for “carbon emissions auctions,” also rolling out inexorably in blue states, as that ramps up, virtually every BTU of fossil fuel energy consumed will put a commission into the hands of a financial intermediary. Trillions are on the table.

Unionized government hides behind environmentalism to justify increasing pay and benefits over-investment in infrastructure—which after all is environmentally incorrect. As the cost-of-living inevitably rises through artificial constraints on the supply of land and energy, the unionized government workers negotiate even higher pay and benefits to compensate, and the corporate monopolies that control existing supplies of land and energy get more revenue and profit. And of course the resultant asset bubble is healthy both for pension funds and wealthy investors, even as low and middle-class private-sector workers are priced out of owning homes—or even automobiles—and struggle to make ends meet.

It is crucial to perceive the irony. Government unions empower the worst elements of the capitalist system they persistently demonize. The crony capitalists and speculative financial interests benefit from an overbuilt, over-regulating, state and local government populated with overpaid unionized workers. Those virtuous capitalists who want to compete without subsidies are successfully lumped together with these robber barons, discrediting their support for reform. Those small business owners who want to grow their enterprises are harassed and marginalized.

If government employee unions were illegal, the most powerful political force in California, New York, Illinois, Massachusetts, and a host of other smaller blue states would cease to exist. But losing these government unions wouldn’t “turn government over to the corporations and billionaires.” Quite the opposite. It would take away the ability of those corporations and billionaires to collude with local and state government unions who currently control the lawmakers. It would force them instead to compete with each other, lowering the cost of living for everyone. It would restore balance to our debate over environmental policy, energy policy, and infrastructure investment.

Wherever government unions become as powerful as they have become in California, their domain increasingly becomes a feudal state, where the anointed and compliant corporations build monopolies, government workers lead privileged lives, the rich get richer, the middle class diminishes, and the poor become dependent on government. Nobody who is serious about reversing California’s decline into feudalism—or America’s potential decline—can ignore the fundamental enabling role unionized government is playing.

It is important to emphasize that the most ominous consequence of unionized government is its complicity in the asset bubbles that, if abruptly deflated, threaten to plunge the United States, if not the world, into a liquidity crisis. Government unions in the United States control the directorships managing trillions of dollars of public employee pension funds. These pension funds are the biggest single player in the U.S. equity markets. They are also major investors in real estate and bonds. One may argue all day as to just how inflated all these asset classes have become, but regardless of your stance on the question, one thing is indisputable: public employee pension funds are dangerously underfunded despite the fact that there has been a bull market in stocks, bonds, and real estate for over a decade. They will use all their influence to keep the bubbles inflated—and that includes ongoing support for extreme environmentalist regulations to create artificial scarcity of everything—houses, energy, water, food, commodities—buoying their prices which boosts profits, as well as mass immigration to create unmanageable demand for homes, also buoying prices and investor profits. The insatiable need for perpetually increasing asset values constitutes an identity of interests between public-sector unions, multinational corporations, and international investors and speculators that is as obscure as it is inviolable.

Government Union Abuses That Provoke Bipartisan Opposition

“Bipartisan” isn’t what it used to be. Now that America’s political establishment has been exposed as supporting with bipartisan unity, regardless of party, the policies of importing welfare recipients, exporting jobs, fighting endless wars, and micro-managing all forms of energy production under the pretext of saving the planet, the term “bipartisan” doesn’t evoke quite the same transcendent connotations it once did. With that noted, it remains true that with respect to public-sector unions, establishment Democrats are worse than establishment Republicans. When it comes to fighting the influence of public-sector unions, most Republicans lack the courage of their convictions, whereas most Democrats have no convictions at all.

Two exemplary issues, however, have the potential to bring Republicans and Democrats together in opposition to public-sector unions. Those issues are public education and pensions. These issues are not only capable of fostering productive, bipartisan reform efforts, but that eventuality is almost inevitable because the status-quo is not sustainable.

Public EducationIn blue states, union control over public education is almost unassailable despite strong opposition. California’s failing school districts face insolvency caused by a combination of administrative bloat and out-of-control costs for pensions and retirement health benefits. The academic achievement of California’s schools is hard to measure objectively. California’s average SAT score, 1076, places it in 34th place among states. According to a study sponsored by U.S. News and World Report, California’s K-12 system of public education was ranked 26th among states.

But this average performance obscures a bigger problem in California’s union controlled public schools. Union work rules are causing the schools in the most vulnerable communities to get the worst teachers. In 2012 a coalition of mostly Democrats filed a lawsuit, Vergara v. California, attempting to change these rules. Claiming that education was a civil right, they tried via litigation to revise three union work rules; tenure (a job for life) after only two years, dismissal rules (almost impossible to fire an incompetent teacher), and layoff rules (seniority over merit).

The impact of these three rules was, and is, a relentless migration of the worst teachers into the worst performing schools, since they can’t be fired, but they can be transferred. View the closing argumentsof the plaintiffs for a compelling description of how these three union work rules are destroying California’s public schools. In 2016, after a favorable district court ruling, the appellate court ruled againstthe plaintiffs, and California’s Supreme Court refused to hear an appeal. The schools harmed the most by these corrupt union rules are those in the burgeoning low income immigrant neighborhoods of Los Angeles, where literally hundreds of thousands of children are denied a quality education.

For better or for worse, these kids are America’s future. But who wins when society fails? The government unions win. As demographically ascendant low-income immigrant subcultures are permanently handicapped because their children got indoctrinated instead of educated, taxpayers will have to hire more unionized public servants to redistribute wealth and preserve the peace.

The good news? Increasing numbers of Americans of all ethnicities and ideologies are realizing the impact of union controlled schools is denying future opportunities to a generation of children. The battle over charter schools, home schooling, and union work rules in traditional public schools is far from over.

Public Employee PensionsWith pensions, reform is even more inevitable, because financial reality will compel reform. According to Pew Research, in 2016 state and local government pensions plans disclosed assets of just $2.6 trillion to cover total pension liabilities of $4 trillion. This understates the problem. These pension plans assume they can earn, on average, 7.5 percent per year on their invested assets, yet, as discussed, despite nearly a decade of a bull market in stocks, bonds, and real estate, these pension plans are less than 70 percent funded.

Pension finance isn’t as complicated as the experts would have you believe. What “pension liabilities” refers to is how much money would have to be invested, today, for these pension plans to earn enough interest over time to eventually pay all of the future pension benefits that have been earned so far. Think of pension assets as a growing tree, nourished by the water and sun of investment earnings, supplemented by the fertilizer of regular taxpayer contributions, and pruned each year by the payments going to retirees. If this tree is less than 70 percent of the size it needs to be, then it’s going to get pruned faster than it can grow. Eventually, there won’t be any cuttings to provide pensions to retirees.

For clarity, take the metaphor one step further. What if this undersized tree had been enjoying a decade of abundant water and sunshine—the generous investment returns of the bull market—but suddenly that changes, as it always has and always will? What if this undersized pension asset tree now has to endure years of drought and cloudy weather, stunting its growth at the same time as the pension payment pruning for retirees continue at the same pace?

This is what America’s public employee pension funds are already confronting. The tree is too small, and in response more and more fertilizer—payments by taxpayers—have to be applied to keep it alive. This data compiled by the California Policy Center explains what’s coming:

“A city that pays 10% of their total revenues into the pension funds, and there are plenty of them, at an ROI of 7.5% and an honest repayment plan for the unfunded liability, should be paying 17% of their revenues into the pension systems. At a ROI of 6.5%, these cities would pay 24% of their revenue to pensions. At 5.5%, 32%.” To restate—according to this analysis, at a 5.5 percent annual return for the pension funds, 32 percent of total tax revenue would have to go straight into the coffers of the pension funds, just to keep them solvent.”

These are staggering conclusions. Only a few years ago, opponents of pension reform disparaged reformers by repeatedly asserting that pension costs only consumed 3 percent of total operating expenses. Now those costs have tripled and quadrupled, and there is no end in sight.

The looming pension crisis is already uniting fiscal conservatives, who want smaller, financially sustainable government, and conscientious liberals, who want to protect their cherished government programs from being eliminated in order to pay the pension funds. And as out-of-control pension costs become a problem too big to ignore, it casts a spotlight on the entire question of overcompensation for unionized government employees. Government employees, on average, retire 10 years sooner and enjoy annual retirement benefits two to five times greater than private sector workers. In California, on average, they make twice as much in pay and benefits during the years they work, and veteran employees are eligible for as many as 58 paid days off per year, not including sick leave.

A harrowing example of just how skewed political discourse has become can be found in the government union campaign against California’s Proposition 6, placed on the November 2018 ballot by tax reformers. The proposition was struck down by voters, who were barraged with union-funded flyers and television ads featuring a rugged firefighter, in uniform, explaining how public safety would be jeopardized if voters approved Prop. 6. But nobody told the rest of the story, how this firefighter, as readily verified by publicly available online data, made $327,491 in 2017. That’s only a bit unusual. The average firefighter in a California city in 2015 made $200,000 in pay and benefits. It would be interesting to compile more recent data. The number certainly has not fallen.

Teachers and firefighters are our heroes. They are our role models. But the best among them are unrecognized, because the worst among them are not only nearly immune to being fired, but make exactly as much money as the best. The only thing that matters is seniority. It is likely that the finest teachers are underpaid. But overall, and especially with respect to the cost of retirement benefits, unionized public employees are overpaid, and the cost is becoming too much to bear.

These two issues, quality schools and financially sustainable pensions, represent the wedge that could eventually roll back, if not break the power of public-sector unions. Everyone cares about public schools, because their success or failure governs our children’s future. Everyone cares about public employee pensions, or will care, because if they aren’t reformed, they will bankrupt our cities, counties and states. The primary reason public schools are underperforming, and the primary reason public-sector pensions are not reformed, is because public-sector unions fight reform at every turn.

But all their power cannot deceive voters forever. Change is coming.

Fighting Back

In June 2018, in the landmark case of Janus v. AFSCME, the U.S. Supreme Court ruled that public sector employees cannot be compelled to pay anything to unions as a condition of employment, not even the so-called agency fees. In the months leading up to this case, public-sector unions made Janusout to be a catastrophe in the making, fueled by “dark money” and poised to destroy the labor movement.

In the months prior to the Janus decision, the mainstream press played up the panic. The Economist reported that “Unions are confronted with an existential threat.” The Atlantic went with “Is This the End of Public-Sector Unions in America?” Even the Wall Street Journal was caught up in the drama, publishing a report with the ominous title “Supreme Court to Decide Fate of public-sector unions.”

Maybe some union officials actually thought an unfavorable Janus ruling would destroy their organizations, but more likely, they saw it as an opportunity to rally their base and consolidate their power.

The Janus ruling has come and gone, but public-sector unions are as powerful as ever. In ultra-blue states such as California, they still exercise nearly absolute control over the state legislature, along with the city councils and county boards of supervisors in nearly every major city and county. Their control over school boards is also almost absolute.

This pattern repeats itself across the United States, especially in ultra-blue states. For example, following the 2018 midterms, fourteen states had democratic “trifectas,” where Democrats controlled both houses of the state legislature, plus the governorship. These would include the powerhouse states of California, New York, New Jersey, Massachusetts, and Illinois, along with Washington, Oregon, Nevada, Colorado, New Mexico, Maine, Rhode Island, Connecticut, and Delaware. These states have one overwhelming political variable working in their favor—the politics of their major urban centers are dominated by public-sector unions.

It has been long enough since the Janus decision to assess the initial impact. As of July 2018, unions could no longer collect “agency fees” from workers who didn’t want full membership. Comparing monthly payroll deductions from early 2018 to those from late 2018, one analysis indicated the unions were not very successful in converting these agency fee payers to full members. It is likely that the impact on public-sector unions based on losing their agency fee payers may have caused their revenue to decline by between five and ten percent. That’s a lot of money. Or is it?

In almost any other context, reducing the annual revenue of a network of political players by somewhere between $300 and $600 million per year would be a catastrophe for the organizations involved. But these are public-sector unions, which still have well over $5 billion per year to work with. Losing most of their agency-fee payers clearly had a permanent and significant impact on union revenues, but for them, and only them, it might be most accurately described as a one-time loss of manageable proportions.

The bigger impact that the Janusruling might have regards what is going to happen to their rates of full membership. It is now possible for public-sector union members to quit their unions. But will they? And if they want to, will the unions be forced to make that an easier process?

