Blue State Dems Turn On State, Local Workers

Who is killing the public unions?

Some people, like the tens of thousands of protesters in Madison and the tens of millions of Americans who agree with them, believe that the villains are scheming corporate interests, Fox News, Tea Party ‘fanatics’ and opportunistically populist politicians like Scott Walker.

Many of their opponents agree that the right is responsible, though from their point of view the Tea Party and politicians like Walker are the good guys, and the public sector unions are the ones in the black hats.

In fact, both sides are wrong.  Despite the differences in rhetoric, killing public sector unions is a nonpartisan policy in the United States.  While Republicans are more explicit about their goal, and want to move faster, Democrats and Republicans are both taking steps that will soon reduce the public sector union movement to a shadow of its current self.

Look at Rahm Emmanuel, newly elected mayor of Chicago.  Chicago is a dark blue city in a deep blue state; Emmanuel is a career Democratic pol who served as chief of staff to the most liberal American president elected in many years.  And what is Emanuel doing?

The mayor-elect was cagey on the subject during the campaign, but massive tax increases are off the table, and so are big bailouts from Washington DC.  According to Time magazine, the campaign has spoken cryptically about saving $110 million from reducing “outdated and duplicative work processes to focus on front-line service delivery.”  Translate that out of bureaucratic Newspeak and it means getting more work done with fewer people: layoffs.  Emanuel says that the city’s generous pensions need to be preserved, but may also have to be, ahem, renegotiated.  This does not sound like a renegotiation up.

Strip away the fluff and the rhetoric and it looks as though Chicago’s new mayor plans to balance the city budget primarily through layoffs and cutbacks.

Look at New York, the classically blue state where I live, home to  liberal lions like Franklin and Eleanor Roosevelt, Fiorello LaGuardia and Mario Cuomo.  Here our new governor Andrew Cuomo is seeking major concessions and threatening layoffs against the public sector unions, vowing to balance the state’s budget with spending cuts.  Cuomo has also promised — read his lips? — not to raise taxes, and has introduced what the New York Times editorial page calls a “radical” bill to cap property tax increases and require a super-majority to raise them by more than 2 per cent a year.  Up to 9,800 state employees face layoffs under his new budget:  that is more than six times more people than Wisconsin governor Walker has threatened to lay off if his union bill isn’t passed.

Or go to Providence, Rhode Island, the deep blue capital of what a recent Gallup poll identified as, next to the District of Columbia and Vermont, the most liberal state in the nation, where the school board is notifying every single public school teacher in the city that they may be laid off.

From a state that is bluer than blue, ultraviolet Vermont, comes the news that Governor Peter Shumlin, a Democratic governor with solid Democratic majorities in both houses of the legislature, will not solve his state’s fiscal problems with a tax increase.  Why?  As Politico reports, “We’ve already got a progressive income tax in Vermont, and we can’t get more progressive because we’ll lose the few payers that we have,” Shumlin said in between sessions at the National Governors Association meeting. “We don’t have any more tax capacity.”

“I can see New Hampshire from my house,” said the governor, noting that Vermont is already losing business, investments and residents to its low-tax neighbour.

These politicians aren’t taking these steps because they are afraid of Republican opposition or because the Tea Party is breathing down their necks.  In New York, Vermont and Chicago, getting attacked by Republicans and the Tea Party makes your poll numbers go up.  These are places where Democrats light votive candles in church in hopes that Ron Paul, Glenn Beck, Newt Gingrich and Sarah Palin will come to their district to campaign against them.

These politicians are slashing budgets, freezing taxes, cutting pay, chopping pensions and reducing their workforces because they have no choice.  The old way of running government just doesn’t work.  They can’t raise taxes any higher and they can’t borrow more money from increasingly skittish bond markets.

Blue states where citizens want activist government to take on a lot of jobs actually feel this pressure more than red states: the more government you want, the more ruthlessly efficient you have to make it.  Otherwise the costs explode and the state goes into a long fiscal death spiral as taxes increase while the business climate worsens.  If you are a blue state politician whose constituents demand more government, you must prune the costs of delivering services.

If you are a politician in a red state whose citizens just hate taxes, you also have to make government more efficient.  In both cases you simply cannot afford either the level of pay and benefits that public sector unions want to negotiate or the work rules and level of job protection that unions want their members to have.

