Collective Bargaining Rights For Public Sector Workers: Fill & Download for Free

Executive Order 10988, signed by President John F. Kennedy in 1962, allowing collective bargaining for federal employees.. and to a lesser extent, 1912's Lloyd-LaFollette Act, which gave federal workers the formal right to organize.Executive Order 10988 overturned FDR's prior legislation barring federal workers from collective bargaining rights; ever since, government employees have been able to collectively bargain at the federal level.This was a massive policy shift that has had far-reaching economic implications. The order was widely seen as a "thank you" to AFL-CIO leader George Meany, who was instrumental in JFK's successful bid for the White House.But also: federal approval of collective bargaining rights for workers significantly encouraged state and local government workers to form unions; such unions have subsequently exploded in membership size and overall bargaining power.In 1962, no federal workers belonged to unions. Today, more federal workers belong to unions than private sector workers do. Not just as a percentage, mind you -- but by total numbers (about 8 million public, 7.5 million private).In its 2009 Annual Report, the Bureau of Labor noted that the number of public sector workers who belonged to unions actually exceeded (for the first time ever) the number of private sector workers who belonged to unions -- fairly astonishing, given the private sector is many time larger (in numbers of workers).The current entitlements crisis faced by federal, state and local governments have many causes; however, collective bargaining rights for government workers adversely has impacted this situation.Most notably, as Amy Shlaes opined recently in the Wall Street Journal, (http://www.cfr.org/labor/government-unions-became-so-powerful/p22887) American workers now rather neatly divide into two classes: "The first is the private-sector worker, the vulnerable one who rides the business cycle without shock absorbers. The second worker, who works for the government, lives a cushioned existence in which terminations take years, pension amounts are often guaranteed, and recessions are only thunder in the distance. Yet worse than this division is the knowledge that the private-sector worker will pay for public-sector comfort with ever higher taxes."Shlaes may be piling on a tad, but her underlying point is salient.The growth of government has been huge since JFK's time; the growth of union membership in government has been huge; and the cost of sustaining benefits those unions have collectively bargained for has been enormous.And shows no signs of abating.Reasonable people can disagree about the morality of allowing collective bargaining for public sector workers. But reasonable people cannot disagree that allowing collective bargaining has exploded the cost of sustaining benefits for which those public workers have bargained -- a bill private sector workers continue to pay.

No, the damage done by public-sector unions is more systemic than local although the effects impact most locales.As in the private sector, public sector unions are able to increase their wages through employer negotiations. In addition, however, public sector unions are also able to increase demand for their labor through the political, legislative, or regulatory process, thus increasing wages further than private sector unions are able to.—Richard B. Freeman, “Unionism Comes to the Public Sector,” NBER Working Paper 1452, 1984.That quote explains the harm mechanism of public-sector unions.Even Franklin Roosevelt refused to sanction public-sector unions, stating in part, “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.” [full text at the link] The Wagner Act of 1935 that strongly bolstered private-sector unions in this country had specifically excluded public workers. When the most pro-government president in our history offers multiple reasons that organizing of unions of public workers cannot be allowed and leaves them excluded from the legislation that covers private workers, that is worth taking note of.Yet, Wisconsin approved true bargaining unions for its state employees in 1960. Two years later, seeing the boon the Wisconsin unions were proving to be for his party, John Kennedy signed Executive Order 10988 permitting federal employees to be organized into true bargaining unions.So, what are the dimensions of the harm public-sector unions have caused? It turns out to be an existential crisis.To explain, in the private sector, there is the concept of line vs. staff employees. Line employees are revenue generators. They make or sell the product. Staff employees do other useful work, some of it required, such as bookkeeping, and some of it to make line workers more productive, such as secretaries.Businesses must watch the ratio of line and staff with an eagle eye. A certain ratio of staff to line workers, usually somewhere around 1 to 10, can optimize business profitability. But profitability degrades quickly as staff is brought on. Add a second staff person to the 1 and 10 scenario, and, suddenly, the productivity of 5 workers has to cover each full staff salary rather than the productivity of 10. Businesses thus have a strong incentive to monitor such ratios and keep them optimum.Governments? Not so much.Workers in the public sector (local, state and federal government employees plus school districts, some universities, research centers, health organizations and so on—in sum, everyone paid out of tax revenue) back in 1960 made 80% of the salary of a private worker. For that, they got excellent job security.Now public workers average more than 140% of the compensation of private workers. Federal employees average more than 160% of private-sector compensation.But the thing is, the number of line workers in the public sector (collecting fees, rents on public lands and so forth, many of which are calculated on a break-even basis) is vanishingly close to zero. All public sector workers are staff workers. They are staff to the rest of us. We have to earn money from which they are paid courtesy of our paying taxes.With the coming of the Trump administration, we have added some five-million workers in the private sector for a record total workforce of 155+ million. But I am going to