Are Public Sector Unions Doomed?

Currently, many eyes are riveted on the battles taking place in Wisconsin, Ohio and other states where public sector unions are desperately fighting to hold on to their privileges. I don’t blame them for that–privileged classes generally find it easy to believe that their privileges are well-deserved–but, while the results of these battles are in doubt, I wonder whether the war is not, in essence, over. The reality is that we, the taxpayers, can’t afford public sector unions. And the unions and their members have nowhere else to go–no one else to sell themselves to, except us. So I think they are doomed.
Michael Barone has interesting thoughts on the history of the union movement in the U.S., which include these observations:

[N]on-union private sector companies have thrived, while unionized companies have gone under. And public sector unions, with their bought-and-paid-for politicians, have produced public sector work forces that are unresponsive, unaccountable and impossibly expensive.

Noel Sheppard, meanwhile, comments on a surprising New York Times editorial that, while it includes the usual partisan barbs, nevertheless acknowledges the key facts:

Private-sector wages in New York dropped nearly 9 percent in 2008. In 2009, Gov. David Paterson pleaded with the unions to give up the raises to help the state out of its crisis. Union leaders attacked him in corrosive television ads, and Mr. Paterson eventually caved, settling for an agreement that reduced pension payments to new employees. The deal wasn’t enough to address New York’s serious fiscal problems.
The average salary for New York’s full-time state employees in 2009 (even before the last round of raises) was $63,382, well above the state’s average personal income that year of $46,957.

It is not realistic for public sector employees to expect private sector taxpayers to maintain them in a style which is unattainable in the private sector. The Times continues:

In 2000, employee pensions cost New York State taxpayers $100 million. They now cost $1.5 billion, and will be more than $2 billion in 2014. Wall Street’s troubles are a big part of that. But so are state politics. The Legislature, ever eager to curry favor with powerful unions, added sweeteners to pensions and allowed employees to stop making contributions after 10 years.

Noel Sheppard comments:

Readers are advised that this is a 1900 percent increase in eleven years. Inflation during that period was only 24 percent. This means that employee pension costs in New York have risen at almost 80 times the rate of inflation!

The Times, of course, recoils from the solution proposed by Governor Walker and others: break the power of the public employee unions. But, as Sheppard points out:

The reality here is that New York’s problems are not much different than Wisconsin’s or California’s or Indiana’s or Ohio’s. Public employee unions for decades have gotten contracts for their members that in the end were unaffordable.
But the unions don’t care, and frankly, neither do their members. These folks feel they’re entitled to everything they get, and that states should just be raising taxes to cover the rising costs.

It may not happen this year or next, but the power of the public sector unions will be broken, because there is no alternative. The ability to buy politicians who then “negotiate” pay and pension increases with their union friends delayed the inevitable for a while, but unions have priced themselves out of the market in the public sector, just as they did in the private sector. They are, I think, doomed.


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