Notes From Babel

The Left’s Late Defense of Public Sector Unions

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Wisconsin Gov. Scott Walker’s proposed limits on public employee collective bargaining—and Republican election victories in November more generally—have uncorked a backlog of opposition from the left to criticisms against public sector unions.  More complete responses to that opposition will follow this post (though Ezra Klein has already kicked out the legs from under his own opposition in an update here).  But what is alarming about the opposition itself is how late it is to the party:  Scrutiny and criticism of public sector unions have been ongoing for many years, documented in innumerable reports across the nation, and increasing in the past decade to a state of near ubiquity.  Yet perhaps even more compelling than the affirmative evidence is the lack of any opposition from the left, the nominal champions of public employee unions and the beneficiaries of their substantial political support.  In fact, as described below, the left have concurred in the call for reform.

Yet, following the November “shellacking” that widely discredited Democrats’ extreme partisanship, the left is now intent on politicizing public sector union reform—a cause that until recently generally enjoyed nonpartisan agreement.  Having recently been shown the business end of the populist stick, perhaps it is not surprising the left is now trying to tap into some populist heat of its own.  What is surprising is their attempt at reconciliation with public unions, anathema in mainstream populist sentiment, and whose support Democrats have only grudgingly and quietly accepted in recent years.   Thus, while the left seeks to characterize public union reform as a purely political maneuver, the left’s sudden rush of support for public unions is at least as politically motivated.

With the foregoing in mind, notice how the left now acts as if it’s been blindsided by Wisconsin’s attempt at such reform.  Here’s Ezra Klein:

In English: The governor called a special session of the legislature and signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it helped turn a surplus into a deficit [see update at end of post]. As Brian Beutler writes, "public workers are being asked to pick up the tab for this agenda. . . . That’s how you keep a crisis from going to waste: You take a complicated problem that requires the apparent need for bold action and use it to achieve a longtime ideological objective.

Kevin Drum echoes.  But after having thus engaged the debate as a purely political contest, Klein and Drum both backpedaled from their material allegation that the deficit was manufactured in a Republican conspiracy to ambush public employees.  Here’s Klein again in an “update” at the end of his original post:

Update: I’ve been persuaded that the surplus-to-deficit picture is more complicated that I initially understood. The budget report is working with two time periods simultaneously: 2010-2011, and then 2011-13. The $130 million deficit now projected for 2011 isn’t the fault of the tax breaks passed during Walker’s special session, though his special session created about $120 million in deficit spending between 2011 and 2013 — and perhaps more than that, if his policies are extended. That is to say, the deficit spending he created in his special session is about equal to the deficit Wisconsin faces this year, but it’s not technically correct to say that Walker created 2011’s deficit. Rather, he added $120 million to the 2011-2013 deficits, and perhaps more in the years after that.

Robert Reich also insists the “assault on public employees” is part of a comprehensive scheme by Republicans—which Reich sensationally likens to the plot to continue and expand slavery in the 1850s —to hobble the middle class for the benefit of the wealthy.  Yet, Reich ignores the fact that the criticism of public sector unions has been, up until very recently, nonpartisan.  The arguments against public sector unions over the past several years have come not from partisans, but from concerned taxpayer advocates and journalists who have worked diligently to educate the public of the myriad problems with public sector unions.  That politicians are now giving ear to these concerns is not the conspiracy the left alleges.  Nor is it any wonder that the Wisconsin proposal exempts police and fire unions, as this has long been a sacred cow for Republicans.  “Democrats,” Greenhut explains, are more closely allied with public-sector labor unions and have been on the forefront of these pension-hiking deals.”  However, “Republicans have been particularly aggressive in pushing expanded benefits for public-safety workers.”  (This, despite the fact that according to the Bureau of Labor Statistics, fire and police do not even make the top 10 most dangerous occupations, topped by workers in fishing, logging, flight, iron and steel, taxi driving, construction, farmers, roofers, electrical, and truck driving industries.)  There is little reason for Republicans’ bias in favor of public-safety workers, but it should hardly be surprising that Wisconsin’s first attempt at public sector union reform excludes them.  While these unions should not be exempted, politics only moves so fast, and the left cannot defensibly maintain that reform efforts ought to be defeated unless they reform all public sector unions at once.  As President Obama is fond of saying, the perfect ought not be made the enemy of the good.

