Across the private sector, workers are swallowing hard as their
employers freeze salaries, cancel bonuses, and institute longer
work days. America's employees can see for themselves how
steeply business has fallen off, which is why many are accepting
cost-saving measures with equanimity -- especially compared to
workers in France, where riots and plant takeovers have become
regular news.
But then there is the U.S. public sector, where the mood seems
very European these days. In New Jersey, which faces a $3.3
billion budget deficit, angry state workers have demonstrated in
Trenton and taken Gov. Jon Corzine to court over his plan to
require unpaid furloughs for public employees. In New York,
public-sector unions have hit the airwaves with caustic ads
denouncing Gov. David Paterson's promise to lay off state
workers if they continue refusing to forgo wage hikes as part of
an effort to close a $17.7 billion deficit. In Los Angeles
County, where the schools face a budget deficit of nearly $600
million, school employees have balked at a salary freeze and
vowed to oppose any layoffs that the board of education says it
will have to pursue if workers don't agree to concessions.
Call it a tale of two economies. Private-sector workers --
unionized and nonunion alike -- can largely see that without
compromises they may be forced to join unemployment lines. Not
so in the public sector.
Government unions used their influence this winter in Washington
to ensure that a healthy chunk of the federal stimulus package
was sent to states and cities to preserve public jobs. Now they
are fighting tenacious and largely successful local battles to
safeguard salaries and benefits. Their gains, of course, can
only come at the expense of taxpayers, which is one reason why
states and cities are approving tens of billions of dollars in
tax increases.
It's not as if we haven't seen this coming. When the movement
among public-sector workers to unionize began gathering momentum
in the 1950s, some critics, including private-sector labor
leaders such as George Meany, observed that government is a
monopoly not subject to the discipline of the marketplace.
Allowing these workers -- many already protected by
civil-service law -- to organize and bargain collectively might
ultimately give them the power to hold politicians and taxpayers
hostage.
It wasn't long before such fears were realized. By the
mid-1960s, dozens of cities across America were wracked by
teachers' strikes that closed school systems. Groups like New
York City's transit workers walked off the job in 1966, bringing
business in Gotham to a near halt. The United Federation of
Teachers led an illegal strike which closed down New York City
schools in 1968.
Widespread ire against strikes by public workers produced
legislation in many states outlawing them. That prompted
government workers to retreat from the picket lines into the
halls of government. In Washington, they organized political
action committees, set up sophisticated lobbying efforts, and
used their muscle to help elect sympathetic public officials.
Today, public-sector unions sit atop lists of organizations that
devote the most money to lobbying and campaign contributions.
In Pennsylvania, a local think tank, the Commonwealth
Foundation, counted the resources of the state's teachers union
a few years ago. It had 11 regional offices, 275 employees and
$66 million in annual dues. In Connecticut, representatives of
the teachers union camped outside the legislators' doors in 2005
to keep tabs on school reformers who were calling on these
officials to expand school choice.
And in California, unions spent more than $50 million in 2005 to
defeat a series of ballot proposals that would have capped
growth in the state's budget. Now the state's teachers union is
putting its clout behind a ballot initiative, to be voted on
next week, that would restore more than $9 billion in
educational spending cut from the state's budget.
The results of such efforts are evident in the rich rewards that
public-sector employees now enjoy. A study in 2005 by the
nonpartisan Employee Benefit Research Institute estimated that
the average public-sector worker earned 46% more in salary and
benefits than comparable private-sector workers. The gap has
only continued to grow. For example, state and local worker pay
and benefits rose 3.1% in the last year, compared to 1.9% in the
private sector, according to the Bureau of Labor Statistics (BLS).
But the real power of the public sector is showing through in
this economic crisis. Some five million private-sector workers
have lost their jobs in the last year alone, and their
unemployment rate is above 9% according to the BLS. By contrast,
public-sector employment has grown in virtually every month of
the recession, and the jobless rate for government workers is a
mere 2.8%. For anyone who thinks such low unemployment numbers
are good news, remember that the bulging public sector must be
paid for with revenues that most governments don't currently
have. This is one reason for a spate of state and local tax
increases, such as $5 billion in tax increases New York state
passed in April, and $12 billion in tax increases California's
legislature agreed to in February that will only become law if
voters pass a series of ballot initiatives next week.
The next lesson we are likely to learn is that voter revolts
against new taxes are no longer effective because of the might
that these public- sector groups now wield. The tax-cut uprising
of the late 1970s began in California with Proposition 13
capping property taxes. It then spread to more than a dozen
states before it became a national movement that helped elect
Ronald Reagan. The next tax revolt, during the recession of the
early 1990s, helped sink officials like New Jersey Gov. James
Florio and produced ballot propositions in places like Colorado
that capped spending or made tax increases more difficult.
Now powerful and savvy, public unions have moved effectively to
quash antitax movements. In New Jersey, public unions derailed a
taxpayer revolt in 2005 by using their legislative clout to
water down a bill that would have created a state constitutional
convention to enact property-tax reform. Meanwhile, under
pressure from unions, state legislatures in places like Florida
have been tightening rules and requirements for passing voter
initiatives and referenda -- blunting a favorite tool of antitax
groups.
In states like Iowa where public unionization rates are still
low government workers have had to accept concessions. But
allies of the unions in Washington are working to rectify that
situation with union-friendly legislation like the card check
bill, which will make organizing much easier.
In the private sector such efforts will still be subject to the
demands of the marketplace. Employers who are too generous with
pay and benefits will be punished. In the public sector,
however, more union members means more voters. And more voters
means more dollars for political campaigns to elect sympathetic
politicians who will enact higher taxes to foot the bill for the
upward arc of government spending on workers. That will be the
pattern for the indefinite future unless taxpayers find a way to
roll back the enormous power public workers have acquired.
Mr. Malanga is a senior fellow at the Manhattan Institute.