September 8, 2009 | Commentary on Jobs and Labor Policy, Health Care

Labor Unions on Health Care: Their True Motives

Unions across the country are campaigning hard for Obamacare over Labor Day weekend. The AFL-CIO has made creating a government run "public plan" their top priority. Yet polls show that most Americans strongly oppose this. So why have the self-proclaimed advocates for America's workers made government-run health care their top priority?

Union leaders say they are fighting to win "win secure, high-quality health care for all" against greedy and self-interested corporate defenders of the status quo. Many union activists sincerely believe this. But altruism does not explain why the labor movement is spending tens of millions of dollars on this campaign.

Organized labor is campaigning for government-run health care for the same reason that the private insurance industry is campaigning against it -- it is very much in their self interest. The union movement will gain billions of dollars if Obamacare passes.

The most obvious payout is the taxpayer bailout for union health plans. Many union-negotiated retiree health plans cannot pay their scheduled benefits. Rather than reducing benefits, the bill passes those costs onto taxpayers to the tune of $10 billion. But that is small potatoes compared to what the bill will do for union membership.

As it stands now, the union movement in America is withering. In the mid-1970s, a quarter of all workers belonged to unions. Now just one in eight workers do. In countries such as Canada, union membership remains high: Almost a third of Canadians belong to a union. What has happened to the house of labor in America?

In a word: competition. The higher costs that unions bring put the companies they organize at a competitive disadvantage. As deregulation and free trade have made the economy more competitive, unionized companies haven't been able to keep up. The airlines. The steel industry. General Motors. Unionized companies shed jobs whenever they face competition.

Union membership has stayed high in just one area of the economy: the public sector. Almost 40 percent of government employees belong to unions. The government has no competitors. And it doesn't go bankrupt. No matter how high unions raise costs, the government can always raise taxes to pay for them.

Canada's bigger government explains why so many more Canadians belong to unions. Canada has nationalized health care, so competition doesn't exist in their health care sector. The taxpayers cover all the costs. As a result 60 percent of Canadian health care workers and a stunning 80 percent of nurses belong to unions -- more than quadruple the levels in America.

If Congress passes a "public plan," most employers will drop their health benefits and force their workers onto the government plan. A public plan means government-run health care for almost all Americans. That would make the health care system a prime target for union organizers. Unions would quickly bring in millions of new dues-paying members.

It's no accident that the strongest supporter of the public plan is the Service Employees International Union (SEIU). Purple-shirted SEIU activists have filled Town Hall meetings across the country to counter the angry opposition of ordinary citizens. Why? The SEIU represents nurses and other health care workers.

If the government runs health care, then the SEIU's membership rolls will swell. If union rates among nurses in America rose to Canadian levels, then the SEIU would bring in over a billion dollars a year in new mandatory dues. Newly organized technicians and other medical support staff would add even more to that total. The Labor movement has a huge financial stake in the government dominating health care.

How to pay for this health care reform is another question. taxes would have to rise to cover the cost, but no one wants to pay them. Many economists believe that taxing the value of employer-provided health plans would make the most economic sense. But most union members have health coverage, and their plans provide above average benefits. Many -- like those at GM until recently -- have gold plated benefits. So taxes on health benefits would fall heavily on union members.

Senate Democrats briefly considered this. When they did, the union movement made it clear that their commitment to "high-quality health care for all" didn't mean their member's taxes should go up to pay for it. Just the opposite. They threatened to scuttle health care reform if Congress taxed existing health benefits.

When you read about unions campaigning for health care reform, remember they aren't doing so out of an altruistic pursuit of the common good. Most labor activists do believe that health care reform would benefit most Americans. But the billion-dollar payday they will collect if it passes helps motivate their impassioned efforts.

James Sherk is the Bradley fellow in labor policy at The Heritage Foundation.

About the Author

James Sherk Research Fellow, Labor Economics
Center for Data Analysis

First Appeared in Human Events