Do Public Sector Unions Drive States Into Bankruptcy?


The Senate's Public Safety Employer-Employee Cooperation Act (S 3194), which I discussed briefly the other day, seeks to prohibit state governments from restricting collective bargaining by public sector unions.

Currently, 21 states restrict, to varying degrees, the power of public employees to unionize. This bill would abridge those states' rights and complete a trend that began in the 1960s, when many states passed laws exempting civil servants from court rulings that generally prohibited public sector unionization. Effectively every state would end up with an organized public sector. In a letter to the editor, Lake Wales, Florida resident Brigitte Fell explains the imposition this would place on state governments:

It would direct local governments to recognize the employees' labor union; require local government to collectively bargain over hours, wages, and the terms and conditions of employment other than pensions; require states and municipal governments to establish an impasse resolution process; require that state courts enforce the rights established by this mandatory collective bargaining bill; and direct every state—even if that state currently recognizes employee-collective-bargaining rights—to conform to federal regulations around mandatory collective bargaining within two years of the bill's effective date, without regard to state or local laws.

The bill is called "reasonable" by one of its six Republican supporters, Nebraska Sen. Mike Johanns, because it would prohibit public sector strikes and require arbitration of deadlocked contract negotiations. But this codicil does not address the more important objection to an organized public sector—not that state workers will strike but that they will amass unique lobbying power. (And unlike private sector lobbyists, they draw all their money and power from the taxpayers—an essential unfairness that puts the whole universe of public sector unions in bad odor.) This in turn makes it exceedingly difficult for a state to say no to budget-busting benefits packages, as we have seen in California, Illinois and New York, to name a few.

The National Review's Reihan Salam condemns the bill, and notes that Fairfax County in Virginia (where collective bargaining by public employees is prohibited) is in better fiscal shape than Montgomery County, Maryland (where it is only partially restricted).

But is the relationship really that simple? In its article on S 3194, the Wall Street Journal maps out the 21 right-to-public-work states:

No agitators here!

It would be tempting to say that these states are performing relatively better in budgeting than the other 29. But it would be true only in the case of Arkansas, which according to the liberal Center on Budget and Policy Priorities is one of only four states not facing a deficit in 2011. The other three all allow the kind of public sector unionization the bill would force on all 50 states.

Far from correlating with fiscal thrift, restrictions on public sector collective bargaining may have little effect on deficits. The 21 states above include (again using CBPP's figures) some of the most mismanaged state budgets in the country. Colorado is looking at a shortfall of 21 percent of its fiscal 2011 budget, Georgia 26 percent, South Carolina 26 percent and Arizona a whopping 37 percent.

Is it different for states that completely bar collective public employee bargaining? Apparently not: Virginia, one of two states that prohibits bargaining entirely, has a relatively manageable 9 percent budget gap—but North Carolina, the other one, is looking at a massive 30 percent shortfall.

As I noted the other day and will reiterate in an upcoming print column, S 3194 is still a bad bill. It is on shaky ground in federalist terms. (How is hiring a DMV drone interstate commerce?) And the danger from public sector unions is not only that they lock in impossible benefits packages but that they interfere at all levels of the political process. That political power may not hinge on the presence of collective bargaining rights: While it has no bargaining power, the Virginia Education Association nonetheless includes "advocacy" among its duties.

The results from the 21 states that curtail government-worker unionization indicate the presence of government-worker bargaining is not sufficient cause for a huge deficit. But it's unlikely that forcing states to allow public unionization would have no effect on deficits: Illinois, with more than a 50 percent budget gap (by far the highest percentage gap in the country), also has an exceptionally vigorous public employee movement. That's the worst of both worlds, and all states may get to experience it if PSEECA passes.

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  1. Unions would not exist without both gov’t coercion to force membership and support of their thuggery.

    1. I’m not sure about that.

      But what I am sure about is that the Public Sector is unique in that it’s one of the only employer sectors that demands unionization, and encourages its own employees/Unions into runaway wages and pension benefits. It’s essentially a self-feeding system. The bigger the union, the more powerful the government. The more powerful the government, the bigger and more powerful the union. The higher the wages, the more tax revenue is required to feed the pension/wages machine.

