Obama & Unions

We have written about unions dozens of times, and have consistently acknowleged the contributions unions have made. But over the past fifty years, the role of unions in the United States has changed in two important ways. First, most of the initial grievances that inspired workers to organize have been met; second, union power has migrated out of the private sector and into the public sector.

In our post “Unions – Ideals vs. Reality” we present a graph that illustrates the problem with unions in the public sector. Unions in the private sector bargain with companies who have to compete globally, and this is a powerful self-regulating mechanism. If the union is too aggressive, the company goes out of business because their labor costs meant they could no longer charge a competitive price for their product. In the public sector, there is no global competition, no alternative product for the taxpayer – and this means that in the public sector, unions have an unfair advantage. Unions used to be more heavily regulated in the public sector as a result, but as these regulations have been abandoned, unions have taken over the public sector.

The more monopolistic an industry is,
the more their unions require regulation.

Despite powerful rhetoric to the contrary, corporations do not control most state and local governments, public sector unions do. Public sector employees make 2-4x what taxpayers make in the private sector, which is why the public sector is fiscally bankrupt – and they were bankrupt before the current financial meltdown, that just made them more bankrupt. The primary reason for public sector deficits – and rising taxes – is the cost of wages and the cost of pensions for unionized public employees who are grossly overpaid compared to the rest of us.

In order to maintain their power, public sector unions collect dues – often as much as $1,000 or more per year per member. In California, for example, nearly 4.0 million non-Federal public sector workers pay what totals nearly $4.0 billion per year in dues to public sector unions. Among other things, they use this money to indoctrinate their workforce and to control our elections. They can basically spend as much as they want to make sure their candidates win elections. Their power goes beyond this – since public employees get 50-75 paid days off per year, vs. 10-25 paid days off per year in the private sector, and since public employees retire on average 10 years earlier than private sector employees – they are far more likely to find the time to run for office.

Union influence goes far beyond just undermining the competitiveness of our private manufacturing sector and bankrupting our government. Unions also exert undue influence over management decisions. If one person can do a job, two people can do it better. If one person can do several tasks, why not turn those various tasks into several jobs requiring several people? Unions, like government bureaucracies, exist to create jobs, and not necessarily nurture innovation and efficiency. Unionizing the government is pouring fuel onto a fire.

There is nothing wrong with wanting better pay and benefits, but when the levers of government are manipulated by public sector unions so they have retirement security and early retirement, and they have generous vacation and health benefits, but the rest of us don’t, something is very wrong. We indeed have two Americas, but they aren’t rich vs. poor. They are unionized public sector workers vs. taxpaying private sector workers. That is the real two Americas – and anyone running for President on a populist economic platform like Obama should be making their campaign priority to normalize taxpayer supported benefits between the public and private sector workforces.

In this context, Obama’s position on unions is relevant. In an October 27th Wall Street Journal editorial entitled “The Election Choice: Unions” they state Obama is a co-sponsor of the “Employee Free Choice Act,” a pro-union piece of legislation that would do the following:
– Force employees to vote pro or against unionizing on an open ballot, meaning any employee who objected to being unionized would be publically identified and open to intimidation.
– Impose mandatory arbitration, meaning after 120 days if a company wouldn’t agree to union demands, an arbitrator’s decision would be final.
– Narrow the definition of a “manager” in order to put a higher percentage of a company’s employees under union control.
– Make it illegal for a company to hire new employees to replace striking employees.

Obama also supports the sinister “Public Safety Employer-Employee Cooperation Act” which will require every city over 5,000 in population to negotiate police and firefighter compensation with a national union. For a good look at what that leads to, examine pretty much any city in California – they are all facing insolvency due to the cost of paying their unionized workforces. Because it is common for these folks – before you factor in the real cost of funding their early and generous pension – to make over $100,000 per year, and many of them make over $200,000 per year. This is simply too much money for these positions – and we can make this assertion and still appreciate the work they do.

The government according to Obama – and we agree – should be working to improve the lives of all Americans. But in 21st century America, the government is working to make the lives of government workers better. This is the current legacy of unions, and Obama is going to perpetuate and worsen this divide between those of us who work in the globally competitive private sector, and our unionized public sector overlords.

What does any of this have to do with the environment? Because global warming alarm is being used to justify the biggest expansion of government in history. The taxes and fees that will pass into government hands through regulating CO2 are the only potential source of funds remotely large enough to continue to pay the unionized public sector workforce their exhorbitant, grossly unfair compensation packages.

11 Responses to “Obama & Unions”
  1. JohnnyVegas says:

    Wow-these have been my thoughts for years!

  2. gijoe says:

    This is complete BS!!!!

  3. Burt says:

    This article is so full of fail. Do you work for Foxnews too?

  4. Ed Ring says:

    Burt – we welcome all points of view here, but to really advance the dialogue it would be helpful if you could explain what you mean. And no, we are not a branch of Fox News.

    It is our hope, as stated, that Obama will work to improve the lives of all workers, and not just those who are fortunate enough to belong to powerful unions.

  5. Jim Clement says:

    You are spot on! California has been too passive in negotiations with their unions. GM, Ford and Chysler are EXCELLENT examples of Union Power; their power to destroy American institutions. President Carter had the same plan! Remember?! It turned an ailing economy in 1976 into a FAILED economy of STAGFLATION by 1978. He had both houses and his programs sailed through congress. It took many years to recover. Bad for the environment? Absolutely! Bloated, bogged down change agents don’t move ahead, they beg a UNION not to waste too much of their resources as they (unions) skim pensions and mismanage their affairs. The modern Environmental movement NEEDS to be ready for quick change, and able to adapt to it. It is many small, diverse efforts that will change our environment and energy policy. NOT a UNION.

