Why Conflict with Public Unions Will Continue

November 21, 2011

Notwithstanding the recent demise of reform in Ohio, conflict over government labor relations is far from over and is very likely to continue.  This is especially the case in states where the public workforce is heavily unionized and where slow economic growth will cause persistent budget problems -- especially as pension and health benefits for retired workers crowd out other parts of their budgets.  Yet the recent strife between state lawmakers and local labor unions brings to the forefront the pervasive and harmful effects of public-sector unionization, says Daniel DiSalvo, a senior fellow with the Manhattan Institute.

  • In the 1950s, about one-third of nonagricultural workers belonged to unions, yet this is the high-water mark for aggregate unionization.
  • Today, only about 6 percent of private-sector workers belong to unions, while public-sectors have become drastically more powerful in recent decades.
  • While less than 10 percent of full-time public employees were unionized in 1960, this figure has grown to 36 percent today, dwarfing this same share in the private sector.

While it is tempting to cluster private-sector and public-sector unions together (as many believe they are more or less equivalent), their economic and political impacts differ drastically.

  • Economically, private-sector union leaders are inclined to cooperate with business leaders to protect the health of the business.
  • In contrast, such qualms do not exist in the public sector.
  • Because government will not go out of business, public-sector unions are free to push as hard as they can without concern for the overall health of the government.

This problematic distinction is further exacerbated by the fact that, on the other side of the bargaining table, government negotiators have no personal stake in the negotiation process and instead spend taxpayer money that is not their own.  This contrasts with for-profit, private-sector business owners who are incentivized to resist union demands.

Politically, public-sector unions also benefit from the basic truth that democracy allows them to elect their bosses.  This creates a drastic conflict of interest, such that the candidate who needs help getting elected will, in a few months' time, have a say in determining compensation packages for those workers that got him elected.  This cycle of favors for favors is self-perpetuating and undermines the American political and economic systems far more than traditional, private-sector unions.

Source: Daniel DiSalvo, "Storm Clouds Ahead: Why Conflict with Public Unions Will Continue," Manhattan Institute for Policy Research, November 2011.

For text:

http://www.manhattan-institute.org/pdf/ib_13.pdf

 

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