      Something has to be done, and I’m not sure what the answer is.

      1. Pressure your state to ban public sector unions and stop any federal overreach such as the unconstitutional one mentioned in the above article.

    2. The question mark at the end of the headline was funny.

  2. Far from correlating with fiscal thrift, restrictions on public sector collective bargaining may have little effect on deficits.


    Simply because there are many ways for states to go broke other then government employee unions does not mean there is no correlation.

    Cheery picked examples and a cruddy map is not enough. I need more graphs and shit to be convinced there is no correlation.

    1. It would also be interesting to see what (un-bugeted) amounts are due in the near future. The unions have been very successful in loading benes into the contract, all somewhat ‘hidden’ in that they didn’t affect the budget in the specific year of implementation.

      1. Instead of overall budget, specifically looking at things like pension size correlated with these laws would be more interesting.

  3. Daniel Henninger had his usual great collumn in today’s WSJ. In it he talks about the coming conflict between liberals who still care about liberal programs and goals and unions. David Obey is trying to gut a bunch of special programs for failing schools and use the money to give to states to keep them from laying off teachers. It is a total payoff to the teacher’s unions at the expense of liberal sacred cow. A few liberals are starting to catch on to the fact that if all the money goes to the unions, they don’t get a pony.

    1. A few liberals are starting to catch on to the fact that if all the money goes to the unions, they don’t get a pony.


    2. John is absolutely right here.

      I think there might be some benefit to pushing a benefits reform bill that really put stress on the tension between liberal goals and unions – namely by taking all the various benefits the poor receive now that are micromanaged by public sector employees and transforming them into cash benefits with no management or administration at all. The Democrat party has to be forced to choose between the “unfortunate” they claim to advocate for and the public sector unions they really serve.

      1. LOL. There is an old Twilight Zone where a gangster dies and goes to hell. The only thing is he gets everything he wants. All his jobs work and nothing ever goes wrong. He keeps asking the devil how this is hell. And the devil says just wait. And sure enough by the end of the episode he is getting everything he wants but is miserable.

        I am starting to understand that episode in a new way. You are really sly fluffy.

      2. “The Democrat party has to be forced to choose between the “unfortunate” they claim to advocate for and the public sector unions they really serve.”

        They’ll just justify it in terms of preventing waste and abuse.

        Besides, favoring the union side also enables Democrats to micromanage the lives and personal decisions of the poor, unfortunate, or otherwise dependent on government. Protecting the lesser folk from themselves at least as important to liberals, if no moreso.

  4. Somewhat related:

    Bell,CA, is seeking the resignation of its high pay managers. City Mgr, 800k USD salary, is facing living on a 600k USD pension. What they don’t discuss is how they got all that money.

    I don’t think they have a union.

    1. Good point. I think the broader issue is insiders’ use of State power to plunder the public purse. You don’t need a union to do that, but it’s dodgy when you permit organizations to form whose primary purpose is that, i.e. unions.

    2. City and county governments are ripe for that. No one pays attention.

    3. A law requiring all public retirement plans to be fixed contribution would help a lot. Could still be abused (contract says city must contribute 50% of base salary to retirement account), but would be far less abused.

      1. Yeah, but a contribution of 50% of base salary would show up right here, right now and impact the budget immediately. Cities and counties can’t take that kind of a budget hit.

      2. Yeah, but a contribution of 50% of base salary would show up right here, right now and impact the budget immediately. Cities and counties can’t take that kind of a budget hit.


    This is pretty good.

    1. funny and pointed but not mean.

      very good.

  6. The state GOPs of all 23 states affected by the bill need to make it clear, if the bill passes, they will fund primary challenges against any Republican senator who votes for cloture on the bill. In every single election until the bill is repealed.

    Guaranteed the backing of 23 state party committees, it shouldn’t be hard to recruit opponents who can give these people a hard primary challenge. Even if they win their primaries, they’ll be wounded for the general election . . . and facing the same punch next election, too.

