Labor

The Difference Between Private and Public Sector Unions

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At The Washington Post, Ezra Klein makes the case that it's a mistake to separate private sector unions from their public sector counterparts. For one thing, he says, the costs they create are born by the rest of us regardless of whether the unions are public or private:

Lets let go of the idea that the public is on the hook for unions made up of government workers but not for unions made up of janitors in Las Vegas hotels.If private-sector unions negotiate higher wages that lead to higher corporate costs, those costs are passed on to the consumer. If public unions negotiate higher wages that lead to higher taxes, those taxes are paid for by the taxpayer. If public or private unions negotiate work rules that stifle innovation or impede good service, the public bears the brunt of that, too.

It's true that deals made by private sector unions can impose higher costs on others. But Klein overlooks a major difference: In the private sector, consumers have the right to opt out.

If private sector unions negotiate deals that make their respective industries more expensive to operate, and thus their products more expensive, consumers have the right to buy less, or to go elsewhere to get what they want. Businesses can send fewer employees to Las Vegas conferences. Families can pinch their food budgets if labor costs at grocery stores make prices more expensive, or replace their cars less often if union benefits add too much to the price of an automobile. If too many people opt out, or buy too little, the company in question goes out of business. And unless the government offers a bailout, that's the end of the story. When dealing with the private sector, unions generally have some incentive not to overreach to the point where their employer goes out of business.

The story's not the same in the public sector. When government employees negotiate added salary and benefits, those who are not directly employed by the government—which is to say, the vast majority of taxpayers—can't really opt out. So one of three things has to happen: 1) Taxes are raised to pay for the added compensation costs. 2) Services are cut in order to pay for the additional compensation. 3) The additional compensation isn't ever paid—a situation that usually comes with, at minimum, some sort of minor political drama, if not a serious showdown. This is why the power of public sector unions is such a big deal: When they negotiate better benefits, the majority of taxpayers usually end up forced to bear the cost, somehow, whether they want to or not. With private sector unions, that's not necessarily the case.

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  1. NO unions getting anything above market with OUR tax dollars, EVER.

    End communication.

    1. ^^ that isn’t hyperbole or sarcasm on my part; I re-read it, and it came of came across that way. I honestly, truly do not understand the logic of collective bargaining for tax-payer supported public workers.

      1. 1. The union negotiates for salaries paid by taxpayers

        2. Part of that salary (taxpayer dollars) goes directly to the union.

        3. The union then uses those dues (taxpayer dollars) to support politicians who will negotiate better salaries for union members (more taxpayer dollars).

        Quite a scam, huh? Taxpayers end up giving unions the cash they need to screw even more money out of them.

        1. It’s crony capitalism minus the capitalism. There’s no ‘tension’ in the relationship between the unions and the gubmint. Bring in the consumers – tension i.e. you have to please me to get the money to buy a lobbyist!

          Both suck but the union scam is the fast path to a worthless currency.

        2. If only unions were in most taxpayers’ best interest. Oh wait, they are. I was with you until you called it a scam. Seems like a perfectly legitimate way to look after oneself. Aren’t you supposed to be the ruthless selfishness people?

          1. It’s not ruthlessly selfish to join a union. Public sector unions however suck directly at the teat of the taxpayer. That is just wrong.

      2. Collective bargaining between government and public sector unions is like playing poker with somebody else’s chips. It’s great fun and a win for everyone–except for the actual supplier of the chips.

  2. Fuckin’ coercion, how does it work?

  3. If private-sector unions negotiate higher wages that lead to higher corporate costs, those costs are passed on to the consumer.

    As Peter points out, obviously not, if the consumer decides the product is now too expensive and decides not to buy it. And non-unionized companies will be happy to step in to fill the gap.

    Seriously, this guy is dumber than some of the trolls around here.

    1. Well, maybe Ezra’s next part would have been:

      “And in the private sector, if the union demands actually do get the company in trouble, the federal government has to bail the company out because it’s Too Big To Fail, so taxpayers still end up paying.”

      Unfortunately, there’s a bit of truth in that. So Ezra’s convinced me– we need Right to Work laws everywhere.

