Taming the Tiger: Public Employee Labor Unions – Part I

I am running for City Council, among other reasons, to take back control of our local economy and to reduce our high tax burden.  One of the major topics I will address this fall is the role of high-cost labor contracts in creating our problems.  Before discussing Plainfield’s labor affairs in particular, I want to sketch out my view of today’s labor problem, in general.

Perhaps the biggest problem facing local and state government in recent years has been the public employee labor unions.  They form Plainfield’s biggest budget challenge, though our situation is not at all unique, among New Jersey municipal governments.  Most of Plainfield’s employees are unionized, therefore, the salaries and benefits our employees receive are set forth in union contracts.  The pension and benefits programs provided in these contracts have grown way beyond our ability to pay for them.

I remember learning the history of the labor movement in college.  There was a time that people working for corporations and industries existed at the mercy of their not-very-generous owners and shareholders.  If you didn’t like doing a dangerous job for a wage too small to survive on, and raised a complaint about anything, you were fired.  Working conditions were often highly unhealthful, and there was no such thing as fringe benefits.  If a worker died, or became too ill or too old to work, his family might simply starve.  These abuses of unbridled capitalism only began to come under control when the labor union movement became strong enough to force reforms.  After unions in some sectors of the economy began to prevail, Congress created the modern labor movement by passing the National Labor Relations Act, a key piece of the New Deal, in 1935.  Basically, this law made it illegal for employers not to engage in collective bargaining, with employees who were organized and sought recognition.  Collective bargaining is built on the metaphor that a company’s income is like a huge pie, and you could fight a war, or make a deal, on how it should be divided up.

No one suggests we go back to the time before 1935.  Millions of workers depend on their unions to make sure that employers provide for them a living wage, various benefits, safer and better working conditions, a defense against unfair charges, and many other useful activities and programs.  It certainly raises the employer’s cost of doing business, however.  The downside of this started to become noticeable in the 1950’s, as manufacturers in union-friendly states such as New Jersey and Connecticut started closing down their plants, and moving their operations to low-cost, “right to work” (non-unionized) states such as North and South Carolina.

One particular kind of benefit that attracts great attention today started as a mere historical accident, during World War II: medical insurance.  A few large companies, trying to attract workers to move to where they operated, started offering health coverage on top of wages.  After the war, this became common throughout the country and the economy, and today we think of it as a right.  This quirk has led to the unintended consequence that people who work for themselves, or don’t work at all, have to buy medical insurance at great cost, or live without it.  Medical coverage is therefore not thought of as a civil right provided by the government, but rather, as a perquisite of one’s job.

To understand why the cost of medical insurance has skyrocketed is easy: look at all the medical and technological advances of the last 60 years.  Nowadays, we don’t die when we become seriously or chronically ill, or too old to live independently, we go into a hospital or nursing home, where diagnostics and treatments of great sophistication–and huge cost–are routinely incurred.  We take various medications for whatever is wrong with us, some of which are hugely expensive, and we don’t think about the cost.

Today, we have not only lost millions of jobs to low-tax states, but to other countries, which can make things far more cheaply than we can.  I could go off on a lengthy tangent here, but will just point out that our lack of competitiveness with other countries has become a huge problem for American workers.

One peculiar side effect of unionization was the emergence of loud, obnoxious, dishonest labor leaders, who demand unreasonable treasures for their members, in a shrill and confrontational way–notably by strikes.  These leaders have tried, with great success, to influence public officials in many ways, all to strengthen their hand for collective-bargaining time.  Because the NLRA compels a sort of industrial democracy, union leaders compete with each other for members’ votes by trying to outdo each other in toughness and noisiness.  This caused the labor movement to intersect with organized crime, since the stakes were so high that everyone wanted their cut.

It is likely that the uncouth power gamesmanship and insensitive brassiness of so many labor leaders is cultivated precisely so that, when it’s collective-bargaining time, their viciousness will be perceived as strength.  Maybe this works out well in the long run.  Or maybe it is just a hideous, crude excrescence of legitimate labor relations principles.

And that gets us to what I will post next week as Part II–the extension of the labor union movement into the PUBLIC employment sector, and the effect that this has had on local and state affairs, and on our economy.   I will address the specifics of Plainfield’s situation there.