    1. Yup. If they vote for this they are just worthless tools of the establishment. Might as well have a Democrat in there.

    2. I’m afraid you’re expecting a bit much from the other side of the ruling party.

    3. In the case of Virginia, both senators are Democrats, dammit.

  7. But this codicil

    Codicil? Codicil?


    Lemme load up in my other tab…

    1. supposed to only apply to wills.
      but good use of the term.
      the language grows

  8. Why do we have to look at this in such loosely correlating terms. Why can’t we look at it in a more direct light:

    Like what percentage of budgets where states or cities are in the hole are going to pension benefits of retired municipal/state workers? Ie, how much money is being spent on people who aren’t producing anything?

    1. Should we get rid of pensions for retired military personnel also?

      1. Don’t ask me. I won’t tell.

      2. That’s a bad question to ask around here. These folks don’t exactly love the military.

        1. Just trying follow the “reasoning”. I’m the first to wonder why the military budget is so sacrosanct that waste in the military budget is never really discussed to any serious degree, but deficit hawks want to piss and moan about essentially nominal NEA funding.

          1. You were doing nothing of the sort. You’ve been busted for your man of straw.

            1. In what way, exactly – lest I be misconstrued?

              1. Jimmy|7.23.10 @ 1:17AM|#
                “In what way, exactly – lest I be misconstrued?”

                From above:
                “I’m the first to wonder why the military budget is so sacrosanct that waste in the military budget is never really discussed to any serious degree, but deficit hawks want to piss and moan about essentially nominal NEA funding.”

                Please show me the “deficit hawk” who wouldn’t like to cut the military budget.

                1. I never hear these folks talk about waste in the military budget, ever. They talk primarily about cutting social programs, and we all know this. The moment anyone talks about looking at cutting defense spending, it gets demagogued as weak on terror, or just weak in general. In this latest extension of unemployment benefits, anyone serious about paying for the $34 billion could find it at the Pentagon, but no one has the guts. Farm subsidies, no one really talks about cutting these subsidies to any serious degree. So who, and I mean a “who” that actually matters, talks about cutting military spending?

          2. From the July issue of Reason:

            “Military expenditures are one of the reasons the U.S. government’s financial path is unsustainable.”


            1. U.S. government yes. State governments, no. The article and discussion are about state government pensions, not federal. Let’s not conflate two different issues.

            2. Particularly since China just signed a trade deal with Taiwan that practically ensures China will never attack. So, the raison d’etre of the kind of military we pay through the nose for has essentially vanished.

      3. we didn’t have a union in the usa.

        no one is talking about taking pensions earned.

        sfc theocrat, usa ret

      4. oh yes. complaining about a 600,000USD yearly pension for a city mgr is just like stripping us military persons of their pensions.

      5. Why not? Is there something about being in the military that makes one unable to save for retirement like the majority of other people?

        1. The military sucks so you have to do something to incentivize NCO’s. Just increasing pay would probably lead to a shortage in E-6 and higher.

        2. The point isn’t that he gets a pension. It’s the size of the pension that’s objectionable. I don’t have the figures on what comparable private sector compensation would be, but I’d be willing to bet that it’s a lot less than $600,000 annually.

          Now, if you think that military retirees are over-compensated, I’d say you need to bring some figures to make your point. Their pensions aren’t “sacrosanct,” but I don’t think 50% of a military salary after 30 years (or something along those lines) is unreasonable.

          1. And the same goes for other public pensions. We should not assume that they are unreasonable, but as Paul was saying, we need to look at the data. The article doesn’t go as deep as it could have into the issue.

          2. It’s actually 50% of base pay after 20 years, 75% if you go to 30 years.

      6. See my post above. As long as its a fixed contribution retirement plan, Im okay with it.

      7. When the time comes for everyone to take a haircut, I’m sure us military people will be there getting it done along with.

