Plan Would End Collective Bargaining

February 10, 2011 - By admin

FEB. 10, 2011

By LANNY EBENSTEIN

There are at present several approaches being considered to reform public unions in California, including proposals to change public sector pensions and to enact paycheck protection, which limits the ability of unions to use members’ dues for political purposes without first asking their permission. These approaches merit support as ways to reduce public sector union power in California.

However, the best approach to reducing public employee union power would be to end public sector collective bargaining. This would be the solution to many of the government problems that plague California and many other states.

As an increasing number of observers are recognizing, the essential problem in contemporary public policy at the state and local levels is the excessive power of public sector unions.

It is not merely that these unions have engrossed a disproportionate share of resources for themselves. It is that they alter the political climate in the jurisdictions in which they are strong. By electing majorities to thousands of city councils, school boards, boards of supervisors and special districts across the United States, as well as to state and federal legislative chambers, public sector unions are the primary driving force for bureaucratic, expansive and costly government.

With respect to expense, the cost of public sector unions is well-documented. There can be little question that government employees in general have higher salaries, more secure jobs, better working conditions, better and more benefits, more sick leave (credited to retirement), more holidays, and better and earlier retirements than employees in the private sector.

In the city of Los Angeles, for example, public employees receive 17 days of sick leave a year, 12 at 100 percent of the employee’s daily rate and five days at 75 percent. Ten holidays a year is standard in the public sector, and if a holiday falls on a weekend it is taken on the preceding Friday or following Monday. Public sector employees’ health plans are usually top-rate. Working conditions and job security are superlative.

But it is when it comes to pensions that public sector workers really stand out. Many public employees in California can retire between the ages of 50 to 55 with 75 percent to 90 percent of their final salary as an inflation-indexed pension for life, together with health insurance. Especially in public safety area, the actuarial value of public employee pensions can be millions of dollars.

There are already more than 12,000 retired public employees in California with annual pensions of $100,000 or more. This number will increase substantially in the years ahead. Looking forward 20 years, California will have 2 million retired public employees drawing average pensions of $50,000 — $100 billion per year in pension costs when the entire state budget is now merely $85 billion.

The answer to excessive compensation for public sector workers and to excessive influence of public sector unions is to end public sector collective bargaining. Only when unions lose the power to represent public employees in the bargaining process will their power diminish.

President Franklin Roosevelt was clear that there is a great distinction between public and private sector unions: “Meticulous attention should be paid to the special relations and obligations of public servants to the public itself and to the government,” he said in 1937. “The process of collective bargaining, as usually understood, cannot be transplanted into the public service.”

George Meany, the first and longtime president of the AFL-CIO, had the same view.

In the near future, a group of Californians will submit the first petition in the country to the state attorney general’s office to quality an initiative for the ballot that would end public sector collective bargaining in the state. The proposed California state constitutional amendment would require about 800,000 signatures to qualify for the 2012 ballot.

To eliminate public sector collective bargaining would not take away the right of government workers to form voluntary organizations to lobby on a variety of issues, including compensation. But it would not give these organizations the ability to represent government workers in the bargaining process.

The proposed California state constitutional amendment would be modeled on successful legislation in this area in Virginia that was passed under former Democratic Governor Douglas Wilder. The initiative would disallow any state or local governing body from recognizing or bargaining with any public employee union or association.

Both Democrats and Republicans should embrace public sector union reform. It is to no one’s advantage, other than current public employees, to continue the status quo.

The rise of public sector unions has coincided with a vast expansion of government activity and wasteful and overly expensive compensation of government employees. To end public sector collective bargaining would be a significant step in the right direction.

Lanny Ebenstein, Ph.D., is president of California Center for Public Policy in Santa Barbara

Comments(0)
  1. StevefromSacto says:

    Read and learn:

    With all the hyperbole about “pension tsunamis” and “unfunded liabilities,” it’s easy to forget facts. Retirement funds for public employees were fully funded in the 1990s, in part because of outstanding market earnings. Then the banking fiasco pummeled the earnings of all Americans, wiping out savings and 401(k) accounts and causing pension funds to lose billions of dollars.

    It’s easy, too, to forget that state personnel officials chose to contribute nothing toward pensions during the boom years, instead diverting billions into other programs such as transportation, water, education and safety. During this period, the same state employees it has become so fashionable to bash continued to pay 5 percent or more out of their paychecks to fund their retirement. And in 1999, their retirement benefits were also improved.

