The War on Public Employees

Public-sector unions are not the problem; they are the solution. They are the only organized people who can face up to the organized money that is taking over our government and economy.

In the late 1970s, the American business community declared war on unions and the government. Organized money won. Profits are up and wages are down. The American economy is a mess but American firms have globalized. The federal government is bought and paid for and, with the "no new taxes" pledge, local and state governments don't have the revenues to be effective. Bankers and other businessmen are too big to fail and too important to jail. And theunions, their last opponent, are no longer a credible threat.

Well, the pesky public sector unions are still out there and still causing problems The public-sector unions have been able to maintain the wages and benefits of their workers and they are still funding the Democratic Party. So they have become the target. The goal now of the superrich and their Republican partymates is to reduce the public sector unions to the same subjugation as the private sector unions.

The Republican governors of Wisconsin, Ohio and Indiana led this latest attack when they arbitrarily ended collective-bargaining rights of their public sector employees. The unions had not challenged the governors. Wisconsin unions had, for instance, offered a package of wage and benefit reductions but the governor simply refused to bargain. For the Republicans, it was the principle of the thing: unions are organized to confront management so crush them.

The Republicans and the business community base the current offensive on the claim that public sector wages and benefits are too high and out of line with the private sector. The Republicans have it backwards. The wages of the public sector are not too high; the wages in the private sector are too low.

Look at GDP growth, productivity and total compensation. Wages in the private sector have not been growing with the economy since 1980. Real output in the (nonfarm) business sector increased by 140% between 1980 and 2010. Real compensation per hour (includes wages, benefits, pensions and insurance) increased by only 38%. Had compensation in the private sector been growing with the economy, then wages in the private sector would be at least as high as the wages and benefits in the public-sector.

In the post-World War II world, between 1947 and 1979, Americans shared equally in the increase in output that took place. In those 30 years, the income of the bottom 20% increased 116% and the top 20% by 99%, with the three middle quintiles within that range.

Then the world flipped. From 1980 to 2007 the the rich took practically all of the increase in income. Over those three decades, the bottom 20% got only a 15% increase in income, the middle three quintiles got an average increase in income of about 25%. The top 20% of American families received an income increase of 95% and the top 1% an increase of 261%. Why did that happen?

Back in the 1950s and 60s, when private sector unions were a force in the economy, the wage and benefit levels that they negotiated matched output gains. But those wage gains also had to be matched by nonunion employers if the employers wanted to keep their best workers. Workers understood this and the public supported a vibrant labor movement.

Then, the labor movement took multiple hits. First, the attack by Ronald Reagan and the business community was organized and determined. The laws protecting collective-bargaining were repealed or simply ignored. Globalization, the shift to service industries and automation in the industries that were union strongholds weakened union bargaining power. The private sector labor movement began it's long decline in membership and power. Wages stagnated and real average hourly earnings are no higher now than they were in 1980.

The business community saw a chance to finally crush the unions. They argued, and their propaganda machine from Fox news to the Heritage Foundation publicized widely, the idea that overpaid American union workers had forced the outsourcing, off shoring and loss of jobs. Again, the opposite is true. Only because the unions had been deliberately weakened was management able to move those jobs overseas.

As the labor movement lost workers and bargaining power, it was unable to maintain a wage level commensurate with productivity increases for its members. Nonunion wages still matched union wages but now going down, not up. Those workers thus no longer had reason to support the labor movement. Instead they saw the implementation of dual wage systems with lower wage scales for new workers. A new generation of workers began to blame and resent the unions, just as management had hoped.

The war on private sector unions was successful but it was very costly not just for union workers but for all workers and for all Americans. The war on public-sector unions is still being fought. These workers represent our neighbors, our first responders and our teachers; the people we know and trust to maintain our social structure. We cannot abandon them without abandoning ourselves to organized money.

Note from Paul Heise.

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