        I’d love to see evidence to the contrary, but of all the budget-busting aspects of military spending, I’d be surprised if the money spent on retirees is a sizable problem, or at least as large of a problem as the pensions for state and local gov’ts. The military doesn’t have the huge salaries that allow for massive retirement payments, and the “up or out” nature of the services keep a lot of people who join from ever being able to last long enough to receive a retirement.

        I could be, probably am, wrong though.

      8. Re: Jimmy,

        Should we get rid of pensions for retired military personnel also?

        Do you like being forced to pay for them?

  9. Im of the mind set people should be free to join or not join but government should not be allowed to force someone to join. As well gov’t should not force entities to recognize a union. A business should not have to negotiate with unions unless it chooses to as well gov’t should not either.

    1. some private idiots like general motors are as dumb as or dumber that the govts.

      but we don’t have to bail those private entities, do we?

  10. Good. States shouldn’t have “rights”, anyway, much less the “right” to restrict unionization.

    1. u unionize till the cows come home just don t include me (the below cmt shld be here)

      i ve been in a union roofer in kcmo. we needed the union then back in the 1960 s but u should be able to get out when your needs r met.

    2. MNG|7.22.10 @ 11:05PM|#
      “Good. States shouldn’t have “rights”, anyway, much less the “right” to restrict unionization.”
      “Restrict unionization”? Exactly how ignorant are you?

    3. Re: MNG,

      Good. States shouldn’t have “rights”, anyway, much less the “right” to restrict unionization.

      I totally agree with you – because States are nothing more than political constructs. People HAVE the right under freedom of association to unionize, and by the same token, employers have every right to disassociate from them under the same freedom.

      Right, MNG?

      1. Obviously employers have no rights because they are generally evil corporations. Even small mom-and-pop shops never pay their employees as much as they like. Until everyone gets the salary they deserve, employers do not deserve rights!

    4. Surely they have the right to decide not to negotiate with unions, which is what is at issue here.

  11. u unionize till the cows come home just don t include me

  12. North Carolina is a particular bad example to use, Tim. We have non union related corruption problems that would cause a Teamster to sprout wood in envy. A former Democratic Speaker of the House rots in jail with a former Republican state congressman he bribed to switch parties in order to keep his party in the majority. The last governor forced the UNC system to create a make work six figure salary for his wife in order to keep the bucks rolling in after leaving office. He’ll probably be seeing the inside of a prison cell for an unrelated campaign funding scandal. Several other scandals, but the most fun for me because I got the straight dope from someone in the chancellor’s office, a friend of mine.

    Here is the story:…..from_nc_at

    Note how sweet and innocent that all sounds. How every one is so sad to see him go, and the mayor talking about what a positive contribution he made. Hell, you all know this guy:

    In a written statement UNC President Erskine Bowles said he respected Battle’s decision and praised him for “his ongoing contributions to A&T and the Triad region.”

    I would love to dish the dirt, but all I can really comment about this is according to my gal (not my gal, gal, though three hundred pound women in the public sector of the African-American persuasion are oddly overrepresented in my personal friendships), the reasons behind the resignation were not so sweet nor innocent.

    Note his resignation comes on the heals of another scandal:

    The man Battle replaced, James Renick, left in 2006 after seven years to take a job at the Washington D.C.-based American Council on Education. In 2007, a state auditor’s report found that the university inappropriately moved $380,000 from a campus vending contract to a discretionary fund for Renick from 2003-2005. The financial discrepancies led the Guilford district attorney’s office to ask the State Bureau of Investigation to conduct a criminal investigation. This January, the district attorney announced that no charges would be filed and said neither Renick nor a project manager violated any laws or enriched themselves.

  13. How is hiring a DMV drone interstate commerce?

    AIUI, this isn’t quite correct. The bill, as the title suggests, only applies to “public safety officers,” defined as “an employee of a public safety agency who is a law enforcement officer, a firefighter, or an emergency medical services personnel,” but not including managers, except for people temporarily serving as acting managers.

    In other words, EMTs, cops, and firefighters. It doesn’t apply to DMV workers; it doesn’t even apply to teachers (who can join a union but can’t collectively bargain in VA and NC). Hence the WSJ map specifically mentioning firefighters and police.