  6. Eric Milchak says:

    This should explain why Obama is going to pass these bills.

    I am a 10 year officer with the Chattanooga Police Department in Tennessee. We are a right-to work State or should I say right-to-go broke State. I bring home under $28,000.00 per year. This is a 10 year officer, I am topped out and will never make anymore than what I make now. The average median cost for a home in our area is $190,000.00. How could I even come close to paying for a home like that? Our local government refuses to give and fireman or police officer a livable wage. When we ask for a pay raise they tell us to go and work at McDonalds.

    This is what we have to put up with when we have no Union to back us up. We have a lot of officer who have been here for over 10 years living on food stamps. So, I guess taxpayers have to pay for the cost somehow. I just think if you put your life on the line everyday you should not have to live on foodstamps. We should not have to live in shame.

    So anyone who thinks we are asking TOO MUCH thay can email me. towncountryatv@aol

    I have no idea where the $100,000.00 to $200,000.00 fireman or police officer comes from, but I know it is not here in the South in the Right-to-go-broke state.

  7. Ed Ring says:

    Eric – thank you for your comment. Of course what you describe sounds like these workers are underpaid. Clearly our post is in reaction to what is the other extreme, where government unions control our local governments and grossly overpay their members relative to the private sector. And by the way, houses are unaffordable to everyone, everywhere – they’ve been overpriced ever since the loose credit bubble started.

    Your comment “I just think if you put your life on the line everyday you should not have to live on foodstamps,” is heartfelt and obviously true. And there clearly should be a premium paid to any public worker who is taking risks to protect the rest of us. No argument there whatsever.

    The question is how much is too much. In the case you describe it is too little. In other cases it is, if not too much, far more than we can sustainably afford to pay for, especially now.

    Ideally, unions, corporations and governments interact in a way that optimizes the interests of all three groups. But local governments have become unduly influenced by powerful unions of local government workers, and this, just like an underregulated Wall Street, hurts the interests of all the citizens. Unions, especially in the government, should be working to protect the interests of all workers, not just their members.

  8. jason says:

    this article is alot of rhetoric sprinkled with bits and pieces of speculative B.S.
    i work for a local union in the construction field, and number 1. we do not even have vacation pay, nor do we even get paid holidays, number 2. our retirement is paid for out of our checks and our union dues. i think maybe you are generalizing or confused.
    The purpose of unions is for working class people to claim responsibility for their own destiny, and not let high paid CEO’s who sit on their asses all day make decisions at whim that will affect our lives or put us out of a job so that they can have a 50 million dollar bonus in their bank accounts.
    Id have to add that chances are if you are against unions then youre probably rich,…or you may not like the idea of people that work for a living having the chance to move in next door to you in your exclusive neighborhood where you have a three car garage, and your excise taxes could feed a family of 5 for a year.

  9. Kris says:

    Having grown up in a union household I can tell you that my impression has always been that the purpose of a union is to get the most compensation (wages + benefits) for the least amount of work. We all want the most compensation we can get–who doesn’t want more money? My problem is with the second part–getting paid for not working and also getting paid regardless of the quality of the work done. I believe in an honest day’s for an honest day’s pay, and UAW janitors making $70K are grossly overpaid for an unskilled job. It’s sad that the man making a non-union wage can’t afford a new GM minivan for his family because the ridiculous salary of the janitor is figured into the cost of the car. The rich can afford to pay, it’s the “little guy” who can’t afford to buy “made in the USA.” A few years ago I went to KMart to buy a shower curtain liner. There were two identical liners: one made in China for $2.99 and one Made in USA for $9.99. Which one do you think most working class people buy?

  10. dickginnold says:

    This article makes some good points about the public sector vs private sector imbalance. However, are the unions, who represent a small portion of US workers, responsible for this? The figures I have from 2009 are that a little over 7% of private workers are unionized, compared with 37% of public workers. The unionization rate for all workers in the US is a little over 10%, compared to l980, when it was 27 or 28 %.

    Public workers have done better than the private sector, partly because they represent more of a political force and are less replaceable than private workers. A major factor is that US firms which have viciously downsized US employment in favor of outsourcing to China, Mexico, etc., where wages are a tenth or less of US wages, can easily strike fear into their workers over any union organizing campaign. Public workers are more protected since practicality and legislative policy have avoided outsourcing to other countries, at least until now.

    However, some municipal planning departments have building plan checks done by workers outside the US and there are many other jobs which will be outsourced in the future. Look at distance learning which will come in more and more as state and local budget deficits climb.

    Overall, public sector salaries are about $200-400 per month higher than private salaries and wages, but this doesn’t take into account the much greater fringe benefits and pensions for public workers.

    In any case, one group of workers fighting against another group doesn’t help. As the robber baron Jay Gould said, ‘I can always get one half of the working class to kill the other half.’

    The only solution is better political action and unity among workers to achieve their ends. We stopped being a democracy sometime during the Reagan years and won’t regain any balance and real democracy until we do what the other modern and developed countries do, have a strong labor movement and protect both union and human rights.

  1. [...] of his supporters. Buying GM didn’t do it; taking over banks didn’t do it; giving away the store to the unions didn’t do it; his lack of experience and leadership didn’t do it; and now this [...]

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