The real news here is that the public sector labour movement is inexorably headed down the path the private sector labour movement started down 30 years ago.  At its peak in 1953, the private sector labour movement included 35.7 per cent of all private sector workers in the US.  Now fewer than 7 per cent belong to unions.

labour activists would like to blame this on union-busting efforts by corporations, and it is certainly true that corporate resistance to unions has stiffened over the last 30 years.  But what really drove this process was the market.  With offshore competition and onshore automation cutting demand for unionized labour in the US even as immigration and a surge of women into the labour force increased supply, unions could not repeal the law of supply and demand. Over and over again, unions had to accept pay cuts, rollbacks, layoffs and arrangements that allowed companies to hire younger workers at lower wages and with less expensive benefit packages.  The alternative to givebacks was closure: unions were negotiating at the point of a gun.

Meanwhile, workers, especially younger workers, grew less enthusiastic about unions.  What’s the point of paying dues to an organisation that ultimately cannot protect you?  Why would younger workers support an organisation that mandates higher pay and better working conditions for ageing Boomers than for Millennials with families to raise and mortgages to support?

In the private sector, unions can do less and less to protect their members; naturally enough, fewer and fewer workers make the choice to join — or are willing to run the risks and do the work that organising a union involves.

Public sector unions did not have to face that kind of pressure until recent years.  You can’t outsource the Department of Motor Vehicles or the local public school to China.  And government didn’t face the relentless pressure to raise productivity and automate that the private sector does.  As long as voters, bond buyers and Uncle Sam were willing to pick up the tab and put up with inefficiencies, government worker unions lived in a time warp.  The pressures that were reshaping the rest of society and breaking up the old labour system in the private sector simply didn’t apply.

Now they do.  State and local budgets have reached the breaking point, and the public sector unions must now negotiate under the gun.  Feeble, weak and defensive, they cannot do much for their members.

Look at Wisconsin: in a desperate effort to stave off an attack on their collective bargaining status, the Wisconsin unions have offered to capitulate to Governor Walker’s financial demands.  The unions are no longer bargaining for higher pay; they are not even able to resist demands for pay cuts.  They are simply bargaining to stay alive.

Over time, this position is going to weaken support for unionization even among union members.  Why am I paying dues to an organisation that does not protect me, workers will ask.  Why is my union agreeing to cut my wages in order to preserve its ability to deduct dues from my paycheck, one naturally begins to wonder.

The public sector labour movement has reached a historical dead end.  Cities and states that yield to labour demands have higher costs, higher taxes and higher debt than places that don’t.  Over time, those states stand to lose revenue, jobs and population to cheaper and more efficient jurisdictions. If the governor of Vermont can see New Hampshire from his house, the governor of Illinois can see Wisconsin and Indiana.

In the old days, states could look to Washington for help with high costs.  Most recently the stimulus package allowed many states to postpone the day of reckoning.  But that time is gone.  Washington’s fiscal woes mean there will be no big new state subsidies coming; governors and state legislators will have to balance their budgets with less and less federal help.

The public sector labour movement has started down the path of private sector unions.  It is a long and a winding trail, with many twists and turns along the way and the end won’t be reached overnight, but this is a path, so far as the human eye can see, of no return.

The alliance between public sector labour unions and Democratic politicians is much more feeble than it looks.  Those politicians used to be able to give the unions what they wanted: automatic wage increases, lifetime tenure for teachers, binding arbitration, gold plated pension and health programs.  Now they can’t, and it doesn’t matter how much money the unions pump into their campaigns.

In Greece, it was the Socialist Party that had to impose the austerity programs when the money ran out.  Ditto Spain.  Democrat or Republican, red or blue, when there isn’t any money and the credit cards are maxed out, something has to give.

Public union support is going to be less and less of a political asset.  In Chicago, some key public unions actually backed one of Emanuel’s rivals:  Gery Chico.  Chico got 24 per cent of the vote in one of the most heavily Democratic places in the country.  Increasingly, politicians seen as too close to public sector unions (and therefore likely to favour the interests of government workers against the taxpayers who pay them) are going to suffer at the polls.

Right now, many government workers still believe that their unions can protect their jobs, their pensions and their wages.  Town by town and state by state, they are going to learn that this is less and less true every year.  As that realisation sinks in, union dues will stop looking like a good investment and start looking like an unnecessary expense.

Currently, 36 per cent of the country’s government employees belong to a union — about where private sector unions were at their 1953 peak.  In 2010 for the first time more union members worked for the government than worked in the private sector.  That isn’t going to last, and in the end, blue state politicians may do more to kill the public union movement than their Republican rivals.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.