The core of the left’s recent argument on public sector unions is this:  attempts to reform public sector collective bargaining cannot be explained by any documented or empirical circumstances, and thus can only be explained by an intent by the right to engage in partisan and class warfare.  As the volume and scope of reporting done on this subject in the past several years indicates, however, this position is indefensible.  Steven Greenhut, reporting for many years on the subject of public union abuses, synthesized much of this work in his 2008 book, Plunder: How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.  Greenhut also continues to maintain a website reporting ongoing abuses in California.  The Reason Foundation has contributed a steady stream of research and scholarship on the topic.  In California, the left-leaning Sacramento Bee has been on the forefront of reporting public employee abuses, alongside the right-leaning Orange County Register.  Countless other authors, scholars, researchers, and journalists across the nation have contributed to the continuous stream of scrutiny and criticism of public employee unions.  The overwhelming body of this reporting has framed a context in which public employees have successfully negotiated salaries first approaching, then matching, and by now in some cases surpassing private sector salaries, even while these employees continue to enjoy more generous hours, workloads, health care, sick days, vacation days, and pensions—the benefits formerly considered to be an offset given in lieu of matching wages with the private sector.  See, for example, this chart from the U.S. Bureau of Labor Statistics’ December 8, 2010 News Release, and this chart from the USA Today last August.  The left’s suggestion that public employees have somehow been blindsided by the recent attempts at reform, then, finds little support in the journalistic record.

The reported abuses and excesses of public sector unions are too numerous to even categorize in a blog post.  In fact, Greenhut’s 241-page book itself provides only an introduction to the problems, particularly as they relate to California.  What follows below is a sampling of some of the broad categories of abuses reported in recent years.  Again, the left has heretofore provided scant opposition to these reports.  As indicated below, the problems with public sector unions vary from the imprudent, to the fraudulent, to the unconstitutional, and in some cases even to the criminal:

  • Retroactive pension increases. As I’ve previously written, public employee unions have been successful in negotiating up to a 50% baseline pension increase effective retroactively across their entire tenure—e.g., from a 2%-at-50 plan to a 3%-at-50 plan).  These increases violate the California Constitution, which prohibits payment for services already rendered (a prohibition long recognized in private contracting), prohibits gifts, and requires increases in liability beyond the current fiscal year to be approved by taxpayers.  These retroactive increases account for approximately $8 billion of California’s state and local liabilities.
  • The “$100,000 Pension Club.” As of 2009, 5,115 retired California government employees earned pension in excess of $100,000.  The database of “club” members is maintained here.  Public employee unions fought to keep this information secret, and it took a court order in July 2009 to force them to turn it over to taxpayers. One member of the $100,000 Pension Club is former San Francisco police chief Heather Fong, who retired at age 53 with a $229,500 lifetime pension, valued at approximately $5 million based on a 75 year lifespan.  Fong’s pension is not uncommon, and this problem is not exclusive to California.
  • Legislative Capture. Public sector unions have captured Democratic officials.  As Greenhut describes, during California’s 2009 budget crisis, one Republican “explained that even some prominent Democrats are upset at the power that public-sector employee unions wield.  But the Democrats are completely beholden to those unions and cannot stand up to them.”  Thus, Democrats “were urging to GOP to please tackle pension reform, even though they admitted that there was no way they could possibly help out.”
  • Overpaid Workers. The average annual compensation of Orange County, California firefighters is $175,000 a year.  Greenhut explains that although officials confirm the accuracy of that number, they complain it unfairly angers taxpayers because it includes the cost to the taxpayer associated with the benefits package.  Thus, public employee unions avail themselves of a rhetorical advantage by talking only about their members’ pay, while squelching discussion about members’ total compensation packages.
  • Recession-Proof. Even during California’s historic and ongoing fiscal crisis, from June 2008 to February 2009, most state agencies either increased or kept the same number of employees, reported the Sacramento Bee.  It should be noted, however, that by approximately two years into the recession, California public employees began to feel the pinch.  The point, however, is that public employees tend to be the last to feel the effects of economic realities and, unless in the event of an all out economic crisis, the public sector expects taxpayers to guarantee their job security and standard of living.
  • Overtime Abuse. In 2008, while Baltimore struggled to close a $37 million deficit, public employees ran up $60 million in overtime costs, Stephen Janis reported.  Some states, including New York and California, allow overtime to factor into employees’ pensions.
  • “Chief’s Disease.” In 2004, the Sacramento Bee reported the increasingly common practice of high-ranking CHP officers, nearing retirement, to report a “disabling injury or disability”—e.g., acid reflux, stress, back injury, knee issues, heart problems, all of which are presumed to be “work related.”  Under their union-negotiated contracts, this entitled them not only to retire early, but to a tax-free disability pension with cost-of-living adjustments.  This practice increased from an already alarming 47% in 1996 to a staggering 82% in 2002.  Moreover, many of these retired officers went on to join another force under a different union and start the process over again.
  • Midnight Promotions. In some unions, to maximize pensions, police officers are routinely promoted to “captains” in the last five years of work.
  • Pensions Based on Highest Single Year’s Pay. Some union deals base pensions on a single year of pay.  To exploit this rule, reported the Sacramento Bee, one Sacramento-area state accountant moved to a higher paying state job in the Bay area just before retiring, increasing her pension by $18,000 a year.   The Bee estimated this loophole cost taxpayers $100 million a year.
  • Benefits paid out to criminals and cheats. New York pays out pensions to 450 corrupt officials, some of whom are in jail, and two of whom were dirty cops who carried out murders for the Mafia.
  • Golden Handshakes. Many public employees are offered additional pension in exchange for leaving the workforce early.  Such deals have been used to get rid of officials accused of self-dealing.
  • DROP Schemes. Deferred Retirement Option Plans allow public employees to retire for a short time and then return to work, enabling them to receive both a salary and a pension check.
  • Double-Dipping. Many public employees are permitted to double-dip by retiring from one job and begin receiving a pension, and go back to work for full pay.
  • Air-Time. Many public employee unions have negotiated “air-time” deals, in which employees can purchase additional years of work credit in order to collect more generous pensions.

