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By Gary Starr for the Neville Awards
April 23, 2010
"Workers of the world unite...It's not just a slogan anymore, it's the way we're going have to do our work. We're trying to use the power of persuasion, and if that doesn't work we'll use the persuasion of power." -- Andy Stern with Bill Moyers, interviewed on PBS, June 15, 2007
In 1962, the sainted and, now "national treasure" President John F. Kennedy set the stage for a slow motion economic calamity. He signed executive order 10988 allowing the unionization of the federal work force. This order plus President Carter's 1979 Community Reinvestment Act, which gave us sub-prime lending for housing are the twin pillars of fiscal malfeasance that ultimately caused the great economic collapse of 2008.
Kennedy's executive order fundamentally changed the American political system allowing for the inevitable rise of a unionized public work force in many states and cities. It led directly to today's bloated public employee unions-The American Federation of State, County and Municipal Employees (AFSCME), the Service Employees International Union (SEIU) and the teachers' National Education Association.
This growth also led to an entrenched system of taking money from members' dues and spending it on political campaigns. How often have we heard of the rank and file at complete odds with the leftist thugs running the union. The Democratic Party is now a textbook case in public-sector dependency completely different the party of FDR, Truman, Meany and Reuther. That Democratic Party was allied with the industrial unions, which were anchored in the reality of profit and loss.
The states in the industrial North and on the coasts turned solid blue because the unions are strongest there. The tax-and-spend narrative became the training ground for their politicians. That system will also lead to their undoing because the bill is fast coming due.
Public Sector Unsustainability
Enter our Fraudinator-in-Chief, and his cabinet of academics with zero private sector experience. Job one was to enact the phony $865 billion stimulus bill, which they brag mainly saved state and local jobs. A pure sop to the unions. Then came the year long odyssey for the $1.2 trillion health-care bill, dripping with taxes. Sop number two to the unions. Independent and conservative voters felt like everything was being sucked down public-sector rathole.
Overall unionism keeps declining with the loss of 771,000 union jobs amid last year's recession. In addition 10.1% of private union jobs were eliminated, which was more than twice the 4.4% rate of overall private job losses. Only one in eight workers (12.3%) now belongs to a union, with private union employment hitting a record low of 7.2% of all jobs, down from 7.6% in 2008.
In 2009 the number of unionized workers who work for the government surpassed those in the private economy for the first time. The Bureau of Labor Statistics reported recently that 51.4% of America's 15.4 million union members, or about 7.91 million workers, were employed by the government.
Public sector unions offer what is basically lifetime job security and benefits. And these jobs almost never go away except in times of extreme fiscal crisis. The taxpayer may hold sway for a short time (The City of LA is talking about layoffs), but the unions soon regain their political advantage because taxpayers move on to their daily concerns. In private industries, union workers are subject to the changing economic fortunes of the marketplace and economic growth.
But now the Kennedy public sector union utopia finally appears to be hitting the wall. Pension costs and wage hikes are skyrocketing and are unsustainable.
In Massachussettes alone public safety spending is up 139%; social services, 130%; education, 44%. And of course Medicaid costs up 163%, before Romneycare has even been calculated.
In California 85% of the state's 235,000 employees (not including higher education employees) are unionized. Over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. The San Jose Mercury News noted, "This year alone, $3 billion was diverted to pension costs from other programs."
According to the California Foundation for Fiscal Responsibility there are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year. These retirees include police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay. The pensions for these (and all other retirees) are inflation adjusted and are guaranteed by taxpayers forever. If the economy tanks (which it has) the retirees must be paid even if the state's pensions funds aren't fully funded (which they aren't).
It will probably take a change to the state's constitution to effect change. In the meantime business and individuals are fleeing California.
Want a federal contract? You better be a union shop in the age of Obama. Back in the Bush days the press howled at the no-bid Halliburton contracts. Now there is not even a peep at the outright corruption taking place in Washington.
Within weeks of taking office Obama signed an executive order ordering federal agencies to require "project labor agreements" (PLA's) for all construction projects larger than $25 million. This means that only contractors that agree to union representation are eligible for work financed by the U.S. taxpayer.
Since only 15% of the nation's construction workers are unionized, the other 85% will have to forgo federal work for having exercised their right to not join a union. This is a raw display of political favoritism, and at the expense of an industry experiencing 27% unemployment.
