Government Unions after Wisconsin

Summary: Unlike private-sector unions—which create an adversarial relationship between the labor union and the employer—public sector unions operate under a different dynamic. Indeed, public sector unions are in a unique position to “elect their bosses,” and they’ve aggressively done so by contributing almost exclusively to Democratic candidates. As a result, states like California, Connecticut, and Illinois, are now facing financial crises that threaten to bankrupt these states. But reform—like measures taken in Wisconsin and elsewhere—is increasingly possible.

On June 5, 2012, government worker unions suffered a potentially fatal defeat following the collapse of their vicious campaign to recall Wisconsin Gov. Scott Walker and Lt. Gov. Rebecca Kleefisch. The unions were out to get Walker and Kleefisch for supporting reforms to government worker collective bargaining, but despite over $14 million spent by Big Labor to topple the targeted politicians, both prevailed. Walker increased his majority from 124,638 votes to 171,105 votes—this victory confounded pundits’ eager projections that a higher voter turnout would favor his union-backed opponent. And in 2014, Walker and Kleefisch were reelected, this time by over 130,000 votes.

The Wisconsin reforms (known as the Budget Repair Bill or “Act 10”) broke the back of government worker unions who had long controlled the state where they were first recognized in 1959. Thanks to provisions that gave public employees a choice over whether to keep their unions or not and protection from having political dues withheld from their paychecks by the state, membership in the state’s government worker unions tumbled. The Wisconsin State Journal found that union membership in both public and private sectors in the state fell by 136,000 from the passage of Act 10 through 2016. The Budget Repair Bill also made a major impact on Wisconsin state and local spending, especially regarding employee compensation.

In fact, losing Wisconsin was a major setback to the nation’s government employee unions and a blow to the progressive left to whom they provide major financial, organizing, and manpower muscle. According to the Center for Responsive Politics, four out of the top ten organizations contributing to federal candidates are major unions with substantial public-employee membership: The Service Employees International Union (SEIU), National Education Association (NEA), American Federation of State, County, and Municipal Employees (AFSCME), and American Federation of Teachers (AFT). All of these groups give over 97 percent of their contributions to Democratic candidates and liberal organizations.

But the success of Wisconsin’s government worker union reforms has shown a path forward for policymakers looking to balance state budgets, support employee rights, and push back against leftist aggression.

The History of Government Worker Unions

Government worker collective bargaining is recognized at the federal level and for at least some state and municipal employees in all states except Virginia, South Carolina, and North Carolina. Collective bargaining is the practice by which unions organize workplaces and, upon a showing of majority support from voting employees, receive the privilege of negotiating contracts on behalf of all the employees.

In a private-sector workplace, collective bargaining sets up the familiar adversarial relationship between the labor union and the employer, with each negotiating for a greater share of the business’s revenues. In the government sector workplace, this dynamic does not exist. As a result, the practice of collective bargaining by government employees has long been controversial. Franklin D. Roosevelt, in a letter to the National Federation of Federal Employees national convention, wrote:

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress.

George Meany, the founding president of the united American Federation of Labor-Congress of Industrial Organizations, was also skeptical of government worker collective bargaining: “[I]t is impossible to bargain collectively with the government,” he famously wrote. The AFL-CIO Executive Council resolved as recently as 1959 that “government workers have no right [to collectively bargain] beyond the authority to petition Congress—a right available to every citizen.”

However, the labor movement would abandon that position shortly after those comments. In 1958, New York City mayor Robert Wagner granted government worker unions collective bargaining privileges. Wisconsin became the first state to do the same the following year—just as the AFL-CIO resolved that government worker unions did not have special rights. (It should not be surprising that one of the reasons Wisconsin took that action was the precarious political situation of the state’s Democratic then-governor, Gaylord Nelson, who received critical support from government workers’ unions.) By the mid-1960s, the federal government and over 20 states had recognized collective bargaining for government workers.

Currently, 47 states allow at least some government employees to unionize and bargain collectively; indeed, in recent years government employees have made up a majority of union members, although the most recent figures show private-sector members retaking the lead. This resurgence can be ascribed to economic recovery increasing private union membership, while various reforms have led to declines in government worker unionism.