    Last year, former Gov. Arnold Schwarzenegger called for the rollback of retirement benefits to 1999 levels, stating, “All I’m asking is for them to reform and roll it back and we will be home free.” His pension adviser, David Crane, said that the benefit rollback would save the state more than $90 billion.

    State employee unions not only agreed to roll back the 1999 benefits but also went even further, agreeing to create a two-tier retirement benefit, forgoing one-year averaging for pensions in favor of three-year averaging, and increasing employee retirement contributions. Hundreds of billions of dollars will be saved in coming years by these concessions from employees, whose retirement benefits average only $2,200 per month.

    Writing in these pages, Crane acknowledged that public employee pensions are “hardly extravagant” and that “workers are not the villains” in the ongoing pension “drama” unfolding in California and across the nation. On this we wholeheartedly agree.

    Public employees have paid a dear price for the abuses of Wall Street in pay cuts, furloughs and retirement givebacks. But rather than standing behind his former boss’s claim that we are now “home free,” Crane still is arguing that investment earnings assumptions and employer contributions are not sustainable.

    History suggests otherwise. In 1980, when Jerry Brown first served as governor, California paid more as a percentage of payroll toward retirement than it does today. For example, for school employees, the state contributed 13.1 percent in 1980. In 2010, it contributed 9.7 percent.

    While the state’s payments fluctuated during those years, including years when the state paid nothing at all, employees steadily paid in. That is why retirement benefits today are funded primarily from investment earnings and employee contributions, with the state paying only 20 percent of the total cost.

    Public employees have a strong interest in a vital economy, good public and private sector jobs, good schools, roads and safety. That’s why employees have made concessions. As the economy begins to recover and retirement investments rebound, we must avoid the use of misleading statistics to further punish public employees for the misdeeds of banks and Wall Street.

  2. Susan says:

    Just a small point, but retired employees are able to access the state’s healthcare system until they are Medicare eligible at age 62.

    It will be very interesting to see what happens to our Police and Fire protection, and at our prisons. We want to be safe and we want individuals to step up and put their lives on the line potentially every day. Let’s go to Mexico to see what happens when a Police Force cannot make it on their salaries. That’s a better system, right?

    There are some things that do not translate easily from the public to the private sector. Like life and death on the job, like permanent disability. Although we see this in the private sector, the percentage of occurence is not parallel.

    Let us address former Governor Gray Davis’ crimes, shall we? The retirement fund was fully funded until he changed the law that said the fund was untouchable to him and to the reps in sac. They started robbing it blind and NEVER paid it back like the new rules were written. THEN Davis decided to invest heavily into Enron and lost everything he put in.

    Davis’ shenanigans plus the $20 billion we spend annualy for tax paid entitlements to illegal aliens have killed this state. The average state worker is NOT TO BLAME.

  3. David L says:

    So much for freedom of association. America is dead. Class warfare has unUnited the USA. Both sides of the political spectrum piss on the constitution.

  4. David from Oceanside says:

    With all due respect to Steve from Sacto who wrote an editorial size comment, it is clear to all who are not lined up at the government trough that public employees are wildly overpaid in all respects.

    The average Californian would be much better off if most of the laws and regulations on the books were eliminated, three quarters of all state and municipal workers were laid off, and our taxes reduced accordingly.

    How and where do we sign up for petitions? I will ask friends and coworkers and stand in front of Walmart if I have to in order to collect 100 signatures.

    It is time for the taxpayers to take the state back from the taxconsumers.

  5. John Seiler says:

    StevefromSacto:

    You make some good points. But there’s no more money. Whatever the causes of the breakdown, it happened. This is just the beginning of the cuts at all levels of government. And there will be bankruptcies. There is no alternative.

  6. [...] This post was mentioned on Twitter by CalNews.com, AFP California. AFP California said: Plan Would End Collective Bargaining http://fb.me/DRUxRRHJ [...]

  7. John Gardner says:

    Finger pointing at Wall Street is a red herring. California’s public unions have enough misdeeds of their own to explain California’s problems: huge campaign support for politicians who then authorize yet more give-aways — to California Pubic Unions.

    The fundamental problem, IMHO, is that politicians have no incentive to resist outrageous union demands and every incentive to give in to them, unlike private enterprise where management’s own jobs are on the line unless they resist.

  8. Rex ther Wonder Dog! says:

    Collective bargaining should NEVER had been allowed in a monopoly-public employment.

    Thank Ronnie Raygun and Jerry Brown for that.

