Public Sector Unions: The bane of America’s existence

A recent report by the Times, preludes by introducing Rich Hahan.  Hahan, a fifty-year-old Wisconsin resident, who was recently laid off by GM, said that, “…he still believes in unions, but thinks those in the public sector lead to wasteful spending because of what he sees as lavish benefits and endless negotiations.”

While I agree with Hahan’s viewpoint that public sector unions lead to wasteful spending, I think that it is important to delve more deeply into the crux of the matter, which is less about profligate benefits and ceaseless negotiations and more about public sector unions as a whole.

Public sector unions are a blight on the developed world, sucking away billions of dollars from local and national budgets while their private sector counterparts face enormous downsizing.  According to a recent Economist article, Squeezing the Unions: The Wisconsin Way, Governor Walker’s recent policies, “…will save Wisconsin $30m by July, and another $300m over the following two years.”  Yet, interestingly enough, “Mr. Walker himself has muddied the waters by exempting police and firemen from the cutbacks and restrictions… Mr. Walker argues that the state often treats public-safety workers differently, and is wise to do so, since it cannot do without them in a pinch.”  The fact that Governor Walker, a man adamant about scaling back the power of unions, seems almost afraid of interfering with public-sector unions is reflective of the public-sector unions’ tremendous size and power.

I don’t agree with Walker’s aim to deprive unions of their collective bargaining power and am appalled by his motives (he admitted to an alleged campaign donor in what was revealed to be a prank phone call that his recent policies are less about budgetary concerns and more about his conservative agenda), but I think that Americans as a whole must examine the overbearing influence public sector unions wield, and the huge deficits that could be lessened if we only scaled back pensions.

This issue is hardly centralized to the United States.  An Economist news briefing on public-sector workers from a month ago presented the ubiquity of budgetary deficits exacerbated by public-sector unions.  “In the Canadian public sector union density has increased from 12% in 1960 to more than 70% today.  In America it has increased over the same period from 11% to 36%.  There are now more American workers in unions in the public sector (7.6m) than in the private sector (7.1m), although the private sector employs five times as many people.”

Public-sector workers enjoy, “light workloads and generous pensions… 90% of American state- and local-government workers have defined-benefit plans, compared with 20% of private-sector workers.  Generous pensions have produced an epidemic of early retirement.  In Brazil civil servants can retire on full pay after 35 years on the job and teachers can retire after 30 years.  The result is that Brazil spends as high a proportion of its GDP on pensions (12%) as Britain does, even though the population is much younger.  In Poland soldiers and policemen can retire after just 15 years, so it is possible to come across 33-year-old retirees.  Add to this the fact that any public-sector worker can hide behind union power to game the system- 82% of senior California Highway patrol officers discover a disabling injury about a year before they retire- and you have a dysfunctional mess.”

“In California, the prison guards’ union has been one of the leading advocates of getting tough on crime.  The result of this policy has been a dramatic increase in both the size of the state’s prison-industrial complex (from 12 prisons in 1980 to 33 in 2000) and the pay of the people who run it (prison guards in 2006 made $70,000 a year in base salary and $100,00 with overtime)….Barry Bluestone, a left-wing economist, calculates that the price of America’s public services increased by 41% in 2000-08, while that of private services rose by 27%.”

The enormous benefits bestowed upon public sector workers are not only detrimental to budgets across the world, but are also causing a huge rift between the public sector and the private sector.  As our national deficit continues to balloon, the enormous disparity between the public and private sector will reach its limit.  Private-sector workers will no longer accept that the public sector receives obscene benefits while local and national budgets reach record deficits.  Still, I doubt that public sector workers will give in without a fight.  “Millions of French workers marched against Nicolas Sarkozy’s modest plans to raise the retirement age by two years.”  In the U.S. attempts at affecting policy change on public service workers’ benefits have been made to no avail.

Cracking down on public workers’ unions will be a chaotic disaster, but given our country’s enormous deficit it is essential that excessive pensions and benefits be minimized.  As this fight unfolds it will become more clear that the power struggle between public sector unions and those seeking to downsize them is a fight between David and Goliath in which the public sector unions are Goliath.

Will David and his stone and sling prevail or will he be toppled by the overpowering Goliath?  I have my money on the public-sector unions.

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