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How Government Unions Became So Powerful

Author: Amity Shlaes, Former Hayek Senior Fellow for Political Economy
September 4, 2010
Wall Street Journal

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This weekend we celebrate Labor Day in a country divided between two kinds of workers. The first is the private-sector worker, the vulnerable one who rides the business cycle without shock absorbers. The second worker, who works for the government, lives a cushioned existence in which terminations take years, pension amounts are often guaranteed, and recessions are only thunder in the distance. Yet worse than this division is the knowledge that the private-sector worker will pay for public-sector comfort with ever higher taxes.

How did we get here? