“The unbridled growth of crony unionism and government corruption will destroy the United States as we know it.” This statement may strike many as sheer hyperbole. But its author, Mallory Factor, a political scientist at The Citadel, knows whereof he writes. His new book, “Shadowbosses: Government Unions Control America and Rob Taxpayers Blind” (New York: Center Street), makes a credible case, and a well-sourced one, that our country may be in the early stages of a ruinous dystopia, courtesy of public-sector unions. In pursuing their interests, argues the author, these labor organizations hold taxpaying citizens hostage to unsustainable wage/salary, pension, health care and other contractual commitments. Municipal bankruptcy filings this year by San Bernardino and Stockton, Calif. may be a mere taste of things to come.
Some context here would be useful. America, with relatively little fanfare, passed a milestone during 2009. For the first time in our nation’s history, public-sector union membership, as an absolute number, surpassed private-sector membership. The respective figures at year’s end were 7.9 million and 7.4 million. Though they dropped two years later to 7.6 million and 7.2 million, this shift hasn’t diminished the economic and political grip of government employee unions, especially given the figures for union membership as a percentage of the total work force, commonly known as “union density.” Government employee union density in 2011 was 37 percent; in the private sector it was 7 percent. This represents a remarkable turnabout from the Fifties and early Sixties. Back then, government employee unions were in their germination stage, while about a third of the nonfarm private-sector work force was unionized.
This reversal of fortune, in retrospect, isn’t really startling. Unions in the private sector, like those in the public, grew as a result of monopoly privileges. But government unions, on top of privilege, feed off political brinksmanship and favoritism. In the private sector, union officials, however reluctantly, recognize that the employers with whom they negotiate may respond to unfavorable business conditions by cutting payrolls, closing plants, or even going out of business. Hence, union negotiators, as a strategy, hold back on demands. This restraining mechanism, for all intents and purposes, doesn’t exist in the public sector, where employers can shift higher labor costs onto the general public and where opportunities for privatization remain limited. Elected officials, fearing public wrath will come down hardest upon them in a worst-case scenario, lean on agency heads to acquiesce. Governments, unlike enterprises, don’t have the option of hanging a “closed” sign over their doors. The growth of public-sector unions is both a cause and effect of the growth of government.
Mallory Factor, aided extensively throughout the book by his wife, attorney Elizabeth Factor, understands the symbiotic relationship between government employees and their employers – and why it threatens the nation’s long-run stability. Amplifying the critique of government unions by Rutgers University labor economist Leo Troy, the authors note that public-sector unions, by nature, operate in a manner different from unions in the private sector. Government employee unions, though they are private organizations and not public agencies, negotiate with representatives of public agencies, and indirectly, with elected officials who secure funding for the agencies. As a result, the verities about “public service,” whether or not they truly described traditional motivations of government employees, have lost their cache. Through aggressive organizing and representation, public-sector employees thus have become receivers more than givers, concerned mainly with maximizing their interests. The authors observe: “And through their incessant focus on extracting more from the employer, unions have encouraged government workers to consider their jobs as an entitlement, not a privilege.” Delivering value to those who consume government services and thus pay their salaries has been relegated to secondary importance. Employers don’t have to bear the economic cost. For them, ruin doesn’t mean bankruptcy; it means their own employers don’t win re-election. And nothing ruins re-election prospects than becoming a scapegoat for a public employee strike or slowdown.
But citizens aren’t just voters. They also are taxpayers. And as taxpayers, they pay a high price to obtain temporary labor peace. Citing various sources, the authors note that in 2010, federal employees averaged $126,141 in combined salary and benefits. Indeed, more than 450,000 federal civil service workers – more than one in five – made over $100,000 in salary alone. Controlling for age, race, education level and other factors, federal workers now receive 22 percent more in salary than comparable employees in the private sector. State and local government employees on average make about a third more in salary and 70 percent more in benefits than comparable private-sector workers. The back end of employee tenure has become particularly expensive. Government workers generally now can retire at age 55 and receive often lavish pensions. This is especially true with contracts allowing them to claim excessive overtime during their final three years of service, the period upon which pension accruals typically are calculated. It is no small wonder that attrition and termination rates are minimal in the public sector. Who would want to leave? As for involuntary departure, union contracts, especially for teacher unions, give employees elaborate opportunities to delay or block a firing. In the face of this, government employee unions have learned to think politically, not only in the way they conduct business but in larger causes they advocate. Their leaders and members, as a principle, support enlarged government – and candidates for elected office who will deliver. More government intervention in the economy means more public-sector hiring and hence more workers to organize. Coalition-building becomes paramount. And public-sector unions are natural builders. As the authors note, “(G)overnment employee unions have been able to unite all net tax receivers into a huge special interest group that is focused on growing the government.”