    It’s a thin edge of the wedge argument; police and firefighters tend to get better press. Teachers may well follow at some point. DMV workers later.

    1. Just a comment – EMTs and paramedics get diddly unless they work in a fire-based service. If they don’t, the people who save lives in emergency situations could make as much money working in Starbuck (EMTs anyway). Pensions? Benefits? Many of them don’t even get health insurance, while working in a skilled health care occupation. As for the firefighter unions, they recognized 30-odd years ago that declining fire incidence due to improved technology and safety regulations meant that firefighting was declining in relevance. So they stepped on the toes of the developing field of EMS as a power play.

  14. Question: if we print our way into Weimar-style inflation to pay off our public sector overlords, do we get to make their pension checks in worthless funny money? Or are their pensions indexed to the cost of living?

  15. I’ve always wondered about something. How do you “prohibit strikes”? Do you torture the employees unless they work?

    1. It’s a complete twisting of language.

      Basically when people say a law “prohibits strikes” it means that the law permits employers to fire striking workers and replace them.

      Which is a right that employers should already possess without restriction anyway.

      Basically all the law does is take away the “right”, speciously and unjustly granted to other unions, to go out on strike without being fired.

  16. Actually, I think any state laws barring state employees from forming an organization to advance their interests is unconstitutional anyway.

    BUT the real issues here are mandatory collective bargaining and mandatory arbitration.

    THOSE are the two elements of this bill that will create runaway growth in public sector compensation.

    Any system with mandatory arbitration will result in salary inflation. Ask any professional sports league ownership group about that.

    Unless employers [and taxpayers] are allowed when pressed to take a negotiating position that says, “Take or leave it. Go fuck yourself!” the unions have too much power. Want the power to strike? Fine. But employers have to be able to say “Go fuck yourself!” too.

    1. If the state law requires a closed shop, should that not also be unconstitutional?

      Collective bargaining, in and of itself, is anathema to a free society. The employer’s right of association is necessarily abridged by collective bargaining.

      1. I don’t know that collective bargaining is anathema, but the employer being forced into it by legislative gunpoint certainly is. If all parties are agreeable, it’s certainly easier for the employer to negotiate with a single representative rather than each employee individually. It’s the fact that the employer is made to do so against its will that is the problem.

  17. As a life-long resident of NC, I can tell you the problem with our finances. Democrats.
    NC has been (effectively) run by the Democrat party since reconstruction. Yeah, it is ~that~ simple. When you have effective one-party rule for 140 bleeping years, the corruption gets pretty bad.

  18. Did unions bankrupt Eastern Airlines, Pan Am, TWA, Bethlehem Steel, General Motors, Chysler, etc!!!!!

    1. They sure played a major role. Of course, the companies which you list made a bad investment with collective bargaining.

  19. Well, then. The Republicans should counter by introducing a bill to completely outlaw public sector unions. It would be a wildly popular campaign plank that they could carry all the way through to November.

  20. I’d ask our good liberal commentators to explain how the U.S. Congress has even the slightest authority to do this, but I know they don’t actually give a shit whether the U.S. Congress has the authority or not. So I may as well not waste the effort.

    1. It’s the Good & Plenty Clause.

  21. Do Public Sector Unions Drive States Into Bankruptcy?

    Do cats meow?
    Does that dress make her look fat?
    Is the pope catholic?
    Do bees swarm?

  22. Kind of ironic, if this passed, that the federal government would be forcing state governments to do something it doesn’t do itself. Federal employee unions can’t negotiate over wages or benefits, just working conditions and a few other areas.

    1. Shhhhhhhhhhhhhh!

      For God’s sake man…

  23. Currently, 21 states restrict, to varying degrees, the power of public employees to unionize. This bill would abridge those states’ rights[.]

    Why don’t just drop this pretense that States have rights to begin with, and just concede the obvious: That the central government pretty much can do whatever it pleases, since the people enabled them out of pure rent-seeking greed?