Some of the tactics the unions have adopted to make the process of quitting more difficult are being challenged in court. These cases would include Uradnik v. IFO, which would take away a public-sector union’s right to exclusive representation, or Few v. UTLA, which would nullify many steps the unions have taken to thwart the Janusruling. How those cases play out, and whether or not public-sector unions can remain accountable enough to their members to keep them in voluntarily, remains to be seen.

Public-Sector Unions and America’s Future

With America’s electorate split almost evenly between Republicans and Democrats, between liberals and conservatives, between socialists and capitalists, between Right and Left—however you want to express those polarities, it doesn’t take much to alter the equilibrium. But wherever you identify powerful forces shifting the balance, you find the public-sector unions are the puppeteer.

Should America import millions of highly skilled immigrants whose children will excel in public schools no matter what? Of course not. Private success requires no public money.

Should America reform its financial house of cards before a liquidity crisis crashes the global economy? No. Because pension solvency requires asset bubbles.

Should public-private partnerships fund new infrastructure so private investors can competitively develop new cities on America’s vast reserves of open land? Not a chance. Artificial scarcity keeps property tax revenues up, and helps prop up the real estate asset bubble.

Should incompetent bureaucrats and teachers be fired? No, because the union protects them.

To understand how intractable this problem has become, it’s worthwhile not only to identify the differences between public and private sector unions, but also the differing philosophies that guides them. To be sure, these structural differences are profound: unlike private-sector unions, public-sector unions elect their own bosses, are funded through coercive taxes instead of competitively earned profits, are rewarded by inefficiency and failure which they use as justification to expand government, and operate the machinery of government, which allows them unique powers to harass their opponents.

But these structural differences need to be viewed in the context of the ideological differences between unionized workers in the public and private sectors. These ideological differences are not absolute, but they are nonetheless very real and impact the political agenda of public-sector unions versus private sector unions. There are at least three areas of ideological differences:

Authoritarian vs. Market DrivenWorkers for the government exercise political power, whereas workers in the private sector exercise economic power. A private sector union can cause a company to go out of business, an economic threat, whereas a public sector union can cause their manager—the elected politician—to lose their next election, a political threat. This basic difference makes if far more likely that private sector union workers will have a better appreciation of the limits of their power, since if their demands have a sufficiently adverse economic effect on the company they’re negotiating with, that company will go out of business and they will lose their jobs.

Another related manifestation of the authoritarian core ideology among government workers is the simple fact that the government compels people to pay taxes and provides only one option for services, whereas corporations must persuade consumers to voluntarily purchase their products if they want to stay in business. Private-sector union members understand this difference quite well, because they live with the consequences if their company fails in the market.

Environmentalist Restriction vs. Economic DevelopmentWorkers in the private sector benefit from major construction projects and resource development. These projects create new jobs, and they yield broad societal benefits in the form of more competitive choices available for basic resources; energy, water, transportation, and housing.

When more development occurs, this increases supply and lowers prices. Development creates jobs and lowers the cost of living. Private sector union members understand this, but public sector union members have an inherent conflict of interest. This is because public sector workers benefit when roadblocks are placed in the way of development. An extended process of permitting and review, labyrinthine regulations impacting every possible aspect of development, creates jobs in the public sector.

The harder the public sector can make it to build things, the more fees they will collect and the more government jobs they will create. Ironically, the public-sector unions have an identity of interests with the most powerful monopolistic corporations on earth in this regard, because they both benefit from barriers to competitive development. Private sector union members just want to see more jobs and a lower cost of living, which development ensures.

Internationalist vs. NationalistThis area of ideological differences between public and private sector unions is perhaps the least mentioned, and the most subject to overlap and ambiguity. But identifying this difference is crucial to understanding the differing agendas of public- and private-sector unions.

For example, the ideological agenda of the unions controlling public education in the United States are dramatically out of touch with the values of a great many Americans. In states where public education is controlled by powerful teachers unions, classroom materials and textbooks routinely demonize the role of the United States and Western Civilization in current affairs and world history. Their emphasis is to mainstream the marginalized, at the expense of teaching the overwhelmingly positive role played by democracy and capitalism in creating freedom and wealth. Another critical example is how job losses to foreign manufacturers affect members of these respective unions; it has an immediate, deeply negative impact on members of private-sector unions, but is something that has no effect on a public-sector worker.

Members of public-sector unions who consider themselves in favor of free markets and resource development, and harbor pro-American patriotic sentiments, would do well to examine carefully how the leaders of government employee unions have powerful incentives to promote policies in direct opposition to these values. And that is where there might be hope.

The precarious equilibrium between Right and Left in America is maintained not only by virtue of powerful public-sector unions pushing as hard as they can in favor of the Left; public employees themselves constitute a critical swing vote in America’s electorate. Including federal workers, there are nearly 20 million government employees in America, and nearly all of them vote. If you include households with government workers in them, you likely could double that number. These Americans have a tough choice to make: Will they vote for more government, because more government will create more career opportunities for themselves and their loved ones, or will they only ask themselves what political choices will offer the most benefit to all Americans?

Public employees, like all Americans, are awakening to the propaganda that passes as mainstream journalism. Despite rampant suppression of the truth, they can see what has happened to Europe thanks to mass immigration. Despite endless rhetoric coming from the press and public institutions, they realize that campus radicalism and identity politics are a nihilistic dead end. Despite nightly “news” that spends more time on celebrity gossip than global events, they can see the where socialism leads in the devastated nation of Venezuela. They’re even realizing that climate change activism is a cover for globalist rationing and wealth redistribution. They see the hypocrisy.

Public-sector unions are the brokers and enablers of corporate power. As politicians come and go, and business interests rise and fall, they are the continuity, decade after decade. In every city and state where they’ve been allowed, they are the deep state. They are globalist instead of nationalist, authoritarian instead of pluralistic, they favor rationing and regulation over competitive development. They want to make everything harder, scarcer, more expensive. They prefer cultural disintegration and chaos to unity because it empowers them when things get bad. In a just world, public-sector unions would be outlawed. Until then, their agenda and their impact must be exposed for all to see.

This article originally appeared on the website American Greatness.

Can Public Sector Union Power Ever Be Stopped?


unionImagine you’re hoping to support a candidate for local office who will enact reforms that will improve your city, maybe even save it. Someone who will fight tirelessly to eliminate work rules that force agencies to hire more people than are actually necessary. Someone who will insist that incompetent public employees are fired. Someone who will finally do something about compensation and benefit packages that are threatening to bankrupt the city.

