Unions Drive Growth of Government

Published February 1, 2006

David Denholm, president of the Public Service Research Foundation (PSRF) in Vienna, Virginia, has spent almost 40 years studying the impact of unionism in government on government. PSRF’s services include the publication of Government Union Review, a quarterly academic journal of which Denholm is senior editor. Denholm and Budget & Tax News Managing Editor Steve Stanek discussed America’s unions and the influence they have over local officials and state lawmakers.

Stanek: Are there things about the state of unions today that surprise you?

Denholm: I am constantly surprised by unions, or perhaps I should say by union officials.

In the late 1970s I predicted a split in the union movement, but it didn’t come about as I anticipated. I thought it would break along the lines of public- and private-sector unions, because the members of private-sector unions would get tired of paying the price for the public sector. The decline in private-sector union membership over the past 25 years was also steeper than I anticipated.

The Change to Win unions have their share of public-sector members, but none of the unions that are almost entirely public sector–like the National Education Association, American Federation of State County and Municipal Employees, or American Federation of Government Employees–went with Change to Win. [Editor’s note: The Change to Win Coalition, representing about 6 million union workers, formed in 2005 after breaking away from the AFL-CIO.]

I think the reason is obvious. The split was over the issue of whether to organize or to politic. The Change to Win unions want organizing. The fact is, public-sector unions don’t really organize but they sure do politic.

Stanek: In the 1950s barely one of every 20 union members was a government employee. It’s now almost one of every two. Why do you think that has happened?

Denholm: There are two largely ignored reasons behind the growth of public-sector unions. The first is that management in the public sector has done a terrible job. In the private sector, if a union tried to organize and management didn’t, at the very least, communicate with employees about the downside of unionism, they would be derelict in their duties.

In the public sector it is all too often just the opposite. City managers and school superintendents who actively oppose unionism are putting their job at risk. The reason is politics. The ultimate boss in the public sector is the elected officials, and they are subject to political pressure. Managers who try to do their job and communicate with employees about unionism are often brought to heel by elected officials for political reasons.

Public-sector unionism also has become a form of patronage. In the “good old days” people paid off the ward heelers to get a government job. Reformers took a dim view of this. But because in the public mind there is something akin to motherhood and apple pie about unionism and collective bargaining, unions have been able to step in as the middle man. The politicians turn public employees over to the unions. The unions collect the money and give some of it back to the politicians. It is a neat little mutual back-scratching arrangement.

Stanek: How does this affect government tax and spending decisions?

As far as I’m concerned labor unions, particularly public-sector unions, are the driving force behind the growth of government and, therefore, taxes. The reason is obvious. So long as approximately 37 percent of all public employees are union dues payers, the unions have a strong motive to grow the size of government.

But the reason is really more complex than that. Most union officials, unlike most union members, are very liberal. Liberals tend to see government as the solution to problems rather than the cause of them. For a liberal union official–put aside the question of increased membership and dues for the moment–there is something inherently good about big government.

Stanek: Can you talk in general terms about the pay and benefits of public-sector employees? Here in Illinois–and in many other states–many of them seem to be highly paid, with benefits that almost no one in the private sector can hope to get.

Denholm: There is no question that public employees enjoy higher pay and better benefits than their private-sector counterparts. I’ve already discussed the mutual back-scratching arrangement. But there is a statistical trick at work, too.

Government employee unions often claim their members are not paid as well as their private-sector counterparts. One of the factors taken into account in most compensation surveys is the size of the employer. There is no doubt that large employers provide better pay and benefits than small employers. When a union or an arbitrator does a compensation survey they compare government employment not to other employment in the community but to employment at employers of comparable size, and in most communities government is the big employer.

Take Illinois as an example. The Census Bureau says that in 2004 there were 160,408 state employees in Illinois. I doubt that any private-sector employer in Illinois has that many employees. For comparison purposes consider that General Motors has about 324,000 employees globally and about 200,000 in all of North America. You can see how that distorts the analysis.

Stanek: Unions are big supporters of prevailing wage laws, and we’ve also been hearing about “project labor agreements,” which shut non-union shops out of government work. Could you talk about this?

Denholm: A prevailing wage law, the federal Davis-Bacon Act being the most commonly recognized example, dictates the wages to be paid on public works construction projects. Davis-Bacon is a Depression-era statute aimed at preventing bidding on federal public works construction from undermining local wage scales.

In theory the wage set by government was to be the wage prevailing in the community where the work was being done. There was a time when it was assumed the prevailing wage would be union scale. This was largely a function of the way the law was administered rather than whether union scale actually prevailed.

In the early days of the Reagan administration, Secretary of Labor Ray Donovan put through a series of regulatory reforms that, as they worked their way through the system, resulted in much more realistic wage determinations. As I understand it, at present about 75 percent of Davis-Bacon wage determinations are other than union scale.

Where they have had the political power, unions have responded to this with something called a “project labor agreement,” which, in essence, provides that only union members can work on the project.

These so-called “project labor agreements” are nothing short of a bid-rigging scheme and protection racket. The politicians rig the bids to favor their friends, and all the union promises in return, a false promise at that, is labor peace.

These arrangements are a burden to taxpayers and violate the spirit of most public contracting laws. They ought to be illegal. But politicians wrap them in the motherhood and apple pie aura of unionism, and somehow they become legitimate. That’s utter nonsense.

Steve Stanek ([email protected]) is managing editor of Budget & Tax News.

For more information …

More information about public-sector unionism and the work of the Public Service Research Foundation is available on the group’s Web site at http://www.psrf.org/index.jsp.