  9. Charles says:

    Rex thinks no one should have rights. Unless they work for private enterprise.

  10. Charles says:

    Lanny Ebenstein, Ph.D., (pile it higher and deeper)is president of California Center for Public Policy in Santa Barbara

    And a total jerk.

    He thinks no public employee produces anything. And he thinks he produces everything. How stupid. Public employees produce many valuable things. Only a total F!ckhead would say otherwise.

  11. [...] At Cal Watchdog, Larry Ebenstein of the California Center for Public Policy in Santa Barbara writes: There are already more than 12,000 retired public employees in California with annual pensions of [...]

  12. Steve says:

    This is CNN article that appeared on the Yahoo home page.
    ___________________________________________________________________

    Are you better off than your parents?

    Probably not if you’re in the middle class.

    Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.

    In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.

    Meanwhile, the richest 1% of Americans — those making $380,000 or more — have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust. Experts point to some of the usual suspects — like technology and globalization — to explain the widening gap between the haves and have-nots.

    But there’s more to the story.

    A real drag on the middle class

    One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University.

    Because of deals struck through collective bargaining, union workers have traditionally earned 15% to 20% more than their non-union counterparts, Rodgers said.

    But union membership has declined rapidly over the past 30 years. In 1983, union workers made up about 20% of the workforce. In 2010, they represented less than 12%.

    “The erosion of collective bargaining is a key factor to explain why low-wage workers and middle income workers have seen their wages not stay up with inflation,” Rodgers said.

    Without collective bargaining pushing up wages, especially for blue-collar work — average incomes have stagnated.

    International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn’t exactly been a win for middle class workers in the U.S.

    Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages.

    “As we became more connected to China, that poses the question of whether our wages are being set in Beijing,” Rodgers said.

    Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for.

    Whereas 50 years earlier, there were plenty of blue collar opportunities for workers who had only high school diploma, now employers seek “soft skills” that are typically honed in college, Rodgers said.

    A boon for the rich

    While average folks were losing ground in the economy, the wealthiest were capitalizing on some of those same factors, and driving an even bigger wedge between themselves and the rest of America.

    For example, though globalization has been a drag on labor, it’s been a major win for corporations who’ve used new global channels to reduce costs and boost profits. In addition, new markets around the world have created even greater demand for their products.

    “With a global economy, people who have extraordinary skills… whether they be in financial services, technology, entertainment or media, have a bigger place to play and be rewarded from,” said Alan Johnson, a Wall Street compensation consultant.

    As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s.

    In 1980, workers with a high school diploma earned about 71% of what college-educated workers made. In 2010, that number fell to 55%.

    Another driver of the rich: The stock market.

    The S&P 500 has gained more than 1,300% since 1970. While that’s helped the American economy grow, the benefits have been disproportionately reaped by the wealthy.

    And public policy of the past few decades has only encouraged the trend.

    The 1980s was a period of anti-regulation, presided over by President Reagan, who loosened rules governing banks and thrifts.

    A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed.

    In 2000, the Commodity Futures Modernization Act also weakened the government’s oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector.

    Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation’s richest.

    And as then-Federal Reserve chairman Alan Greenspan brought interest rates down to new lows during the decade, the housing market experienced explosive growth.

    “We were all drinking the Kool-aid, Greenspan was tending bar, Bernanke and the academic establishment were supplying the liquor,” Deutsche Bank managing director Ajay Kapur wrote in a research report in 2009.

    But the story didn’t end well. Eventually, it all came crashing down, resulting in the worst economic slump since the Great Depression.

    With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.

    Meanwhile, as corporate profits come roaring back and the stock market charges ahead, the wealthiest people continue to eclipse their middle-class counterparts.

    “I think it’s a terrible dilemma, because what we’re obviously heading toward is some kind of class warfare,” Johnson said.

  13. Phil says:

    It is easy to blame the unions for the economic troubles. The unions did not receive a bailouts nor did local and state governments. It was the banks that received billions of dollars in bailouts, while our economy was crashing. Our economic troubles was due to our banks. The reasons public employees have collective bargaining is so we can negotiate a fair contract. I am a public employee who was part of bargaining in my county, and we made concessions to address our budget issues in our county. Many public employees you refer to are teachers, social workers, probation officers, building inspectors, food inspectors, police officers, park ranagers, street cleaners, etc. These are middle class people and not wealthy bankers receiving big bonuses. The avg. public employee receives about $40,000 in retirement benefits. It is easy to scapegoat the unions for the financial crisis but the union did not cause this collaspe. It was our BANKS!!!! The great Dr. Martin Luther King Jr. once said, “Injustice anywhere is a threat jusitce everywhere!”