    1. OM, do you read Gary North? Lew Rockwell carries his columns. Last montth he predicted that, in the end, public employee pensioners will face the same fate as other unionized pensioners at GM and the airlines.

  24. Re: Libertymike,

    I read every day, and I love Gary’s columns.

    1. I have to take him with a fist-sized grain of salt after his Y2K doom-mongering.

      1. Re: T,

        You’ve got to be kidding – everybody made a huge deal out of that (eventually) non-event, even The Simpsons. Why single him out?

        1. He was spectacularly over the top about it. His website was getting passed around by guys I knew who were working (in COBOL, no less) to fix the problem. He basically predicted the end of civilization.

          1. 9-11 was a Y2K glitch. The powers that be decided to blame it on a convenient enemy – Ay-rabs.

            I wonder if there is money to be made mongering that take?

            1. I like it.

              Where was Gordon Moore on Sept 10th?

  25. I think there will be serious Constitutional problems with this bill. SCOTUS generally frowns on the federal government ordering states how to manage their own affairs.

    And I do agree that any serious analysis has to look at the deferred cost of pensions. My recollection is that there are over a trillion (with a “t” and an “r”) in unfunded defined pension benefits hanging over the states. How does that map to a unionized workforce?

    Oh, yeah, as we run out of money, the Blue on Blue infighting should be yummy indeed.

  26. Please name a union that did not bankrupt it employers.

  27. The ONLY thing Unions are good for is sucking the life blood out of anything around them!


  28. Please name a union that did not bankrupt it employers.

    Way back when I was just a wee tad of a lawyer, I worked in a firm that did employer-side labor law. One of the partners had picture up on his wall with (as I recall) a couple of dozen company logos on it.

    All unionized companies that had gone bust. Now, correlation isn’t causation, and all that, but it was suggestive.

  29. When will Congress take up a bill that gives we, the Citizen Taxpayers, the right to collectivley say “screw you” at tax time and not give one thin dime?

    That philosophy did not hurt Tim Geithner one bit on his way to becoming Treasury Secretary.

  30. Aside from the separation of powers problem that comes up whenever the feds try to boss state governments, there is also a Commerce Clause problem (alluded to above).

    This bill would be an exercise of the Commerce Clause directed specifically at an employment relationship that is not related to commerce. Cops, firefighters, teachers, whatever – by definition, if you work for the state, your job is not “commerce”, and I damn sure can’t see how its “interstate” commerce.

    Sure, sure, “indirect effects” and all that. . .

  31. Pension payments are primarily an issue of buy now pay later. Management and/or Political officials can offer high pensions now and when the costs come due these leaders have already moved on to their next job. If the rules about funding pensions where changed so that pensions had to be fully funded each year with money from that year AND remove the right to count the expected rate of return of saved pension funds against future pension spending; this problem goes away. Pensions would then be a fixed annual dollar expense for keeping each employee. Not some future balloon payment that suddenly came due.

  32. It would be tempting to say that these states are performing relatively better in budgeting than the other 29.

    Why would those be correlated? Just because they’re not wasting money on excessive union-negotiated compensation doesn’t mean they aren’t wasting it somewhere else. It’s like asking if people who eat salami are more likely to be overweight.

    A far better measure would be simply ask what the relative compensation looks like, adjusted for COL.

  33. I do not see this bill as being something that will be held up in courts. As much I despise state’s abusing their power and keeping rights away from individuals, including their own employees, I do believe this falls in the realm of “state’s rights”.

  34. Yet one more federal overreach and one more disregard to the 10th Amendment! How can the federal government require a state to recognize a union; that’s not how our nation was founded. The federal government had better get itself in check or it’s going to face civil upheaval. I’ve never witnessed a nation so divided and the feds are causing it all.

  35. Read this report:…..s_are.html

  36. Piggish public employees will never see their outrageous pensions. Their pension funds will go broke, requiring bankruptcy and slashing of wages and benefits.

  37. Typical conservative fundamentalism. You don’t actually care about empirical facts, you just keep hammering your little narrative. And why? So you can assure yourself that the means justify the ends when you beat down the already beaten.

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