What do you say to them, when their response to your suggested reforms is this: “That’s all great, and I’d like to do it all, but who’s going to give me the million dollars for my campaign that I’m not going to get from the public employee unions if I actually try to do any of it?”

That is the sort of conversation that takes place, or would take place if anyone bothered to ask, multiplied by thousands, every election cycle in California.

Public employee unions run California. They exercise nearly absolute power in the state Legislature, and in nearly every city, county, school district and special district. Can public sector union power ever be stopped?

Earlier this year, a California Public Policy Center analysis estimated that for 2016, total membership in California’s public sector unions was 1.15 million, and total revenue was $812 million. This equates to a stupefying $1.6 billion that these unions collect and spend every election cycle.

 

California’s Public Sector Unions (including local affiliates)
Estimated Total Membership and Revenues

While the figure of $1.6 billion per election cycle is a credible estimate, attempts to come up with precise information on California’s public sector union dues is nearly impossible. In California there are many hundreds, if not thousands, of individual local public sector union affiliates. All of them file separate 990 forms, often including financial transfers between entities that have to be offset in any thorough analysis.

Determining how much of California’s public sector union revenue is spent on politics is also a nearly impossible task, despite several online “transparency” portals, including OpenSecretsFollowTheMoneyVoteSmart, and the California Secretary of State’s Campaign Finance “Power Search.” These portals are primarily focused on national races, and in some cases, statewide races, but none of them descend to the thousands of California’s local races, where hundreds of millions of dollars are spent every election.

Moreover, the portals can only display the information they’re given. California’s government unions, like most sophisticated political players, mask their total spending through multiple committees and transfers.

An excellent analysis of how much of teachers union dues end up being spent on political campaigns was written in 2015 by RiShawn Biddle, editor and publisher of Dropout Nation – a leading commentary website on education reform. He writes: “The pro bono consultants who went through the unions’ published national, state, and local tax returns estimated based on their research, interviews, and sampling that roughly one third of the unions’ efforts went toward political advocacy.”

One-third. In California, that is equal to approximately $540 million per election cycle. That is, California’s public sector unions likely spend over a half-billion per election cycle. And this spending does not include other “non-political” spending. For example, not reportable as political spending can include massive public education campaigns that are designed to influence voters but aren’t engaging in explicit advocacy.

Also not considered political spending, but having immense political impact, is litigation. There are countless examples of how government union power is exercised in California’s courts. Pension reforms in San Jose and San Diego, approved by voters, were eviscerated through relentless court challenges. Statewide pension reform pushed by Gov. Brown and partially realized in the PEPRA legislation of 2012 was undermined, and continues to be undermined, beneath an ongoing avalanche of lawsuits. Charter schools are the targets of continuous litigation designed to wear them out. You can do this, when you have hundreds of millions of dollars pouring in every quarter, year after year.

California’s political landscape over the past 20-30 years has been defined by public sector unions. While the recent Janus v AFSCME decision by the U.S. Supreme Court has taken away the ability of government unions to compel payment of fees, the unions are resorting to clever contractual gyrations to make it extremely difficult in practice for anyone to stop paying. That too, will have to sort itself out in court, where union money guarantees tenacious defense and endless appeals.

Even if public employees can easily withdraw from paying government unions, in many cases, why would they? These unions have made California’s public employees some of the highest paid public servants on earth. A California Policy Center study in 2017 concluded “The composite average total compensation (pay and benefits) for a full-time city, county or state worker in California during 2015 was $121,843; for the average full-time private sector worker in California, including benefits, it was 62,475, which is 51% of what the public sector worker earned.” As a result, it is no coincidence that California’s state and local governments confront over $1.0 trillion in debt and unfunded pension liabilities.

The political and financial power of public sector unions has transformed California politics. Their influence is felt everywhere; education, environmental policy, the business climate, important cultural issues. In every area, their primary agenda is to grow their membership and influence. The effect of this agenda is pernicious. If schools fail, spend more public money on schools. If crime increases, hire more police and build more prisons. Wherever society fails, grow unionized government.

Perhaps the next major U.S. Supreme Court case concerning government unions will abolish them due to this inherent conflict between their agenda and the public interest. Perhaps someday they will be outlawed entirely. That would be a happy, happy Thanksgiving indeed.

This article originally appeared on the website of the California Policy Center.

Why Teachers Unions are the Worst of the Worst


Teachers unionWhen considering the influence of unions on American society, there are vast differences depending on what type of union one considers.

Private sector unions, for all the criticisms they may deserve, have nonetheless played a vital role in securing rights for the American worker. Subject to appropriate regulations, private sector unions have the opportunity to continue to play a vital role in American society. If they would bother to embrace the aspirations of their members, instead of the multinational corporations their leaders now apparently collude with, they might even support immigration reform. That would elevate the wages and benefits of all American workers, especially those doing low paying jobs.

Public sector unions, on the other hand, should be illegal. They negotiate with elected officials who they help elect. They negotiate for a share of coerced tax revenue, rather than for a share of profits, meaning there are no competitive checks on how much they can demand. The agenda of public sector unions is inherently in conflict with the public interest. But given the reality of public sector unions, it is important to recognize that some public sector unions are worse than others.

Public safety unions, for example, have successfully lobbied for pension benefits that are not sustainable. This calls for a difficult but necessary economic discussion that can only end two ways – either these pension benefits are going to be reduced, or cities and counties across California and elsewhere will go bankrupt in the next major recession. But public safety unions have not undermined their profession the way the teachers unions have.

The teachers unions are guilty of all the problems common to all public sector unions. They, too, have negotiated unsustainable rates of pay and benefits. They, too, elect their own bosses, negotiate inefficient work rules, have an insatiable need for more public funds, and protect incompetent members. But the teachers union is worse than all other public sector unions for one reason that eclipses all others: Their agenda is negatively affecting how we socialize and educate our children, the next generation of Americans.

Work Rules Harm Public Schools

One of the most compelling examples of just how much harm the teachers union has done to California’s schools was the 2014 case Vergara vs. the State of California. In this case, attorneys representing public school students argued that union negotiated work rules harmed their ability to receive a quality education. In particular, they questioned rules governing tenure (too soon), dismissals (too hard), and layoffs (based on seniority instead of merit). In the closing arguments, the plaintiff’s lead attorney referenced testimony from the defendant’s expert witnesses to show that these and other rules had a negative disproportionate impact on students in disadvantaged communities.

