Public Unions: Are They Good or Bad?

For voters who happen to live in Illinois, California or other states that find themselves saddled by enormous and unsustainable debts–driven largely by deals made between politicians and public-sector unions–they will need to understand how those debts impact where their cities, counties and states are going .

While it is true that overall union membership has declined in recent decades, public-sector unions have grown though they have stabilized in recent years.

As early as the 1900s, workers vied with management for control of various employment rules. How many hours could one work?  How much should workers be paid? How many vacation days, sick days, family leave days should they be granted?

The balance of private unions pitted the interests of workers against the interests of the shareholders.  How much profit was “ok” and how much was unreasonable and could be claimed by labor?

While contentious, private sector unions generally helped create balanced opportunities across the United States.  There was genuine negotiation as both sides represented their interests, with rational self-interest at the heart of their efforts.

By the 1940s, a movement was started to create public-sector unions–unions representing public employees.  Groups like the Association of State, County, Municipal Employees (AFSCME) and the larger teachers unions have begun to dominate state politics in a large way.

Why is that bad? What’s the difference between a private and public union?  To answer that, we should look to none other than Franklin D. Roosevelt, a president who, more than any other occupant of the White House, was a champion for the American worker.

FDR strongly supported the union movement and appointed both bureaucrats and judges who were supportive of collective bargaining, However, regarding “public” unions, he famously said, “It is impossible to bargain collectively with the government.”

What is so different about public unions that even a pro-labor president would be opposed to them? The answer is quite simple.  In a private union, you pit the interests of the workers against those of the shareholders. Both sides are private parties who have rational interests that, assuming they negotiate in good faith, together advance the cause of the company.

In a public union, you pit the interests of the workers against those of the  taxpayers who are ostensibly represented by politicians.  But the real situation goes something like this.  The politician wants votes and donations, the unions have people and money. So, the negotiation isn’t even a real one because nobody represents the taxpayers who are the paying party.

In Illinois, perhaps the most corrupt state in the nation, for decades the political mathematics have been simple. You want to get elected, get a teachers union behind you.

The union wants more benefits, the politician wants the votes. Their agreements have led to unsustainable pensions and deficits. This has led to people leaving Illinois in droves.

How bad can it get? In just Illinois alone, there is around $203 billion in unfunded public pension obligations. At the national level, there is $3.5 trillion in unfunded public pension obligations.

Where does that money come from? The taxpayer and that means it comes from your wallet.

 

Steve Beaman is the Chairman of The McGraw Council and the author of The Path to Prosperity.

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