  14. PublicSafetyProject.org says:

    The City of El Segundo, California has been put on a path torwards bankruptcy by wildly excessive and unsustainable firefighter and police union and manager salaries, benefits, and pensions provided by city council members whose campaigns were supported the firefighter and police unions.

    The CalPERS pension benefit formula increases provided by California SB 400 enacted in 1999 and effective in 2000 are a significant part of the problem.

    For more information, see the Public Safety Project web site, El Segundo City Employee Compensation web page.

    – PublicSafetyProject.org

  15. PublicSafetyProject.org says:

    Response to:

    Steve, February 16, 2011 at 4:14 pm

    “This is CNN article that appeared on the Yahoo home page.”

    CNN is a biased source that lacks credibility.

    “Without collective bargaining pushing up wages, especially for blue-collar work — average incomes have stagnated.”

    Collective bargaining is effectively a form of extortion and price-fixing (for the cost of labor) that is illegal if corporations engage in the same activities. Corporate executives have been prosecuted for price-fixing. Collective bargaining drives up the cost of labor above the true fair market value, and creates artificial inflationary effects that drive up the cost of living for everyone including the middle class.

    Collective bargaining for government workers has driven up government employee salaries, benefits, and pensions to wildly excessive and unsustainable levels that has put cities, counties, and states on a path towards bankruptcy, and has already bankrupted the city of Vallejo, California.

    This is especially true for firefighter and police union members and their managers.

    “As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s.

    In 1980, workers with a high school diploma earned about 71% of what college-educated workers made. In 2010, that number fell to 55%.”

    Firefighters and police officers with only a high school education in California, especially in El Segundo, California, have total compensation ranging from two to five times that of highly skilled professionals with one or more advanced university degrees in difficult technical fields from big-name universities. This is a result of collective bargaining and firefighter and police unions who endorse, contribute money to, and aggressively campaign for the politicians who will determine the increases in their salaries, benefits, and pensions.

    The laws that legalized collective bargaining for government employees should be repealed, because these laws have resulted in an inherent and unavoidable conflict of interest and massive political corruption and abuse of the voters and taxpayers.

    These laws include the Meyers-Milias-Brown Act (MMBA) of 1968, the Educational Employment Relations Act (EERA) of 1976, the State Employer-Employee Relations Act of 1978, known as the Ralph C. Dills Act (Dills Act), the Higher Education Employer-Employee Relations Act (HEERA) of 1979, the Los Angeles County Metropolitan Transportation Authority Transit Employer-Employee Relations Act (TEERA), the Trial Court Employment Protection and Governance Act (Trial Court Act), and the Trial Court Interpreter Employment and Labor Relations Act (Court Interpreter Act).

    For more information, see the Public Safety Project web site, El Segundo City Employee Compensation web page:

    http://www.publicsafetyproject.org/elsegundo/elsegundo_payroll.html

      - PublicSafetyProject.org

  16. Arpancs says:

    All of those things that CI-Roller meoeinntd as gained by Unions (40-hour work week, vacation, sick days, etc.) came about through collective bargaining. It is the main raison d’etre of unions. The International Convention of Human Rights recognizes collective bargaining as a basic human right, and in 2007, the Supreme Court of Canada justified its opinion of collective bargaining as a human right by the following “The right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers by giving them the opportunity to influence the establishment of workplace rules and thereby gain some control over a major aspect of their lives, namely their work… Collective bargaining is not simply an instrument for pursuing external ends rather [it] is intrinsically valuable as an experience in self-government… Collective bargaining permits workers to achieve a form of workplace democracy and to ensure the rule of law in the workplace. Workers gain a voice to influence the establishment of rules that control a major aspect of their lives.” You know, “united we stand” kind of stuff. One little diggity diggity guy or gal trying to negotiate individually with management for better pay or safer working conditions wouldn’t have gotten doodely squat, as they say. This bad-mouthing of unions is all just a big ploy to turn working people against each other, so they are distracted from the fact that the corporate fat-cats (etc.) are the real problem.

News Archive

Archive By Categories
  • Budget and Finance
  • Education
  • Health care
  • Infrastructure
  • Inside Government
  • Life in California
  • Politics and Elections
  • Regulations
  • Rights and Liberties
  • Waste, Fraud and Abuse