Despite winning in the lower courts, the Vergara case was eventually dismissed by the California Supreme Court. Teachers still get tenure after less than two years of classroom observation. Incompetent teachers are still nearly impossible to fire. And whenever it is necessary to reduce teacher headcount in a district, the senior teachers stay and the new teachers go, regardless of how well or poorly these teachers were doing their jobs. The consequences of these self-serving work rules are more than academic.

The evidence that California’s public schools are failing is everywhere. Los Angeles, a city whose residents are – perhaps more than anywhere else – representative of America’s future, is home to the Los Angeles Unified School District (LAUSD), with 640,000 K-12 students. And as reported earlier this year in the LA School Report, according to the new “California School Dashboard,” a ratings system that replaced the Academic Performance Index, LAUSD is failing to educate hundreds of thousands of students. In the most recent year of results, 52 percent of LAUSD’s schools earned a D or F in English language arts, and 50 percent earned a D or F in math. Fifty percent of LAUSD’s schools are failing or nearly failing to teach their students English or math.

Attack Innovative Charter Schools

In the face of failure, you would think LAUSD and other failing school districts would embrace bipartisan, obvious reforms such as those highlighted in the Vergara case. But instead, these unions are relentlessly trying to unionize charter schools, which would force those schools to adhere to the same union work rules. In Los Angeles, the Alliance Network of charter schools has delivered demonstrably better educational outcomes for less money, while serving nearly identical student populations.

How does it help to impose union work rules on charter schools that are succeeding academically? How does that help the children who are America’s future?

A Left-Wing Political Agenda

The other way the teachers union is unique among public sector unions is their hyper-partisanship. Despite and often in defiance of their memberships, nearly all unions are left-wing partisan organizations. Nearly all of them support left-wing causes and Democratic political candidates. But the teachers unions do so with a zeal that dwarfs their counterparts. Larry Sand, a former LAUSD teacher and prolific observer of teachers union antics, has spent years documenting their left wing agenda.

For example, reporting on the annual conventions of the two largest national teachers unions, Sand writes: “The National Education Association convention at the beginning of the month gave us a clue which theory would become reality when the union passed quite a few über liberal New Business Items, maintained its lopsided leftward political spending, and gave rogue quarterback Colin Kaepernick a human rights award. And here in the Golden State, the California Teachers Association continues its one-way spending on progressive initiatives and endorsed 35 state legislators in the June primary – all Democrats.

A week after the NEA convention, the other national teachers union, the American Federation of Teachers held its yearly wingding and left absolutely no doubt as to its future political direction. The resolutions passed by the union at the convention would make any socialist proud. Universal health care – whether single-payer or MediCare for All, full public funding for, and free tuition at all public colleges and universities, and universal, full-day, and cost-free child care are what AFT wants for the country. Additionally, the union resolved to double per-pupil expenditures for low-income K-12 districts and to ‘tax the rich’ to fully fund ‘IDEA (Individuals with Disabilities Education Act), Title I and state allocations to public colleges and universities.’”

Left-Wing Student Indoctrination

This left-wing political agenda finds its way into the classroom, of course. At the same time as California’s K-12 public school students are not being effectively taught English or math skills, they are being exposed to agenda-driven political and cultural indoctrination.

Again, as documented by Larry Sand: “Nor are textbooks safe. Communist and notorious America-hater Howard Zinn’s “A People’s History of the United States” is assigned in many high school history classes. Zinn felt that the teaching of history “should serve society in some way” and that “objectivity is impossible and it is also undesirable.” As a Marxist, he’d prefer a society that resembles Stalin’s Russia. Additionally, Pacific Research Institute’s Lance Izumi notes that pages and pages of the latest California History, Social Science Framework ‘are devoted to identity politics, and the environmentalist, sexual, and anti-Vietnam War movements, with detailed and extensive bibliographical references. In contrast, the contemporaneous conservative movement, which succeeded in electing Californian Ronald Reagan as president, with its complex mixture of social, economic and national security sub-movements, is given cursory and passing mention, with no references provided.’”

Public sector unions are going to be with us for a long time. But in the wake of the Janus ruling, members who don’t agree with the political agenda of these unions can quit, depriving them of the dues that – to the tune of nearly a billion per year just in California – make them so powerful.

Teachers, in particular, should carefully consider this option. America’s future depends on it.

Ed Ring is the co-founder of the California Policy Center and served as its first president.

How Government Unions Are Destroying California


Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker

California was once the state that everyone looked up to. With the best weather and natural resources, we were full of hope and innovation. We had the best public schools, a world class system of higher education, the best freeways, infrastructure to provide fresh water to our growing population, which also doubled as a source of clean energy through hydro-electric power, a business-friendly environment where entire industries grew in entertainment, aerospace and technology, making our economy virtually recession-proof.

Then in 1978, then-governor Jerry Brown signed an executive order that imposed union-shop collective bargaining on public agencies in California, and the rise of public-sector union power began.

Today, public-sector unions are the most powerful political force in our state. They control a majority of our state Legislature and might control a supermajority in November if a few swing districts fall their way. No politician, Democrat, Republican or Independent, acts without considering how it will affect the union agenda.

These government unions press 100 percent for a progressive agenda, and they consistently agitate for increased spending. In two areas, the quality of our public education system and the financial health of our cities and counties, the consequences of government union power have been catastrophic.

Public Schools

The teachers’ unions, usually a local affiliate of the California Teachers Association, control most of our school boards, leading to control of our public schools. It is more than a coincidence that our public schools rank near the bottom in every category among the 50 states.

As lobbyists for staff and teachers, who are paid to run our public schools, public sector unions fight to maintain the status quo. They protect incompetent teachers, they permit excellent teachers to be dismissed in layoffs, they actively oppose charter schools, they fight poor parents who try to employ Parent Trigger Laws, and they conduct an active campaign 24/7 against any form of school choice.

The financial power of teachers unions:

  • There are over 266,255 public school teachers in California.
  • Each pays at least $1,000 in union dues annually.
  • The CTA acknowledges spending up to 40 percent of those dues explicitly on politics. That is $106 million per year.
  • If the lawyers in Friedrichs are right — that all public union spending is political — the actual total is $266 million per year.
  • Unions for non-teacher staff also are active. There are 215,000 school staff employees who are members of the CSEA (California State Employees Association), who each pay approximately $500 annually in dues. If all of those dues are spent on politics, that adds $107 million more for political spending annually.
  • The total spent by public education unions alone is estimated to be $373 million per year – just in California.