Unionism also a rotten deal for taxpayers. Unionism puts an end to open, competitive federal bidding, which always means higher project costs. It also means taxpayers must finance the benefits and work rules of union members.
The Beacon Hill Institute at Boston's Suffolk University in 2006 investigated the costs of building 126 Boston-area schools. It found project labor agreements raised winning bids for school construction projects by 12% and actual construction costs by 14%.
Boston's Big Dig, Seattle's Safeco field, Los Angeles's Eastside Reservoir project, the San Francisco airport, Detroit's Comerica Park-all built under PLAs, were distinguished by their embarrassing cost overruns.
Look for the Union Label in the White House as well.
Andy Stern and the Service Employees International Union (SEIU)
We now come to the true villain in this narrative - former SDS member, Leninist, SEIU President and chief Obama bagman and thug, Andy Stern.
Politico recently reported that Stern is resigning as president of SEIU and if he does he will be doing so while at the top of his game.
Stern: "We spent a fortune to elect Barack Obama - $60.7 million to be exact - and we're proud of it."
Obama, aware of his huge debt to the SEIU, wrote in his autobiography, "I owe those unions."
As a result Stern is the most frequent visitor to the Obama White House, at least twenty-five times according to official visitor logs. This kind of access has already paid off big time:
Even though he's announced his retirement Stern isn't going anywhere. He's been appointed to Obama's deficit commission. What could go wrong with that little bit of quid pro quo?
- The $862 billion phony stimulus that prevented states from having to cut-back government union jobs or wages
- $1.2 trillion in Obamacare spending, much of which will go to unionized health care providers
- Obama's appointment of SEIU associate general counsel Craig Becker to the National Labor Relations Board.
As mentioned earlier, under Stern's tenure the number of government union members surpassed the number of private sector union members for the first time in our nation's history. There are two reasons for this:
Explaining how organized labor really works, US Court of Appeals judge for the 7th Circuit Richard Posner recently wrote:
- Unions kill private sector jobs, and unionized companies earn profits 15% lower than those of comparable non-union firms.
- Government union jobs face no competition. Public sector unionization has exploded in the past decade as leaders like Stern realized politics pays much better than the free market.
The goal of unions is to redistribute wealth from the owners and managers of firms, and from workers willing to work for very low wages, to the unionized workers and the union's officers. … Unions, in other words, are worker cartels. … There is also a long history of union corruption. And some union activity is extortionate: the union and the employer tacitly agree that as long as the employer gives the workers a wage increase slightly above the union dues, the union will leave the employer alone.
The real question is why do public employees need a union in the first place? Who are they organizing against? In the private sector the worker traditionally organizes against management. Union management works to protect its members from perceived tyrannies of management. Other than the increased cost of goods to the public due to union demands the public is not involved. The public can either buy or not buy a private sector product.
In the public sector the management is YOU, the taxpayer. With the majority of union members now working for the government, Stern and his thugs are extorting money from "management", classic Marxist wealth redistribution. SEIU uses its taxpayer-funded government union dues to lobby for an even larger government that can pay for more government union jobs. It is a perpetual government dependency machine.
So why is Stern calling it quits? It seems that after the $862 billion stimulus and $1.2 trillion Obamacare packages he's gettin' out while the gettin' is good, Card Check be damned. Looting the public trough just isn't as much fun as it used to be. Indeed there are storm clouds on the horizon.
One can only hope. Perp walk anybody?
- Having spent $60.7 million to elect Obama SEIU is now $85 million in debt and laying off workers. This will put a crimp Stern's lavish political spending.
- Various fights with AFL-CIO's Richard Trumka and his own locals are sapping resources and time.
- The Feds are looking into allegations of corruption involving SEIU officials (we are shocked, SHOCKED!!), while its connections (and $62,828 in donations last year) to the disgraced activist group Acorn have come under scrutiny.
- The Justice Department is looking into Stern's political activities to see whether he should have registered as a lobbyist.
- The Blago trial is gearing up and the Stern/Obama connection may be featured prominently.
- Democrats are headed for losses in the 2010 midterms and the 2012 presidential election starts gearing up in January 2011. It's not going to be a cakewalk for the Fraudinator-in-Chief this time around.
- The window may be starting to close on public sector dominance in government and the Democratic Party for the first time in forty years.