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Why Is Congress Intent on Helping Unions Bankrupt Our Country?

Posted By Conn Carroll On March 19, 2008 @ 12:24 pm In Economics | Comments Disabled

Stephen Moore has a must read article in the Weekly Standard [1] this week detailing not only how public sector unions have bankrupted the city of Vallejo, California, but also demonstrating that local governments nation wide are also at risk. noting that 80% of Vallejo’s budget is eaten up by labor and pension costs, Moore warns: “Welcome to the next great financial bubble in America–a fiscal time bomb that could cause your local and state tax bills to double or even triple in years to come.” Other details in the piece include:

  • In the Los Angeles County school system, health, pension, and workers compensation liabilities are so mountainous that an estimated one of every three dollars budgeted for the L.A. schools goes to teacher retirement costs.
  • The ten largest Chicago-area cities face a combined $18.7 billion in unfunded pension liabilities, according to a new report by the Chicago Civic Federation.
  • Philadelphia was forced to issue a $4.5 billion bond in February to cover unfunded pension liabilities for 33,000 retirees.
  • The total cost to states for paying for all teacher retirement health and pension obligations is now estimated at $3 trillion, and growing each year.

Turning back to California, Moore quotes a former California budget director on public sector unions are able to get such sweetheart deals: “The public employee unions are far and away the most powerful special interest in the state. They run the state and virtually no politician will stand up to them.” Public sector unions have become the heart and soul of the labor movement. While overall union membership in America has fallen from 21.4% to 12.5% [2], public section union membership has exploded to 34% [3] in the public sector. In a 2005 Heritage Foundation lecture [4] Manhattan Institute fellow Steven Malanga explained why this explosive growth is so dangerous:

The Christian Right is an enormous political force nationally, we know. But what’s happening in American cities and many states is something far different: the rise of a political party that’s neither right nor left, conserva­tive or liberal in the traditional sense, but rather a party of those who benefit from an ever-expanding government. They’ve been gathering political pow­er for 50 years now, quietly at first, and they have shaped and influenced municipal and state budgets in fundamental ways that impose steep costs on taxpayers that are not easily unraveled.

Since 2007 Congress has been eager to further the growth of public sector union power at the local level as much as it can. The House passed the “Public Safety Employer-Employee Cooperation Act [5]” which requires all state and local governments to recognize public sector unions as the exclusive representative of all public safety professionals. Heritage analyst James Sherk explains [6] why this is a disaster for local governments:

A union’s monopoly over bargaining makes it a cartel that prevents employers from hiring workers who would do the same job for less than union wages. That benefits union members at the expense of their potential competitors. It also means that state and local governments must pay more to have the same work done. Without providing financing for the mandate, the act will force these governments to either cut services or raise taxes.


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URL to article: http://blog.heritage.org/2008/03/19/why-is-congress-intent-in-helping-unions-bankrupt-our-country/

URLs in this post:

[1] Weekly Standard: http://www.weeklystandard.com/Content/Public/Articles/000/000/014/886hxint.asp

[2] overall union membership in America has fallen from 21.4% to 12.5%: http://www.heritage.org/Research/Labor/wm1202.cfm

[3] exploded to 34%: http://209.85.165.104/search?q=cache:p7pfxF6UO6EJ:www.irs.princeton.edu/pubs/pdfs/503.pdf+public+sector+union+participation&hl=en&ct=clnk&cd=4&gl=us&client=firefox-a

[4] Heritage Foundation lecture: http://www.heritage.org/Research/GovernmentReform/hl921.cfm

[5] Public Safety Employer-Employee Cooperation Act: http://www.heritage.org/Press/Commentary/ed072007b.cfm?RenderforPrint=1

[6] explains: http://www.heritage.org/Research/GovernmentReform/wm1538.cfm

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