stick with the numbers at the end of the Obama administration, simply because they make for easier arithmetic.We had right at 150 million employed workers of whom right at 30 million were public [such numbers are civilian-workforce-only and do not properly include military numbers compiled by the DOD]. That’s a ratio of 4 to 1, four private taxpayers to one public tax consumer. Of course, public workers feel the tax bite too, but they do not pay taxes in the real sense as, obviously, they are paying taxes out of tax revenue. For analysis purposes, we can look at it that their taxes simply cycle in place. No new money enters the system.Let’s look at the numbers. We’re not at 10 to 1, only 4 to 1. Four taxpayers’ total taxes (not just income tax) have to cover the salary of a public worker who averages almost half again more than they do in pay. For the entire time frame we are looking at total taxes per worker have average right at 40% of income.So, the good news is that taxpayers can cover the salary of public workers. There’s even a smidge left over!But hold it! What about… you know… government programs… government spending?We know that public payroll accounts for half the total cost. Already that is wack because the ideal is that it costs 12 or 15 cents to spend a dollar. Having it cost a dollar to spend a dollar is a bright red flag. And we don’t even have that dollar—well, beyond covering public workers, we have public worker taxes cycling in place, corporate taxes (which actually fall on taxpayers in the form of higher prices and lower dividends), school bake sales and other miscellaneous revenue.That still leaves a shortfall, a shortfall that wholly explains our mounting debt. To put our situation in nautical terms, the ship of state has become all ballast, no sail. Our new captain is unfurling sail, but if we don’t start throwing ballast overboard so that we can make some serious headway pronto, we are likely to drift into that whirlpool of debt and perish.Back in the early 60s when I first started paying attention, we had wealth in government. In 1958, I stood out in the front yard and watched Sputnik fly over. We soon funded a space race, including putting men on the moon. That coincided with an arms race—nuclear subs and aircraft carriers, not to mention ICBMs. We tied the whole nation together with an Interstate Highway system and built schools galore for us Baby Boomers. We started a War on Poverty. We even started a land war in Asia.We were spending all kinds of money on programs without incurring much in the way of debt. Of course, we now have Modern Monetary Theory exhorting that debt is a chimera—the government can always print all the money it needs, and inflation is relative. Do note that that is wholly untested conjecture made by people who have never run an enterprise. And in any case, the resulting inflation is simply another tax, a particularly regressive one.Does all of the damage owe to the quote at the top? And then some. From the start, public-sector unions were an extension of the Democratic Party. They give 98 percent and up of their political contributions to the Democratic Party and its politicians, and the larger public unions are typically four of the top ten organizational donors, including three of the top five.Parties depend on their loyalists for their reliable success, and what better way to create loyalists than to offer people inclined to you in the first place secure jobs at well-above-average salaries? There’s been not that much job growth to go along with the salary growth except for local government, school districts and universities (with their skyrocketed tuitions).When I went to public schools there was one administrator for each ten teachers, both at my school and as a national average. Universities have multiplied their number of administrators, many hired from the ranks of the various race- and gender-studies majors—budding social justice warriors.When I moved back to Texas from California sixteen years back, I played golf with two former high school buddies. They’d both been teachers and at 52 were just retiring with their thirty years in. They explained to me how it works. Public workers still get defined-benefit pensions, unlike private workers. They had with they called three-percent pensions. What that means is that their defined benefit will be three percent less than the average of their three highest earning years.“Play ball with the union,” they said, and the union will make sure you get at least three years as a six-figure administrator. That leads to a pension that is tens of thousands more per year than a straight teacher would make. That’s some power to wield, and apparently a high percentage of union members vie to play ball and get those plum dividends.Skyrocketing cost with zero performance improvementSo, it’s not like the public unions have to square off against public employers in order negotiate wages, benefits, duties, etc. They’re the same team! When public unions are growing, political clout is growing… in the Democratic Party.Some twenty states even had laws on the books that those public workers who chose not to be in the union had to contribute a sum comparable to union dues to cover all the activism the unions did on their behalf. In their recent ruling in Janus, the Supreme Court invalidated such laws.That’s a step in the right direction, but let’s face it, Roosevelt was right—there is a major inherent conflict of interest in public sector unions. We need not only to end them but to shift a substantial number to the ranks of taxpayers in the private sector.This is not “cutting government.” This is right-sizing government so that our tax money can be going to programs for the people rather than to building up the clout of the Democratic Party.So how have us line workers in the private sector fared? Two private sectors, finance and electronics, have held their own. That is, compensation in those sectors has kept up with inflation. The other fifteen sectors have seen compensation lag behind.It should never be the case that your one boom sector is a revenue-consuming sector rather than a revenue-generating one. When you wonder what’s causing our shrinking middle class, they’ve been tightening their belts for three generations to pay for their supposed public servants.