Sadly, with collective bargaining comes its evil stepsister: forced dues collection. Twenty-two states allow unions to force all employees represented by unions to pay union fees. Under a 1977 Supreme Court decision, Abood v. Detroit Board of Education, government worker unions are not allowed to collect fees for explicit political and lobbying programs, but they may collect forced fees for “representational” purposes. However, the practice remains hotly contested. Indeed, all government worker union activities may reasonably be seen as political, considering how much government employees are paid (or how hard they work, or what their pensions look like) necessarily affects the rest of public policy. The Supreme Court divided on the question in 2016 after the death of Justice Antonin Scalia, but is likely to address the question again now that newly appointed Associate Justice Neil Gorsuch returns the bench to nine seats.

Electing the Boss

Even as laws have changed, the problems that Roosevelt and Meany—among others—identified are still with us. Government employment presents what economists call a “principal-agent problem”—the situation that arises when one side with a financial stake (in this case taxpayers) is represented at the bargaining table by actors with different interests (here, politicians and civil-service managers). Government worker unions exploit this problem by intervening heavily in politics in order to “elect their bosses.”

Unions Keep Cities and School Boards under Control

Of course, government worker unions are perhaps most powerful at the local level, where they work to choose the politicians with whom they will negotiate contracts. Mayors, school board officials, and city councilors seek out the endorsement of government worker unions, which comes with the support of government worker union political machines. Chosen candidates of the public unions receive support from dozens of door-knockers and major advertising campaigns aimed both at union members and the general public.

Even municipal electoral calendars favor government worker unions. The generally liberal-leaning analysts at Nate Silver’s website FiveThirtyEight looked into the scheduling of school board and municipal elections, which are often outside normal Congressional and Presidential election cycles. They found that—much to their liberal readership’s shock—progressives will engage in “voter suppression.” Government worker unions, especially teachers’ unions, encourage the scheduling of municipal and school elections outside of statewide and federal general elections, and evidence shows “that off-cycle elections lead to higher salaries and better health and retirement benefits” for government workers. This can be described as a reasonable proxy for union power.

Big-city mayors seeking power frequently court the aid of government worker unions. In the five largest cities in the country, government labor unions strongly backed the mayors of Los Angeles (Eric Garcetti), Houston (Sylvester Turner), and Philadelphia (James Kenney) for election in their most recent campaigns. New York’s Bill de Blasio wasn’t government unions’ first choice, but has proven a loyal Big Labor ally in office. Only Chicago’s Rahm Emanuel, who has struggled to combat the influence of the Chicago Teachers Union on city budget and education policy, saw government unions oppose him.

Even where public policy seeks to curtail the influence of government worker unions over the election of their bosses, union money finds a way: Major cities in Arizona including Phoenix, Mesa, and Glendale have rules that prohibit city employees’ unions from contributing to candidates in their own municipal elections. However, the Arizona Republic recently identified a scheme set up by firefighters’ unions, which saw their own PACs contributing to union-friendly candidates in other municipalities in return for reciprocal support in their own cities’ elections.

The results are unequivocally clear; they were identified in a 2013 University of Pennsylvania study that showed challengers running with union support were not only more likely to win, but also more likely to adopt union-friendly policies in return.

Government Worker Unions Wreck State Finances

Unfortunately, government worker union political activities are not confined to the local level. Unions have always been heavy contributors to ballot initiative campaigns and liberal candidates; naturally when they get their men into office they expect the repaying of favors. Connecticut, California, and Illinois show an inordinately strong public worker union influence on their state governments. It follows that the financial situation in all three of these states hover somewhere between collapse and dire.

Connecticut, despite having one of the richest populations in the United States, is a fiscal basket case. The libertarian Mercatus Center cites Connecticut as the state with the second-worst cash solvency situation in the union. (Though, admittedly, if one includes the bankrupt U.S. territory of Puerto Rico, Connecticut becomes third-worst—small consolation!) In May, the state was given a credit downgrade by Fitch Ratings to A+, third-worst of the fifty states. States with poor credit ratings have to pay higher interest rates to compensate investors for the risk of default or bankruptcy.