The point hardly can be overemphasized: Public-sector unions have become huge political combines. The AFL-CIO-affiliated American Federation of State, County and Municipal Employees (AFSCME), the now heavily public-sector Service Employees International Union (SEIU), along with the two main teacher unions, the National Education Association (NEA) and the American Federation of Teachers (AFT), have formidable political operations. The goal is an expansion of government. And quite naturally, they align themselves to the Democratic Party, which rarely strays from a course of expansion. Go to any AFL-CIO convention – I managed to get into the labor federation’s 50th anniversary confab in Chicago in July 2005 – and the experience will be virtually identical to any recent Democratic National Convention, right down to the parade of union and party speakers bellowing stock populist-Left phrases such as “working families,” “right-wing politicians” “corporate special interests,” and “the people vs. Wall Street.” AFSCME President Gerald McEntee and AFL-CIO chieftain Richard Trumka might as well be ghostwriters for Nancy Pelosi and Jesse Jackson.
There is little new about public-sector unions and the Democratic Party reinforcing each other’s fortunes. Back in the Fifties, AFSCME President Jerry Wurf, an unapologetic practitioner of the sharp-elbows school of union organizing, backed Robert Wagner Jr. for New York City mayor. And once elected, Wagner, knowing his future depended on Wurf’s continued support, gave the union leader what he wanted: monopoly bargaining representation of municipal service workers. The City of New York has been paying highly inflated labor costs ever since. The same can be said for cities and counties across the nation. Government employee union officials know the value of a bought politician. Elected officials who receive donations but don’t come through can expect serious union blowback. As one SEIU official in California quoted by Factor put it: “We helped getchu into office, and we gotta good memory. Come November, if you don’t back our program, we’ll getchu out of office.” Whether at the federal, state or local levels, reciprocation is the name of the game, and taxpayers are the odd men out. Unions raise money for candidates, who, if elected, make it easier for unions to generate revenue, which in turn further expands the pot of re-election campaign contributions. Whether campaign contributions come from union political action committees, special dues assessments or volunteers working the phone banks or mailings, it’s a self-perpetuating process.
The ultimate political prize, of course, has been the election, and now the re-election, of Barack Obama as U.S. president. On the campaign trail in 2008, Obama remarked before an AFL-CIO gathering: “I know the AFL-CIO is tired of playing defense. We’re ready to play some offense…We’re ready to play offense for organized labor.” And speaking to the National Education Association, he announced the rudiments of a plan to “recruit an army of well-trained, well-qualified teachers.” Unions, recognizing him as one of their own, responded with anywhere from $300 million to $450 million in campaign contributions. Then-SEIU President Andrew Stern candidly admitted a half-year after the election that his union spent $60.7 million to put Obama in the White House. From the start, the Obama presidency has been a sound investment for organized labor. Obama thus far has: nominated, and secured Senate approval for, a highly partisan union advocate, former Rep. Hilda Solis, D-Calif., as Secretary of Labor; persuaded Congress to pass a massive stimulus package, part of which has routed grants to unions or to agencies in heavily unionized states; issued an executive order “encouraging” federal agencies to enter union-driven Project Labor Agreements on projects costing at least $25 million; and weakened Civil Service restrictions on monopoly bargaining as they pertain to national security employees. That, of course, doesn’t include the two biggest prizes: the forced bankruptcies of General Motors and Chrysler that gave the United Auto Workers a large equity stake in each company; and a national health care law that represents the largest social welfare program since the creation of Medicare nearly 50 years ago, a law that will create enormous opportunities for organizing.
The book devotes two chapters to the fiscal time bombs tucked away in union contracts. One focuses on the teacher unions; the other deals with the impact of public-sector unions as a whole on state budgets. The NEA, the AFT and their state/local affiliates, which now collect a combined roughly $2 billion a year in member dues and fees, deserve special treatment. The authors, while acknowledging there are outstanding teachers who happen to be union members, note that it’s union representatives (“schoolhouse shadowbosses”) who control the show, and to the detriment of pupils. Even most states with Right to Work laws authorize, if not necessarily mandate, monopoly representation and forced dues collections. The tenure process; compensation packages based more on seniority than merit; on-premises “rubber rooms” for teachers awaiting a disciplinary hearing, with full pay; “last in, first out” layoff policies – these and other contractual features are outcomes of highly aggressive and coordinated union negotiations. Unions also set the much of the tone in classroom pedagogy and selection of instructional materials, including the use of children’s books with thinly-disguised pro-union messages.
As for the fiscal crisis of state governments, the book likewise is unsparing in its assessment of union motives and activity – and with good reason. States, even more than localities, really are locked into union-negotiated contracts. Trillions of dollars in long-term unfunded liabilities, most of all for pensions and retiree health care, pose a potential fiscal meltdown, especially in heavily unionized states such as California, Connecticut, Illinois and New Jersey. The authors write:
(A)s states spend more money on salaries and benefits for current government workers and pension costs for retired workers, these states have less and less left in their budgets for essential services. But currently there is no way for states to get out from under crushing compensation and pension arrangements that were negotiated with the government employee unions. States are not permitted to declare bankruptcy and seek protection against their creditors, although cities are.
