RMG: Here is the union side of the argument

There has been much on this site about the escalating battle between Republican politicians and public-sector unions. However, no one has offered or acknowledged the union side of the argument, other than to characterize it as greed. I think we should know the best possible arguments they have on their side, and what we can say in return. You might be surprised at their merit, and it might help you understand why the pro-union people are so militant.  

BEGINNING OF THEIR SIDE

The big unions see America as an increasingly unfair country. Why? Because over the past 25 years, we have become much more unequal than we were before. In 1987, the top one percent of the country made 12.3 percent of all pretax income. Now, they make 23.5 percent. The bottom 50 percent of America made 15.6 percent in 1987. Now, they make 12.2.  In addition, real wages for the bottom 85 percent of the country have gone nowhere in 20 years. There have been a lot of productivity gains across all kinds of workers (even in manufacturing) that have greatly increased economic growth and corporate profits, but very little of that has gone into higher wages for employees. This has happened for lots of reasons: immigration, offshore labor, higher health costs, and new technology. But it has happened.

Republicans like to point out that American wages have increased significantly over the past 25 years. But that is almost entirely because of high-income people. (Did you know that fully half of all rich people work for a paycheck?) If you take out the top 10-15 percent, you see very small gains.

Even when you do see gains, those are eaten up by the things middle-class people now expect as part of their citizenship: education and health care, where costs have increased dramatically over the past 20 years.

All of these things, which are real, documented economic conditions, lead to this position by the unions:

“We are the only powerful force standing up for the right of the middle class to get more of the wealth that America has accumulated. We are becoming two societies of working people: one that is well-off with increasing wealth and wages, and one that stagnates.”

So, in their mind, at least public employees were keeping up with the ongoing enrichment of the better-off people. When someone points out that the janitor working for the government makes much more than the one in the private sector, their answer is that the one in the private sector is underpaid, and there is no reason to force the public sector one into permanent wage stagnation also. The unions will also point out that the government, like the private sector, requires higher-skilled people than it did years ago, especially because the government does so much more than it did years ago. This requires more parity with the private sector.

Of course, the states are running out of money now, whether the salary of the public janitor is fair or not. Sure, their budgetary problems exist for many reasons, but the compensation of their own employees is certainly a piece of that, the size varying state-to-state. The unions have a clear position on this shortfall, too: raise taxes. Their argument is, at least initially, not unreasonable. They would say, “Ed Lyons – since you moved to Massachusetts 12 years ago, your salary has doubled. The people in your government have only seen a 10% increase in their salaries in that time. Can you, one of the people who has benefitted from this economy more than others, not afford an extra $500 per year in overall taxes to keep them at their current salaries? Isn’t that fair? Don’t their kids deserve to go to college also? Won’t cutting compensation for public employees mean that you get a less competent government? Won’t that hurt you more than that $500 per year?”

So you can see why MoveOn is having a nationwide rally today called, “Save the American Dream.” It is because this isn’t really about what we pay the Town Clerk. It is about who is entitled to what part of America’s prosperity at a time when we fear that our future prosperity is subject to increasingly capable foreign competitors. The unions have mostly lost the argument in the private sector. All they have left is the public sector. When they lose that, they feel the American Dream is over, and the plutocrats will run the empire their way, forever.

That is why this is such a desperate fight.

END OF THEIR SIDE

So what can we say about these arguments? We can disagree, but we cannot ignore them, especially as we are, indisputably, becoming a less equal country, according to share of income. Here is what I would say in response:

– Yes, the wealthy are taking in more of the income, but the pie is getting larger. The middle class is primarily worse off because of expectations that our middle-class parents and grandparents did not have. (Our grandparents had no health insurance, had much smaller houses, didn’t go to expensive colleges, etc.) We need to have a national debate about what the “middle class” is entitled to. It is also unclear that government workers automatically deserve what non-government workers do (see next point).

– It is true that in the private sector, there have been great productivity gains among workers that have created immense wealth that has, mostly, not gone into the pockets of workers. But the public sector is different. There have not been similar, large productivity increases there. (In some places, they have become less productive!) Their wages have not risen because they have created more value, but because of union demands, and a well-known economic condition called Baumol’s Cost Disease, where certain work (like policing, garbage collection) don’t get much more efficient, but you have to pay them more and more to take those jobs rather than other kinds, where the wages keep rising. Overall, unions are defending the wrong set of workers: the ones who aren’t getting better at their jobs all the time.

– Union power is not just a question of maintaining the lifestyle of their members. The system that they defend prevents productivity gains, and prevents oversight that would stop all kinds of abuses of pensions, sick time, and vacation time. The system has other flaws. For example, by putting so much emphasis on defined-benefit pensions and health care after you retire, you put too much compensation in the future, keeping government workers who want to leave the public sector in a job they don’t want, because they would lose too much by leaving. (This is one reason why bad teachers don’t change jobs. They can’t afford to.) Of course, you also prevent us from getting rid of even the worst public employees. In 2010, Los Angeles, which has tens of thousands of teachers, spent $7 million trying to get rid of 35 teachers, only was able to move forward on 7, and only succeeded with 3. Ridiculous. In short, union power frustrates many important reforms.

– It is true that there are more highly-skilled workers required in today’s government. For instance, as municipal finances become more complicated, you need better people to manage them than you did 25 years ago. Let’s take another example cited by unions often: it is true that when you compare the education requirements to be a licensed teacher to jobs in the private sector where a similar amount of education and certification are required, the teacher is definitely underpaid for her skills. However, this licensing regime is an artificial one that you and your allies in the teachers’ colleges have created over time, and has little to do with success in the classroom. Teacher salaries are wrongly tied to the number of college credits, not student performance. Because of this system, teachers incur too much education-related debt, and now we have to pay them for it? Why can’t we tear down the licensing regime instead?

– You are correct that healthcare and education costs are one reason that the middle class, and government workers, are losing their ability to get ahead. However, the actions of your allies in government and education are some of the big reasons we are seeing this. You can’t push legislators to resist cost controls, adopt policies like community rating (everyone gets in-vitro fertilization!) and then complain about costs. You also fight for more and more government subsidizing of college tuition, which, of course, increases it. You should sit down with Republicans and figure out ways to cut education and health care costs. This will, over time, restore some of the prosperity the middle class has lost.

– If you want the public to support more pay and benefits for public employees, prove to us that we are getting more value. We understand that certain jobs will resist productivity gains, but many are not like this. Help create incentives for workers to adopt better processes and technologies. Help us get rid of people who shouldn’t be in their jobs. Help us pay some public workers more money for the same jobs because they do better than others. Don’t create some phony peer-review system where everyone scratches everyone else’s back – create a review process with real rewards and consequences.

I hope that this long post will help Republicans see the other side, and argue intelligently about the issue of public employee compensation, which will be important for many years to come. Remember that when you see some union member shouting at you across the street, he has been told, with at least a little justification, that the future prosperity of his family is being threatened by you. This doesn’t make him right. It does mean you have to see things from his perspective.

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