Currently, Connecticut projects a budget deficit of over $2 billion, barring fundamental and unlikely changes to state finances. Under former progressive darling Gov. Dan Malloy (D), the Connecticut legislature has passed massive tax increases; still the budget refuses to balance. This failure led Malloy to propose budget cuts and state workforce reductions, which drew bitter opposition from the state worker unions that had backed Malloy’s campaigns. Those state worker unions have allies in high places: State House Speaker Joe Aresimowicz (D-Berlin) is an employee of the government worker union AFSCME.

California burns in a similar fiscal hell, though slightly cooler as its Fitch bond rating adds up to a slightly better AA-. Despite a 2012 tax increase passed with over $22 million in public employee union support that was extended in 2016 with an additional $26 million in union backing, the Golden State’s pensions are desperately underfunded. A Stanford study found the funding gap exceeded $1.2 trillion, or over $30,000 for every resident of the state! Government worker unions in California have been so successful in winning generous pension benefits that one study found the average pension for a full-career government worker exceeded the average private-sector annual pay in the state.

The fiscal situation in Connecticut and California is very bad, even terrible, but no state suffers more from the effects of government worker union contract demands than Illinois. The Land of Lincoln holds the worst bond rating of any state, only one step above “junk bond status,” as of press time. Some estimates suggest that government worker pensions could take up more than one quarter of state revenues annually through 2044.

Longtime Illinois House Speaker Michael Madigan (D-Chicago) can be considered the engineer of the state’s pension woes. Barring a single two-year interruption, he’s served as speaker continuously since 1983. A longtime servant of union interests, Madigan was behind a number of government worker pension bills that have sent Illinois crashing over the fiscal cliff. Such service to the unions has its rewards: He received over $1.1 million in contributions from government worker unions from 2002 through 2015, not counting contributions to the Illinois Democratic Party that Madigan solicited in his role as state party chairman.

A minor attempt at pension reform under former Gov. Pat Quinn (D) failed, overruled by the Illinois Supreme Court in 2013. Quinn was subsequently ousted in favor of Republican Bruce Rauner and in 2014, Madigan went back into the unions’ service. At their urging, Madigan declared war on Rauner’s “turnaround agenda,” a package of spending reforms and collective bargaining changes that the new governor had vainly hoped to enact.

But in “Madiganistan” (a term coined by City College of New York professor Daniel DiSalvo in Chicago’s City Journal magazine last fall), the Governor does not govern; Madigan and his government worker union cronies run the show. The state budget has remained at a multi-year impasse, with Madigan and the unions arrayed against Rauner, blocking the “turnaround agenda” at every turn. Meanwhile, Madigan has moved even more aggressively to further entrench union power: In 2016, he tried to use his statehouse super-majorities to pass an arbitration bill backed by Illinois’ state AFSCME council that would have curtailed Rauner’s constitutional power to dictate contract terms during a negotiating impasse. This time, however, Madigan and AFSCME suffered a rare Springfield defeat: One of Madigan’s members abstained from the veto override vote, killing the measure and provoking a primary challenge successfully backed by Madigan and his union allies. A second effort saw a second defection and a second defeat, but Madigan and his unions continue to block Rauner’s reforms and have vowed to unseat him in 2018.

Fighting Back: Reform after Wisconsin

Wisconsin may have been the first state to clip the wings of government worker union collective bargaining—but it seems the gyre has turned and it will be far from the last. (The state itself has not abandoned further reform; Wisconsin later added a right-to-work law to its reform arsenal, stripping unions in both the government sector and the private sector of the power to collect forced fees from non-members.)

In 2017, Iowa Governor (now U.S. Ambassador to China) Terry Branstad (R) and state legislators enacted their own package of government-sector collective bargaining reforms modeled on Wisconsin’s. The Iowa bill requires non-public safety government worker unions to face periodic recertification elections, forbids collective bargaining for non-wage benefits, and restricts government worker unions from automatically deducting dues from paychecks.