When state officials can’t pay their bills, their logical response is to turn to Washington for help. This process already is well underway. Over the last decade, note the authors, the share of state spending covered by the federal government rose from 25.7 percent to 34.1 percent. With more federal funding comes more federal control. Eventually, this “too big to fail” policy will run out of money. The result may resemble that of today’s Greece, desperately in need of money and yet resentful of austerity measures demanded by the European Union. This in turn may induce large numbers of citizens of the most dependent states to run out of patience and join secession movements. The past week’s secession campaigns in various states in response to Obama’s reelection provide dark hints of a possible future.
Public employee union officials are aware they’re not exactly the most popular bunch. In some quarters, they’re a running joke. Back in April 2010, NBC’s “Saturday Night Live” lampooned them in a memorable skit, “Public Employee of the Year.” But they’ve got a battle plan to counteract the opposition. They’re not about to let a lack of popularity get in the way of growing their membership, dues collections or political influence. Their current favored strategy, which the Factors call “Government Employee Unions 2.0,” involves organizing workers seemingly beyond the pale of membership. Honed most of all by Andrew Stern, head of the SEIU until the spring of 2010, this strategy has focused on unskilled, heavily immigrant workers whose jobs depend on government funding – especially home health care workers – and persuading employers to join the union team. Becoming co-lobbyists with unions keeps government funds flowing. When the new health care law takes full effect in 2014, organizing opportunities will expand dramatically. Currently, only about a seventh of the health care industry is unionized. That easily could double or triple. Moreover, there is ample reason to believe that the American Association of Retired Persons (AARP), with some 40 million members, could morph into a union. The National Education Association, which served as a teacher interest group for many decades, went this very route around 50 years ago.
All this suggests a grim set of alternative scenarios. But the Factors offer hope, and not just some Mona Lisa smile. The main sources of potential resistance to these union-driven centralizing tendencies, they argue, are the states. Legislatures and reform-minded governors, most of all, Wisconsin’s Scott Walker, whom the authors liken to the “Star Wars” character, Luke Skywalker, by intention or default, are leaders of the insurrection. Far from being a rigid ideologue, Walker was willing to negotiate with the public-sector unions. The latter, however, refused to budge in the face of a two-year, $3.6 billion budget deficit. Beginning with their highly illegal seizure of the State Capitol Building in Madison in mid-February 2011 to the present, the unions have tried every method of their disposal to immobilize Walker, including removing him from office via recall election, and the budget reform law he persuaded the legislature last year to pass. None worked. Their latest gambit, however, might. This September a state circuit court gutted the new budget law as it pertained to municipal, county and school district employees (State Attorney General J.B. Van Hollen filed an appeal almost immediately afterward). Whatever the outcome, it’s crucial to note that the skies over Wisconsin haven’t fallen. Far from devastating the state economy, the curbs on public-sector union power enacted last year, which include higher employee benefit contributions, has moved the state toward solvency – and, for all intents and purposes, without work force or service cuts.
The authors are optimistic that the tide will turn in against the unions because the American people have the final say. “It’s not merely a question of fiscal responsibility,” they write. “It’s a question of freedom.” Eventually, if belatedly, most Americans will come to understand that public-sector unionism has corrupted the political process and weakened our traditions of liberty and rule of law. The battle is less about party or ideological loyalty than it is about a growing recognition that public-sector union interests aren’t the same thing as the public interest. In Michigan, public-sector unions, in reaction to the Wisconsin situation, placed on the November ballot an initiative to give unions the ability to invalidate existing and new laws purportedly violating collective bargaining agreements; voters wisely rejected the measure by 58 to 42 percent. Disenchantment with union power is being felt at the local level as well. This past June, voters in San Diego and San Jose each approved, and by wide margins, ballot initiatives to rein in soaring municipal pension costs. San Diego has a Republican mayor (Jerry Sanders); San Jose has a Democratic mayor (Chuck Reed). But each came to recognize that unions had locked their cities into unsustainable commitments – and that voters held the key could unlock them.
“Shadowbosses” is a polemic written for a Right-leaning general audience. Sometimes its tone is too over the top; the language of its subtitle (possibly at the publisher’s request) is evidence enough of that. Yet unions and their allies never have been models of restraint when pressing their case. During the heat of the Wisconsin showdown, for example, one Republican state senator received the following e-mail: “We will hunt you down. We will slit your throats. We will drink your blood. I will have your decapitated head on a pike in the Madison town square.” “Over the top” isn’t quite the term for this. “Psychotic” would be more like it. As long as public-sector union officials turn a blind eye from such behavior, if not overtly encourage it, there will be a need to fight fire with fire with a gutsy and informed populism. Mallory and Elizabeth Factor have proven themselves more than up to the job.