Pensions

Police and firefighter unions do the most damage at the local level. They have attained unsustainable pensions, known as “3%@50”, meaning that a member of that bargaining unit is eligible at age 50 for a pension equivalent to 3% of his highest salary times their number of years of service. While the age of eligibility has been raised for new public safety employees entering the workforce, the vast majority of active police and firefighters still retain these “3%@50” benefits. So at age 50, a 20-year veteran can retire with a pension equivalent to 60% of their highest year’s salary, which can be manipulated through spiking, and a 30-year veteran is eligible for 90% of his or her highest salary.

These pension requirements are held under the “California Rule” to be irreversible. In other words, once they have been adopted, democracy is incapable of turning off the spigot. With the spigot running constantly, communities go bankrupt. First, they cut other services. Then they increase taxes. Then they refuse to pay bondholders, so no one will invest again.

Current unfunded liabilities in California:

At CalPERS: $93.5 billion (ref. page 120, “Funding Progress,” CalPERS 6-30-2015 financial report).

At CalSTRS: $72.7 billion (ref. page 118, “Funding Progress,” CalSTRS 6-30-2015 financial report).

Local Unfunded Liabilities add considerably to this total, since CalPERS, with assets of $301 billion, and CalSTRS, with assets of $158 billion, only constitute 62 percent of California’s $752 billion in state and local pension fund assets. If all of these systems in aggregate were 75 percent funded, which is probably a best case estimate given the poor stock market performance since the official numbers were released, the total unfunded pension liabilities for California’s state and local government workers would be $256 billion.

And $256 billion in unfunded liabilities, a staggering amount, still understates the problem for two reasons: First, these pension funds may not succeed in securing a 7.5 percent average annual return in the coming decades. If not, then they will not earn enough interest to prevent their funding ratios from getting even worse. Also, this doesn’t take into account “OPEB,” or “other post employment benefits,” primarily health insurance. The unfunded OPEB liability just for Los Angeles County is officially recognized at over $30 billion.

A realistic estimate of the total unfunded liabilities for retirement obligations to state and local workers in California is easily in excess of $500 billion. These benefits, which are financially unsustainable and far more generous than the taxpayer funded benefits available to ordinary private sector workers, were forced upon local and state elected officials through the unchecked p0wer of government unions.

*   *   *

Bob Loewen is the chairman of the California Policy Center.

In Search of a Legitimate Labor Movement


UnionSarah has worked for a major grocery store chain for the past 25 years. Adjusting for inflation, she makes less now than she did over a decade ago, especially since her hours were cut in order for her employer to avoid being required to offer her health insurance. Even more difficult, she is “on call” most of the week, without a reliable schedule, which makes it impossible for her to take on a 2nd part time job to help make ends meet. Including benefits, Sarah is lucky to make $30,000 per year. Now in her early 50s, she will need to work for as long as there is strength left in her body to do the job.

George works for a fire department serving an affluent suburb on the California coast. Taking into account the vacation time he earns as a 25 year veteran, he works less than two 24 hour shifts per week before qualifying for overtime. Since five-day weekends are overkill, he often works one or two extra shifts a week, doubling his pay. When he goes on calls, 98 percent of the time they are medical emergencies, not fires. Including moderate amounts of overtime and the employer’s payments for his benefits, George makes about $250,000 per year. Now in his early 50s, he will retire in a year or two and collect a pension and health benefits package worth well over $100,000 per year.

Both of these individuals are hard working, honest and conscientious. Both of them perform jobs that have a vital role to play in our society. Both of them deserve to be treated with dignity and respect. Neither of them wrote the rules. And both of them are represented by unions.

While these individuals and the work they do is beyond reproach, the unions that represent them leave much to be desired. In Sarah’s case, typical of tens of millions of private sector workers, the unions who represent her have ignored economic reality in pursuit of ideological fantasies. Almost universally, to cite a particularly wounding example, these private sector unions have supported immigration policies that increase the supply of semi-skilled workers who compete with Sarah for work hours. Also common are the pragmatic alliances these unions form with extreme environmentalist organizations who have bottled up development of land and energy, driving the cost of living beyond the reach of an ordinary worker. One may cogitate endlessly over what constitutes optimal and humane policies with respect to immigration and the environment. But to agitate for higher wages and benefits in a society awash in cheap labor and artificially inflated costs for basic necessities is a fool’s errand.

In George’s case, which is equally typical, at least in California, the unions that represent him should not even be permitted to exist. Associations of government workers who engage in collective bargaining are not unions in any traditional sense of the word. They elect their own bosses, they take money from taxpayers instead of competing for consumer spending, and they operate the machinery of government which lets them intimidate or co-opt any special interest that might oppose them. They have priced normal government services beyond the capacity of ordinary taxpayers, and bred cynicism about government into the heart of any financially literate American. And government unions have even less interest than private unions in acknowledging the complexity of issues such as immigration or environmentalist overreach. In both cases, policies that harm the aspirations of private workers have the opposite effect on them, enhancing their job security.

A legitimate labor movement is easy to justify in the abstract. If not unions, what sort of movement will speak for ordinary workers in an era when jobs are being relentlessly automated, global competition is tougher than ever, and the cost of living is punitive? What sort of movement can speak for ordinary workers if, along with these challenges, the nation is gripped by a deep recession brought on because interest rates can’t go any lower and stimulative debt can’t go any higher?

The reality today is that much of America’s labor movement has gone astray. Private sector unions often put ideological goals ahead of the economic interests of their members. And public sector unions, which are not unions in any traditional sense of the word, and which represent the economic interests of their members all too well, are an abomination. They have corrupted our democracy, they are a corrupting influence on government workers because they have exempted them from the economic challenges facing private American workers, they are driving our governments at all levels towards authoritarianism, they are bankrupting our cities and counties and states, and the pension funds they control epitomize the most corrupt elements of America’s grotesquely overbuilt financial sector. Maybe what would remain after abolition, still very powerful voluntary associations, could start fighting for CEQA reform, for example, to benefit all workers instead of just themselves. Before unions infested our governments, that’s what public service meant.