The election of President Donald Trump has also created an opening at the federal level for reform to collective bargaining for government employee unions. Vice President Mike Pence reportedly met with Gov. Walker in February to discuss changes to federal employee bargaining. Current law prohibits bargaining over wages and benefits, but federal unions can bargain for protection from firing. This practice has been criticized for exacerbating the scandalous conditions at Veterans Affairs hospitals. Of course, the VA workers’ union, the American Federation of Government Employees, opposed a bipartisan VA reform bill that eased the path to terminating bad workers.

Anti-forced-fees litigation has also proceeded to the Supreme Court: Illinois, like a handful of other Democratic-controlled states, had deemed Medicaid-funded in-home caretakers “public employees for the purposes of collective bargaining,” allowing the Service Employees International Union to “skim” compulsory dues from their reimbursement checks. Nationwide, the skim is estimated to net the SEIU roughly $200 million in annual revenues.

But in 2014, the Court held in a 5-4 decision authored by Justice Samuel Alito that caregivers could not be forced to pay union fees. The Court found that the arrangement by Illinois and the SEIU designating caretakers as employees did not form a true employer-employee relationship with the state. The ruling, titled Harris v. Quinn, failed to overturn the purported collective bargaining arrangement entirely, but it did raise hopes that Abood itself could be overturned, thus prohibiting forced union fee payments in the public sector nationwide. By 2016, SCOTUS was prepared to hear Friedrichs v. California Teachers Association; court-watchers expect the new conservative-leaning majority to overturn Abood and give right-to-work protections to the entire government sector.

The core of the argument in Friedrichs was slightly different than the argument in Harris: The plaintiff, a California schoolteacher who dissented from the political program of the California Teachers Association—one of the most powerful interest groups in the state—asserted that providing any financial support to the union amounts to compelled political speech, which the Supreme Court consistently prohibits. Unfortunately, before the case could be decided, Associate Justice Antonin Scalia died. The Court then deadlocked 4-4, defaulting to a lower-court decision that had upheld forced fee payments.

With the subsequent appointment of Associate Justice Neil Gorsuch to the high court, numerous cases have been filed to challenge the forced fees. The most notable, Janus v. American Federation of State, County, and Municipal Employees, Council 31, currently lies before the Supreme Court awaiting a decision as to whether the court will take the case.

Beyond right-to-work protections and further collective bargaining reforms, opponents of public sector unions’ power to lock taxpayers out of the decision making process have taken steps to refocus the spotlight on negotiations: Proposition 104, passed by a wide margin in Colorado in 2014, requires school boards that engage in collective bargaining with teachers unions to open their negotiation meetings to public scrutiny. Idaho enacted a similar disclosure law in 2015 by an unopposed vote in its state legislature. According to the Freedom Foundation, which is pushing a similar measure in Washington State, thirteen states have some requirement for at least a degree of open negotiations.

Advocates of open public negotiations, including the Independent Institute and Freedom Foundation, hope that shining a light on negotiations will increase direct tax payer input into public spending priorities. Open negotiations allow the average citizen to watch their agents—public officials—and hold them accountable if they fail to represent taxpayers’ interests.

Reformers have also taken aim at the dubious practice of government-funded “release time” or “official time.” This is the practice of continuing to pay the salaries of government workers in union roles from taxpayer money while they do the union’s rather than the people’s business. The Competitive Enterprise Institute has estimated that at least 1,000 federal employees paid by the taxpayer spend all their time on labor union business. The federal Office of Personnel Management found that official time costs the taxpayer $162.5 million per year, while saving the unions the same amount, as they don’t have to pay the wages of people working on union matters.

Numerous states also allow for official time (called “release time” at the state level). State constitutional “gift clauses” however, open an avenue for challenging these state worker union privileges. These clauses, included in 47 state constitutions, prohibit subsidies to private entities—including, in theory, labor unions.