    2. Ezra may be the most uneducated of the lot. I’m not sure though.

    3. He is truly a fucking crapweasel.

  4. I would argue that there is no difference between Ezra Klein and, say, a bag of smashed assholes.

    1. Compelling. A tautology, really.

    2. that is an insult to bags of smashed assholes everywhere

    3. Bags of smashed assholes are too smart to write for the Washington Post.

  5. How about the fact that public sector unions are able to donate money to election campaigns of guys they’re nominally going to be negotiating against.

    In that situation, the unions get fat, the politicians get fat and “we the people” get screwed…

  6. This is something liberals cannot accept. To them, there is no difference between Walmart and the government. It’s either all coercion or none of it is.

  7. How does Klein figure out how to put his pants on in the morning? Seriously, why aren’t his coworkers lobbying to have him fired for making their entire operation look even stupider than it is? He’s like the albatross around their neck and there’s words, words everywhere but not a drop to read that make any sense.

    1. Is he the one who couldn’t figure out how Netflix works or the fat one (Yglesias?)?

      1. Yeah, that’s Klien.

  8. hate unions, hate unions, hate unions…got it.

    1. No, schmuck…we hate you.

      1. ur royal we is weewee see

      2. Don’t mind Episuck, he hasn’t read AmHist 101 and has no idea the benefits we’ve gotten from unions.

        1. HAHAHAHAHAHAHAHAHAHA

          1. Sad little epi, always falling into hysteria when he can’t win an argument.

    2. I know, right? Thanks to those clowns out there protesting to keep their gravy train rolling, I only have to work 40 hours a week. The logic is irrefutable!

    3. Re: OhioOrrin,

      hate unions, hate unions, hate unions…got it.

      Hate statist fucks, hate statist fucks… C’mon, OO, say after me:

      Hate statist fucks,
      Hate statist fucks,
      hate statist…

    4. “hate unions, hate unions, hate unions…”

      Change that first “h” to an “H” and I’ll give you a “DITTO”.

  9. I’ve been in unions. I’ve been on strike. When you’re on strike it becomes very clear you’re hurting your company and driving customers to the competition. This gets factored into your decision whether or not to continue the strike.
    Public unions do not have to deal with this because they are a worker’s monopoly.

  10. It’s true that deals made by private sector unions can impose higher costs on others. But Klein overlooks a major difference: In the private sector, consumers have the right to opt out.

    Which has already happened:
    The Steel industry
    GM
    Chrysler…

  11. One suspects Klein has never heard the word “Incidence” before.

    Oh, I know, the whole coercion vs. free markets thing is a much bigger issue. But my economist heart can’t stand errors like this; anyone who seriously believes that an increase in production costs will be passed ENTIRELY along to consumers has not spent more than 15 seconds on their opinion.

    The company in question will bear some of those costs. In the case of government, taxpayers, by definition, will bear every penny of a cost increase.

    1. More than that, really, because at some point you also need more tax collectors, more auditors, more “oversight” and “accountability” officials, etc.

  12. I read this Ezra blog post last night and I had to reread it to make sure he was actually saying the public and private sector was the same.

    I don’t know if its sadder that this douche has a column or that people actually take this douche seriously.

    1. He’s like a big brother to me!

    2. He’s like a big brother to me!

  13. Klein knows this, he’s just a shilly “journolist”ic hack. Like Krugman, but with less paranoid schizophrenia.

  14. It’s true that deals made by private sector unions can impose higher costs on others. But Klein overlooks a major difference: In the private sector, consumers have the right to opt out.

    And I’m sure it was completely an oversight that he left that out. It’s not like he’s a totally dishonest, useful idiot hack or anything.

  15. I was going to say it’s different because the state government legally represents me, whereas corporations only have a duty to me if I become a shareholder. But then I snapped into reality and remembered that I’m less like a shareholder of the state government and more like an exploitable asset.

  16. How about putting a “sic” after the “Lets” in that block quote.

  17. At The Washington Post, Ezra Klein makes the case

    Well, there’s your problem right there.

  18. Just a question but has anyone seen any commentary on the tone of rhetoric used in these protests or has that problem just gone away?