Envisioning exactly how the labor movement might best operate in the interests of the American worker is difficult but necessary. It requires balancing libertarian and mixed-capitalist economic world views. But two reforms would be a very good start. First, outlaw collective bargaining in the public sector. Second, the leaders of the private sector labor movement need to starting caring more about American workers, and less about their elitist ideological fantasies.

*  *  *

Ed Ring is the executive director of the California Policy Center.

Deceptive and Misleading Claims – How Government Unions Fool the Public


Unions pension public sectorCalifornia’s public sector unions collect and spend well over $1 billion per year. When you have that much money, you can hire thousands of skilled professionals to wage campaigns, litigate, lobby, negotiate and communicate. You can hire the best public relations firms money can buy. You can commission research studies that spin facts to support your agenda. You can silence voices of dissent, voices of reason, voices of reform, with an avalanche of misinformation. And it works.

Here, then, for what it’s worth, is a “top 10” list of some of the biggest deceptions and misleading claims made by California’s government unions.

1 – Government unions are protecting the middle class.

FALSE. Government unions are protecting government workers at the expense of the private sector middle class. The agenda of government unions is more wages and benefits for government workers, and more hiring of government workers. To adhere to this agenda, failure of government programs still constitutes success for these unions. More laws, more regulations and more government programs equates to more unionized government workers, regardless of the cost, benefit or need for these programs. The primary agenda of unionized government has nothing to do with the welfare of the private sector middle class, whose taxes pay for it.

2 – Government unions are a necessary political counterweight to “Wall Street,” big business and billionaires.

FALSE. When government is expanded to serve the interests of government unions, the elite and privileged special interests are relatively unaffected, and often benefit. Large corporations can afford to comply with excessive regulations that drive their emerging competitors out of business. When governments borrow to finance deficits created by an over-built unionized government, bond underwriters profit from the fees. Government pension funds are among the biggest players on Wall Street, aggressively investing hundreds of billions each year to secure their 7 percent (or more) per year returns. Billionaires can afford to pay taxes and fees – it’s the middle-class taxpayer who can be overwhelmed by them. When powerful special interests want favorable legislation passed in California, they go to the government unions and make a deal. Government unions are the brokers and enablers of special interest cronyism. They are allies, not counterweights.

3 – Government unions represent and protect the American worker and the labor movement.

union collective bargaining public sectorFALSE. For better or worse, government unions represent and protect government workers. Government unions and private sector unions have very little in common. Unlike private unions, government unions elect their own bosses, and their agencies are funded by compulsory taxes, not through profits earned by creating products and services that are voluntarily purchased in a competitive market. Moreover, government union members operate the machinery of government, giving them the ability to harass their political opponents under cover of authority. Private sector unions – properly regulated – have a legitimate role to play in American society. Government unions, on the other hand, exist to serve the interests of government workers, not the ordinary American citizen.

4 – Public employees are underpaid.

FALSE. In past decades, prior to the unionization of government, a public worker exchanged lower base pay for better retirement benefits and more job security. But today, not only have retirement benefits been greatly increased from what was normal back in the 1980’s and 1990’s, but in most cases the base pay of government workers exceeds the base pay for private sector workers performing jobs requiring similar skills. A 2015 study by State Budget Solutions estimated the total compensation of California’s government workers to exceed private sector workers by 31 percent. But these studies typically omit lower paid independent contractors who now constitute one in three workers. A California Policy Center study that examined 2012 data showed the average pay and benefits for California’s city workers was $124,058, county workers $102,312, and state workers $100,668. And this study did not take into account the value of additional paid vacation benefits, extra paid holidays, and generous “comp time” policies, which add significantly to the total value of annual compensation. Just how much public employee pay exceeds private sector pay for equivalent jobs is the topic of ongoing debate. But they’re not underpaid by any reasonable measure.

5 – The average public sector pension is only $25,000 per year (or some similarly low number).

FALSE. The problem with this profoundly misleading statistic is that this low average is the result of including participants who only worked a few years in state/local government, barely vesting a pension. Should someone who worked less than a decade (or two) in a job expect a pension based on a full career of service? When normalizing for 30 year careers and taking into account the uptick in retirement benefit formulas that rolled through California starting in 1999, the average state/local retiree in California collects a pension and retirement health benefit package worth over $70,000 per year. For a private sector taxpayer to collect this much in retirement, they would have to save at least $1.5 million. If public pensions weren’t so generous, these pension systems would not face severe financial challenges. Which brings us to the next myth …

6 – California’s state/local pension systems are being reformed and will be just fine financially.

FALSE. Virtually every official post-reform projection among California’s 80+ public sector pension systems are predicting eventual financial health based on a huge, extremely risky assumption – that the average annual returns of these funds over the next few decades will exceed 7.0 percent per year. Common sense should tell any unbiased observer that ongoing 7.0 percent average annual returns are not a safe bet. If they are, why are Treasury Bills only yielding 3.0 percent? What are mortgage bankers only able to get 3.5 percent on 30 year fixed mortgages? Why are bank CD’s only offering 2.0 percent? The spread between equity returns and truly risk-free returns has never been this large for this long. Pension funds are basing future performance projections on past results. The problem is that over the past 30 years, interest rates have been steadily lowered to allow people to borrow more. This borrowing stimulated the economy, creating corporate profits and driving up the price of corporate equities. But interest rates cannot be lowered any further. We are at the end of a long-term credit cycle, and pension funds are just beginning to deal with the consequences.

7 – The teachers unions care about student achievement more than anything else.

FALSE. The evidence simply doesn’t support this assertion. Consider the reaction of the California Teachers Association to the recent Vergara decision, in which a Los Angeles superior court judge agreed with student plaintiffs who challenged three union work rules. The CTA criticized the ruling and announced their support for an appeal. What does the Vergara lawsuit aim to accomplish? It would take away the ability for teachers to earn tenure in less than two years. It would end the practice of favoring seniority over merit when deciding what teachers to layoff. And it would make it easier to fire incompetent teachers. These are commonsense, bipartisan reforms that the teachers unions oppose.

8 – Billionaires are trying to hijack California’s public education system.