Arizona is among the states with a “gift clause” that offers unions release time privileges. This practice provoked a lawsuit filed by Phoenix residents and supported by the Goldwater Institute. Despite favorable decisions in the lower state courts, the Arizona Supreme Court ruled 3-2 in 2016 that the gift clause did not prohibit release time. The Goldwater Institute has continued its efforts in other states: Cases challenging release time in Texas and New Jersey are currently pending.

Union Counterattacks

Government worker unions and their allies in the broader liberal movement have rigorously opposed efforts to protect taxpayers and government employees who oppose the progressive agenda. After failing to reverse Walker’s reforms in the expensive “Battle of Wisconsin,” unions have chosen several coordinated approaches to reverse the momentum of labor reform. Some have backfired catastrophically, while others have proven even more dangerous to the conservative employee freedom agenda.

The 2012 election is remembered as a good one for labor, since Democrats retained the Presidency and control of the U.S. Senate. However, labor unions in Michigan, the ancestral heartland of private-sector unionism, sought to pre-empt labor reform in the state by passing the “Protect Our Jobs” Initiative, known as Proposal 2. For good measure, the SEIU backed another measure, Proposal 4, which would overturn the state government’s reversal of a home healthcare “dues skim” like the one the Supreme Court would rule on in Harris v. Quinn.

Proposal 2 failed, despite a massive, multi-million dollar campaign to pass the deceptively named initiative that would have voided an estimated 170 state laws and 18 state constitutional provisions. Had it passed, Michigan would have been barred forever from enacting a right-to-work law. As it turned out, the vote wasn’t even close: While President Obama carried the state 54 percent to 45 percent, the union-backed ballot measure went down 58 percent to 42 percent. Proposal 4 was also defeated, and the SEIU’s secretive effort to hide its financial support for the measure incurred a $199,000 fine for its Healthcare Michigan local from Michigan campaign finance regulators.

But that wasn’t the end of Michigan labor’s pains: Emboldened by Proposal 2’s emphatic defeat, state legislators passed and Gov. Rick Snyder (R) signed a right-to-work law that applied to both private-sector and government-sector workers in the state. For all state and municipal contracts entered into after March 27, 2013, unions would not be able to collect compulsory agency fees.

The SEIU has also fought back against the effects of Harris v. Quinn. As our Michael Hartmann reported in May, the Freedom Foundation, a free-market think tank in the Pacific Northwest, has come under sustained legal attack from the SEIU. The Freedom Foundation uses state open records laws to identify home-care workers whom the Foundation could inform of their Harris rights to opt out of dues payments.

These efforts are paying off. Freedom Foundation claims that they have persuaded thousands of in-home caregivers to exercise their Harris rights and deprive the SEIU of millions in undeserved skimmed dues. These activities have led the SEIU and the Washington state Attorney General—who received campaign contributions from the SEIU—to wage an outrageous lawfare campaign against providing this information.

What is the goal here? Clearly, to bankrupt the Freedom Foundation under a mountain of legal fees. This laudable free-market group has already incurred $1.4 million in costs; the litigation continues with no end in sight. However, this harassment campaign has the potential to backfire on Big Labor: The SEIU, ordered to hand over numerous internal documents in the discovery process, has opened itself to unwanted scrutiny and a Freedom Foundation counter-suit.

Conclusion

Government worker unions, a bad idea from their inception, can now see into the future and it doesn’t look great for them: According to the Union Membership and Coverage Database maintained by economists from Georgia State University and Trinity University, the march of reform has caused a precipitous plunge in government employee union membership. In Wisconsin, for example, before Walker’s 2011 reforms, 187,000 government workers were union members and an additional 11,000 were covered by collective bargaining and forced to pay agency fees. By 2016, membership numbers had plummeted to 91,000 and the right-to-work law meant that agency fee payers would eventually reach zero.

Given the opportunity to leave or abolish their unions, half of Wisconsin government union members chose to walk or had their unions dissolved. Michigan’s SEIU healthcare local—the dark heart of the dues skim—saw a decline in membership from over 55,000 to fewer than 11,000 after the skim was abolished and right-to-work passed in 2013. These reforms increase the power of taxpayers at the bargaining table and increase the ability of state governments to deliver balanced budgets without increasing taxes.