  19. Unions are just cartels with good PR. Why no one on the right has brought that fact up escapes me.

    1. Ixnay on the artelcay.

  20. The real difference is one is easier to attack by corporate stooges on antigovernment grounds, even though their real goal is destroying all unions, which, apart from the public sector ones, has already pretty much succeeded.

    1. Re: Tony,

      The real difference is one is easier to attack by corporate stooges on antigovernment grounds,

      Easy pickins!

      […]even though their real goal is destroying all unions, which, apart from the public sector ones, has already pretty much succeeded.

      Success!

      By the way, the unions pretty much destroyed themselves.

    2. UAW destroyed itself, by destroying the US auto industry.

      1. How did UAW destroy the auto industry?

        Or are you just blaming them because they happened to be there?

      2. Of course the US auto industry is still around and thriving again, thanks to government bailouts.

  21. So, corporate stooges want to destroy all unions. And basically the only unions left are public sector unions. Wait, so why do they care about the issue? Up your game, bitch. This isn’t HuffPo.

  22. The Economics Of Trade Unions:
    (by Gary North, Feb 23 2011)

    THE ECONOMICS OF TRADE UNIONS

    To understand what is at stake, you must first understand the economics of all trade unionism.

    1. Members assert the moral authority and legal right to use violence against any person who offers to work for less than the union is demanding. Usually, this violence is hidden: the government’s threat of fines against employers who hire non-union members, but not always: violence against “scabs.”
    2. Members assert that if they get a majority vote in favor of this legalized violence in one company election, they should continue to exercise it forever.
    3. The union decides who gets membership. It reserves the right to exclude people. This restricts the labor market, thereby raising wages for members.
    4. The members assert a legal right to “their” jobs in a strike. After the strike, they must be re-hired by law. All people hired in the interim must be fired.
    5. The unions claim to represent “labor,” but at all times the vast majority of laborers are not members.
    6. Legislation favoring union members discriminates against the vast majority of Americans, who do not belong to unions.
    7. The goal of all trade unionism is to raise costs of production.
    8. The economic effect of higher costs is reduced output.
    9. The economic effect of reduced output is the reduction of wealth for most customers.
    10. Excluded workers must seek employment with firms that were their second-choice.
    11. This subsidizes firms that are not unionized: a larger supply of labor at a reduced price.

    http://www.lewrockwell.com/north/north950.html

  23. If too many people opt out, or buy too little, the company in question goes out of business. And unless the government offers a bailout, that’s the end of the story. When dealing with the private sector, unions generally have some incentive not to overreach to the point where their employer goes out of business.

    Well, at least the unions should have such incentive. OTOH when I lived in a union state I met numerous union members who worked at the local steel plant. The company that owned the plant had gone belly-up, and the plant had been closed for a couple of years. But that’s still where they worked. To a man, the union members were convinced that the government was going to force someone to reopen the plant and give them “their” jobs back, Any Day Now.

    That was back in the 1970s. I bet they’re still waiting.

    1. Those entitled unemployed people! Who do they think they are, thinking they deserve a job? Sure they could have a job if a few billionaires stopped stealing all the country’s wealth, but they are way more entitled to their loot than workers are to jobs.

      1. A job is just an agreement to do something useful for someone, for which they are willing to pay.

        If you have no useful skills to offer anyone else, then you don’t get paid. It’s that simple. Jobs aren’t an entitlement.

        1. And if there aren’t enough jobs to go around thanks to the horrifyingly myopic greed of a few millionaires, tough shit losers! It’s still your fault you are poor and you should probably just die!

  24. Unions are the cause of all our problems! When they’re finally all gone, well there’s still poor black people to blame…

  25. Thanks for finally making this point. Which you people should have been making last week.

  26. This is overly simplistic; it isn’t always true.

    The private sector has at least some degree of competition while the public sector does not.

    Competition means the private sector workers are more at risk of being squeezed, because of the need to turn a profit. When government workers unionized they already had cushy jobs. When private sector workers unionized they were dying in coal mines.

    Competition also means there is a limit to how much cost can be passed on to consumers, while in the public sector the sky is the limit.

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