FALSE. To the extent wealthy individuals have decided to involve themselves in education reform and private education initiatives, they come from a diverse background of political orientations. But all of them share a desire to rescue California’s next generation of citizens from a union monopoly on education. And unlike the unionized traditional public school, public charter schools and private schools survive based on the choice of parents who want a better education for their children. And if they don’t do a great job, the parents can withdraw their children from the failing charter or private school. Introducing competition to California’s unionized K-12 education system is a healthy, hopeful trend that gathers support from concerned citizens of all incomes, ethnic groups, and political ideologies.

9 – Proponents of public sector union reform are “anti-government workers.”

FALSE. This sort of claim is a distraction from the reality – which is that public sector unions have corrupted the democratic process and have been attempting to inculcate public employees with the “us vs. them” mentality that is the currency of unions. Sadly, the opposite is the truth – government unions alienate the public from their government, and, worse, alienate government employees from the public. They have created two classes of workers, government employees who have superior pay, benefits, job security and retirement security, and everyone else in the private sector. They know perfectly well that this level of worker comfort is economically impossible to extend to everyone. Government unions have undermined the sense of common rules and shared fate between public and private individuals that is a foundation of democracy. Those who oppose government unions recognize this threat. It has nothing to do with their support and respect for the men and women who perform the many difficult and risky jobs that are the role of government.

10 – Opponents of government unions are “right wing extremists.”

FALSE. The problems caused by government unions should concern everyone, and they do. Conscientious left-wing activists who favor an expanded role for government expect positive results, not failed programs that were created merely to increase union membership. They realize that unionized government is expensive and inefficient, leaving less money or authority to maintain or expand government services: Public libraries and parks with reduced hours and curtailed maintenance; pitted, congested roads; after school recreation programs without reliable funding; public schools where students aren’t learning and apathetic teachers are protected from accountability. Government has to be cost-effective, no matter how big or how small. Opponents of government unions can disagree on the optimal size of government, yet passionately agree on the problems caused by a unionized government.

This list of 10 myths promulgated by spokespersons for government unions only begins to chronicle their many deceptions. But each of these myths offer strategic value to these unions – giving them the ability to put reformers on the defensive, change the topic of discussion, redefine the terms of the debate. Each of them has powerful emotional resonance, and each of them – along with many others – is continuously reinforced by a network of professional communicators backed by literally billions in dues revenue.

Compensation reform, pension reform, other fiscal reforms, reforming work rules, education reform – all these urgent reforms must first go through one powerful special interest that stops them in their tracks: Government unions. Reformers must confront not only the myths these unions promote, challenging and debunking them, but they must also redefine the role of government unions, if not question their very existence.

*   *   *

Ed Ring is the executive director of the California Policy Center.

California’s New Coalitions Defy Conventional Definitions


The 2014 mid-term elections will be remembered for many things – pioneering use of information technology to comprehensively profile and micro-target voters, escalating use of polarizing rhetoric, historically low levels of voter turnout, and historic records in total spending. In California, in spite of all this money and technology – or perhaps because of it – the political landscape is probably not going to change very much this time around. But appearances can be deceiving. While Democrats will still control California’s state legislature and nearly all of California’s large cities and urban counties, new fault lines are forming within California’s electorate that defy conventional definitions of Republican and Democrat, or conservative and liberal.

Because as it is, California’s schools are failing, businesses and middle-income residents are fleeing, and the cost of living is the highest in America. Three powerful groups benefit from and perpetuate this arrangement with their money and their votes:  Wealthy individuals and crony capitalists, unionized public sector workers, and low-income residents who have become entirely dependent on government and are susceptible to their rhetoric. The terms of this alliance are financially unsustainable and even now, they harm low income residents more than they help them. It will crack as soon as a viable opposition coalesces. And that is happening.

Here are examples of how coalitions are forming that defy conventional definitions of Republican or Democrat, conservative or liberal:

(1)  Financial sustainability is a bipartisan issue.

California’s cities and counties, despite revenues from an unsustainable asset bubble that has bought them time, are on a collision course with financial insolvency. This reality has already confronted every big city mayor in California. Some, including Democrats like San Jose’s courageous mayor Chuck Reed, are trying to enact reforms to save their cities. Over 80% of the non-federal government spending in California is at the local level, and sooner or later, liberals and conservatives are going to join together to demand realistic financial reforms to restore financial health to California’s public institutions.

(2)  Quality public schools is a bipartisan issue.

California’s public schools will not be improved by spending more money, they will be improved by making fundamental reforms to how schools and school districts are managed. The Vergara lawsuit, funded almost entirely by conscientious Democrats, proves how committed everyone is to restoring accountability to public education. The success of charter schools proves that superior educational outcomes can be had for less money than is currently made available to public schools.

(3)  The mission of public sector unions is inherently in conflict with the public interest.

Both of the examples just mentioned – quality education and financial health – are the priority of any civic minded private citizen, but are not the priority of the public sector unions who control California politics. The reason California’s schools are failing is because of union work rules that prevent innovation and accountability. The reason California’s government finances are perennially challenged is because for decades, public sector unions have pressured politicians to grant pay and benefit increases that have become unfair and unaffordable.

(4)  Private sector unions are fundamentally different from public sector unions.

The growing rift within Democrats, and the growing consensus among all California voters, is based on a fundamental fact: Criticizing, or even abolishing, public sector unions does NOT represent an attempt at a broader war on labor, working people, or private sector unions. There are serious issues relating to the role and optimal regulations for private sector unions, but they play a legitimate, vital part in American society. Public sector unions, on the other hand, should be abolished.

(5)  No party, platform, or person has all the answers.

This is not a new reality, but today in California it is being increasingly recognized by reformers across the political spectrum. And there is a new, unifying theme – the need for public sector union reform, fostered through education reform and fiscal reform. While politicians and citizens may disagree over the size of government and the role of government, they are agreeing, more than ever, that government unions have skewed this debate and taken options away. Can we improve and enhance government services, or invest in ambitious new infrastructure projects? No, because tax revenue must pay over-market compensation to government workers. Can we streamline and modernize a government agency or effectively manage a school? No, because of union work rules.

New coalitions are forming that will not accept failing schools, or cities and counties in a perpetual state of financial crisis. They will fight together for educational excellence and fiscal health. And because nothing matters more than our children and our ability to earn a living, they will recognize the unpleasant truth – to restore public education and public finance requires fighting public sector unions.

In California, the outcome of the 2014 election is sadly predictable. But change is coming.

Ed Ring is the executive director of the California Policy Center.