January 26, 2011

January 26, 2011 | Commentary on Taxes, Labor

Government Employee Unions Have Become Political Bosses

Be glad you don't work or own a business in Illinois. The state just decided to close its deficit by raising taxes.

Illinois business taxes will jump by 45 percent and the state income tax by two-thirds.

These huge increases were the fruit of a two-year campaign by government employee unions, which lobbied legislators to raise taxes instead of cutting spending in order to close a massive state government deficit.

In the process, the state government employee unions donated millions of dollars to the re-election campaign of Illinois' deeply unpopular governor, Democrat Pat Quinn, who had succeeded the disgraced Rod Blagojevich.

They ran millions of dollars of attack ads against his opponent. On Election Day, their efforts paid off: Voters narrowly re-elected Quinn, who promptly broke one of his main campaign promises and signed the tax increases hurriedly passed by a lame-duck legislature dominated by Democrats.

This is the new face of the labor movement. Competitive pressures have undercut unionized businesses in the private sector, but the government has no competitors. It stays in business no matter how poorly it runs. As a result, most workers who are union members now work in government.

Public-sector unions' interests differ profoundly from their private-sector counterparts. They don't negotiate over how to divide profits; they negotiate for the government to spend more on their members. And they've succeeded. Unionized government employees enjoy benefits that few private-sector workers can dream of.

In most states, government employees can retire with a full pension in their mid-50s. They contribute little or nothing toward their health care costs, and often get generous retirement health benefits. They also enjoy incredible job security. In many states, it's far easier to divorce your spouse than to fire an underperforming government employee.

These benefits aren't cheap. For government unions to win, taxes must rise. Government unions in Illinois were blatant about what they wanted. They protested outside the state capitol shouting: "Where's the money?", "Give up the bucks!" and "Raise my taxes!"

Despite the Republican Party's faults, the GOP generally holds the line on taxes. So to get what they want, government unions go all out to elect Democrats: campaign donations, attack ads, get-out-the-vote efforts. Government unions spend heavily to nominate sympathetic Democrats in primaries, and to beat Republicans in general elections.

For all the furor over the Citizens United decision, Republican shadow groups were not the largest outside spenders in the last election. Public-sector unions were. Few Democrats can win office without their support.

Unfortunately, government employee benefits are driving state and local governments into insolvency. Nationwide, state and local government retirement plans are $3 trillion in the red. Illinois' government pension plan faces a $200 billion shortfall.

To get their fiscal house in order, states need to reform government benefits. Government unions, however, do not want change. They do not want their members to have to retire at 65. They only want higher taxes to fund their pay.

Their influence in the Democratic Party enables government unions to block most reforms. Only a handful of states have moved government employees to defined-contribution pensions. Democratic politicians don't want to take on their strongest supporters.

Even Democrats on their way out feel obliged to give unions parting gifts. Iowa's voters fired Gov. Chet Culver last fall. He nonetheless signed a collective-bargaining agreement in his final days in office that gave state employees hefty raises. The outgoing Democratic majorities in the Wisconsin Legislature narrowly failed to ratify expensive new contracts before their successors took office.

This fealty to government unions doesn't serve taxpayers, or the long-term interests of the Democratic Party. Government benefits are also crowding out funds for welfare, health care and other liberal priorities. Politicians in both parties should just say no when government unions demand they "give up the bucks."

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

About the Author

James Sherk Research Fellow, Labor Economics
Center for Data Analysis

Related Issues: Taxes, Labor

First appeared in The Examiner