The idea that we are anti-union, is absurd and much more nuanced that people give us credit for.I am a constitutional conservatarian and I couldn’t care less about PRIVATE sector unions, and most free-market individuals will agree with me on that point. The only problem with private sector unions I have is the idea that in order to gain employment at a unionized business, one MUST pay dues to the union whether they want to or not.The fact is, private sector labor unions add significant overhead to privately unionized companies vs their non-unionized competitors; it is irrelevant. A business with a unionized labor force will either survive and thrive against its competitors or it won’t. A unionized business who can’t compete will go out of business and the unionized labor force, themselves, will have played a significant or insignificant role in the demise of their jobs.Costco is a great example of a private company with a unionized work force providing quality goods, low prices, unbeatable return policies and outshines their competition from a customer experience perspective and is wildly profitable in the process. Good for them. Good for their employees. Good for their consumers. This is a win/win/win for free market economics.UPS and FedEx (is not unionized) are two more examples of private companies with unionized and non-unionized labor forces that compete with one another as well as against the government monopoly of the United States Postal Service. Whether or not UPS or FedEx, respectively, provide good service or not is irrelevant because they provide better service and prices than does USPS, which loses $10s of billions annually as a public unionized work force.From another perspective, car manufacturers have allowed their unionized workforces to destroy their competitiveness and affordability despite once being the beacon of American Ingenuity. I’ve read reports that every GM car purchased from what was once (and may no longer be) an American Automotive manufacturer, includes $2,000 directly attributed to the cost of historical union related agreements (in the form of retirements, retirement benefits, etc FROM 8 YEARS AGO). For some economy cars, that’s nearly 20% the cost of the car itself. This harms the business, because these specific union costs can not be borne by the business, they must be passed on to the consumer. This harms the consumer. These historical agreements with unions are an extremely high cost of doing business and are likely closer to $3,000 or $3,500 per car by now. This is an example of management allowing a unionized workforce to destroy their business model. So much so, in fact, that 2 of the largest car manufacturers needed to be bailed out by the Federal government in 2007 or 2008 — but for that, those 2 automakers would have likely gone bankrupt. Unfortunately for the American consumer, THIS IS NOT GOOD EITHER. Because sooner, than later, the American tax payer is going to be faced with bailing out these same automakers again, AGAINST THEIR WILL, because after all, they are “too big to fail, right” This is NOT good for consumers. This is crony capitalism at its best. This is a progressive policy and bleeds into why public sector unions are so bad, despite my belief that private sector unions are “reasonable.”With the exceptions thatemployees must join and pay for a union to be employed (which I admit they have free exercise to choose to work at to begin with) andthose instances where the government steps in to bail out unionized labor forcesI support the the idea of unionized businesses in private companies because quite honestly, I have choices as a consumer where to buy my consumables from and whether or not to buy a new or used car. I have choices — KEY POINT.Public sector unions, on the other hand, ARE destroying every single industry they touch in the public sector. Even the biggest champion of unions said, “ it is impossible to collectively bargain against the government.” F.D.R. Warned Us About Public Sector Unions - that comes from FDR who warned us of the perils of public sector unions.Education - since public sector unions have taken control of the educational sector, the value of education has deteriorated immensely. Education is supposed to be local, not state based and certainly not nationally based.Utilities - not exactly public sector, per se, but with all the regulations around utilities, might as well be. How easy is it to get your utility company to repair something at your house unless your entire neighborhood is having problems? If you don’t like the prices you are paying for electricity, who do you switch to? How is it that guys digging ditches for the construction company down the street are making little better than minimum wage but make nearly $70k per year working for the “public” utility company?Fire / Police - it used to be that 300 people were employed to cover the cost of retirees — that ratio in many departments is down to as low as 5 active employees covering the cost of the retirees — it is utterly unsustainable.I could continue, but I’ve made my point. Under no circumstance should public sector unions exist. They add demonstrable costs to an already overburdened government (local, county, state and/or federal) payroll structure making it virtually impossible to fire unproductive workers (The state of NY pays some $18 million per year in salaries for teachers, no longer allowed in a classroom, to sit in “rubber rooms” all day, because the union contracts make it nearly impossible for fire them.). In addition, with public sector employment — THERE ARE NO CHOICES. If you don’t like something — GOOD LUCK. You as a citizen only get to stare down the barrel of the proverbial government gun (well, jail isn’t exactly proverbial, now, is it?).All said, private sector companies working with private unions have to contend with the ever changing market conditions — public sector unions, on the other hand, and government employees don’t. In fact, the politicians who make deals with union leaders and mis spend American Taxpayer monies are never held accountable for their actions. By the time the reality of the bad deals have come to fruition and tax payers are on the hook for millions of dollars, the politicians who made the bad deals have since left office, while the public sector unions continue rake in money hand over fist. Hopefully this changes now that public sector employees are allowed to opt out of forced dues. If only the mob bosses of the public sector employee unions understood this ruling, life would be great.Bryce Ebeling's answer to Capitalism: Why is unionization so bad?