Public Sector Labor Unions Are Collapsing the U.S. Economy

Are Labor Unions Done-for?

January 12, 2011

The Atlantic Wire – State and municipal officials on both sides of the political spectrum are increasingly taking on public employees unions--promising to cut pensions, freeze salaries, and inhibit collective bargaining--to address budget shortfalls.

But the antagonism against labor unions is not limited to the public sector or to public officials. As The New Yorker's James Surowiecki points out, a Gallup poll during the Great Depression--when unions gained newfound power--found that more than 70 percent of respondents favored unions, compared with less than 50 percent today.

Is the backlash a fleeting product of the recession, or does it signal an irreversible decline in organized labor's influence?

• Great Recession Has Fundamentally Crippled Unions, argues Surowiecki. Research suggests the popularity of labor unions takes a hit when the economy is bad and and non-unionized workers look on with envy at the more generous wages and benefits commanded by unionized workers, Surowiecki concedes. But he adds that today's resentment toward unions is a new phenomenon, and stems from the decades-long decline of union membership:

Just seven per cent of private-sector workers belong to a union. The benefits that union members still get--like defined-contribution pensions or Cadillac health plans--are out of reach of most workers. And the disappearance of unions from the private sector has radically diminished the threat [to unionize] effect, meaning that unions don't raise the wages of non-union workers.

The result is that it's easier to dismiss unions as just another interest group, enjoying perks that most workers cannot get ... Labor, in other words, may be caught in a vicious cycle, becoming progressively less influential and more unpopular.

• Class War Could Tear Labor Apart, declares William McGurn at The Wall Street Journal. He explains that workers in government unions and their counterparts in private-sector unions are increasingly inhabiting different worlds. Private-sector union members now frequently pay for their own health care and have defined-contribution pension plans like 401(k)s, McGurn contends, while public-sector union members "are rewarded with contracts whose pension and health-care provisions now threaten many municipalities and states with bankruptcy." Government employees are responding to this crisis by demanding "more and higher taxes," he says, "which of course makes people who have money less inclined to look to those states to make the investments that create jobs for, say, iron workers, electricians and construction workers."
  

• Public-Sector Unions Must Compromise to Survive, submits Steven Pearlstein at The Washington Post. While they have any leverage left, Pearlstein says, government employees should accept a wage freeze in return for salary hikes once the economy recovers, request bonuses for better service or greater productivity, agree to contribute more to their health insurance policies, and replace their defined-benefit pensions with Social Security and supplemental defined-contribution plans, as in the private sector.
  

• Blame GOP for Unionism's Decline, claims Kevin Drums at Mother Jones: "Conservatives don't like [public-sector unions] in the first place, and crippling them would also seriously cut into a major funding source for the Democratic Party ... Conservatives succeeded spectacularly over the past few decades in destroying private sector unions (and doing considerable damage to the Democratic Party in the process), and this means that most people no longer belong to a union or even know anyone who does."
  

• What Will Replace Unions? asks Felix Salmon at Reuters:
  

Marxian rhetoric in general, about class or rent extraction or the balance of power between capital and labor, is treated with great suspicion by the broad mass of the population.

Meanwhile ... the people who control capital are willing and even eager to take money they would otherwise use employing middle-class Americans, and spend it on cheaper and equally productive workers abroad.

If the era of the union is over, as it seems to be, what other countervailing force will work to preserve the value of labor?

I'm Not Sure, But We Need Something, responds Mark Thoma at the Economist's View:

"It's not clear what type of institution can work at an international level to restore the bargaining power workers have lost with the decline in unions, but it is clear that something like this is needed."