Again, this is just a sampling of public employee union abuses.  Notably, the list above does not begin to describe the numerous safeguards public employee unions have negotiated to prevent their members from being terminated even when good cause exists.

After all these years, the left has now announced its intention to fully support public sector unions.  This, of course, it is entitled to do.  But the left has a tremendous amount of catch-up work ahead of it.  The rote talking points of union leaders have failed to keep pace with the volume of reported abuses and carefully researched studies demonstrating the impracticability of public sector collective bargaining.  Nor will it do to suggest the entire debate is simply political in nature, as folks like Klein and Drum suggest, or that it is some offshoot of the vast right-wing conspiracy, as folks like Reich suggest.  Now that politicians and journalists on the left have engaged the debate in favor of public employees, I eagerly await their constructive, substantive responses to the volumes of documented problems inherent in public sector collective bargaining.

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7 Responses

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  1. […] my previous post, I argued that it was indefensible to suggest, as the left recently has, that Republicans’ […]

  2. I guess I fall in the category of taxpayer advocate. So here is my latest contribution:

    The Root Cause of the financial distress is Excessive Pensions. So let’s cut to the chase …….

    Private sector employers typically contribute 3%-8% of an employee’s cash pay towards retirement, yet the total cost (expressed as a level annual % of cash pay throughout one’s career) of Public Sector Defined Benefit pensions (for a 30-year employee retiring at age 55) ranges from 29% to 58% depending on the richness of the benefit formula (with safety workers generally at the highest end).

    More specifically, for the noted formulas, the level annual %s of cash pay are as follows:
    2% per year of service w/o COLA – 29%
    2% per year of service with COLA – 39%
    3% per year of service w/o COLA – 44%
    3% per year of service with COLA – 58%

    Even after deducting the typical employee contribution of about 5% of pay, that still leaves the employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The middle of these %s is 38.5% vs 5.5% (the middle of the range of what Private Sector employers contribute) or SEVEN (yes SEVEN) times greater.

    This is completely absurd, and the very modest “tweaking” at the edges by practically begging employees for a few more percent of pay contributions will NOT even begin solve the HUGE financial problem.

    TOTAL COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in the Public and Private Sectors for similar jobs, and with Cash Pay in the Public Sector now AT LEAST equal to (if not greater) than that in the Private Sector, there is ZERO justification for greater Public Sector Pensions and Benefits .

    Not for PAST service, but for FUTURE service, Public Sector pension accruals must immediately be brought FULLY down to the level of their Private Sector counterparts. Due to the huge reduction needed, the ONLY way to do this is to freeze the current defined benefit plans for CURRENT (yes CURRENT) workers, and switch everyone into a 401K-style Defined Contribution Plan with an employer contribution in the same 3%-8% range granted Private Sector workers.

    Additionally, since Private Sector retirees rarely get any retiree healthcare subsidy before eligibility for Medicare at age 65, similar restrictions should apply to Public Sector retirees.

    It’s TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions and better benefits.

    tough love

    February 22, 2011 at 9:20 pm

  3. Aren’t you giving out false information, to your readers, by stating that the retroactive pension increases were a violation of the CA State Constitution? The Second District Court of Appeal just recently ruled that such pension enhancements were not a violation of the CA State Constitution–adding further support to the former CA AG’s opinion, in the Amicus Brief that he filed, on behalf of the members of CalPERS.

    SeeSaw

    February 22, 2011 at 10:00 pm

    • SeeSaw,

      Retroactive increases are specifically prohibited by the state Constitution. I did a lengthy write-up of the Second District’s opinion here. As I explain, the court failed to provide any explanation as to critical points of analysis. It also employed wordplay to evade the constitution prohibition on incurring liabilities beyond the current fiscal year without a referendum, suggesting unfunded pension liabilities were not actually “liabilities,” but instead “an actuarial estimate projecting the impact of a change in a benefit plan.”

      I should have included a link. Thanks for pointing that out.

      Tim Kowal

      February 22, 2011 at 10:26 pm

  4. […] a good liberal to do?  Frustratingly for most of the public, Democrats have been unwilling to seriously engage public unions on their systemic abuses.  So it’s somewhat satisfying to know that even if […]

  5. […] last point about the current debate over public sector unions.  These and the many other criticisms of public sector unions are not new.  Yet, instead of meaningful responses to these arguments or […]

  6. […] engage only the noisy and debatable points about public sector unions rather than the serious and systemic ones.  I have been writing about these problems at great length here, and have shared them with […]


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