The Public Employee Union Problem

As Michigan transitions into becoming a right-to-work state, arguments on both sides often focus exclusively on union vs. non-union workplaces.

But private-sector unionization is much different than the public-sector counterpart historically and in modern-day practice.

Under the National Labor Relations Act, private-sector unions are allowed to extract dues and fees from workers if the employer is a unionized workplace. The NLRA, passed in 1935 during Franklin D. Roosevelt's first term, does not, however, apply to public sector employees, including state and federal workers, because the thinking was that this would over-politicize government and cause a conflict of interest between unions and politicians.

In a Weekly Standard piece by Fred Siegel, a visiting professor at St. Francis College, and Dan DiSalvo, a professor at City College of New York, titled, "The New Tammany Hall," this problem is described:

Unlike private sector unions, the sheer number of workers represented is not the linchpin of [the public sector unions] influence. Private sector unions have a natural adversary in the owners of the companies with whom they negotiate. But public sector unions have no such natural counterweight. They are a classic case of "client politics," where an interest group's concentrated efforts to secure rewards impose diffused costs on the mass of unorganized taxpayers.

In the 1960s, many states began chipping away at the wall of separation between unions and public workers. In 1965, the Michigan Legislature revised the Public Employment Relations Act  to establish mandatory collective bargaining and exclusive representation for state and municipal government workers. This has caused the number of public-sector union employees to skyrocket.

A conflict of interest would be as follows: First, government union elects politician by funding their campaign and organizing a massive get-out-the-vote drive; second, politician supports employee pay increases, generous pensions and condition of employment; third, union takes dues (read: taxpayer money) and starts the cycle all over again for selected politician.

At both the state and national level, public-sector union support for many Democrats has been well-documented. One of the largest public sector unions in the country, the American Federation of State, County and Municipal Employees has given over $65 million to politicians since 1990; with more than 98 percent of that going to Democrats or left-wing groups. The SEIU, AFL-CIO and United Steelworkers have all been huge donors as well, and in return, the Democratic Party has voted nearly lockstep with these union's demands.

But political cronyism knows no party lines and many Republicans have been guilty here in Michigan.

Sen. Roger Kahn, R-Saginaw, worked to ensure that tens of thousands of home caregivers continued to be forced to pay money to the SEIU. The "dues skim" lead to a legislative fight, an attempted ballot proposal and an ongoing legal fight.

Last summer, House Republicans overrode a Senate bill that would have ended the underfunded defined benefit pension system and shifted employees to a 401(k)-type plan. The bill was defeated with lobbying from the Michigan Education Association. This was a re-run: In 2010, MEA-supported Senate Republicans watered down a modest bill that would "increase state and school employee payroll contributions to their pension system by 3 percent, cap pension 'service credits' at 30 years, and create a somewhat less generous defined benefit system for new school employees."

A few years ago, a union subsidiary of the SEIU pushed GOP Senators into coming up short on a vote that would have opened a prison up to competitive bidding and privatized it if it would have saved money.

The end game for these types of relationships is already happening in our country's most public union-friendly states: In California, the government was forced to issue IOUs and minimum wage salaries to public officials before a massive tax a few months ago. And in Illinois, where the state jammed through a 67-percent income tax increase and a 69-percent business tax hike to try and confront its spending problem. Both states have some of the highest state tax rates in the nation, and yet both face pension obligations that they cannot ever hope to pay.

These types of political dealings and financing may not be illegal, but it makes for a poor political process when politicians can take money from government employee unions and then vote on legislation that directly improves the financial well-being of these entities. A quid pro quo exists that would not if public-sector unions were restricted from giving money to politicians, or outlawed altogether.

Politicians granting unsustainable government employee salaries, benefits and pensions is a problem everywhere, but the states with the strongest public-sector unions will have the hardest time correcting it. More broadly, as long as these incestuous relationships between government unions and the political class remain in place and unchallenged, the size and scope of government will continue to grow.

Editor's Note: This is an updated article that first appeared on August 16, 2010.


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Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.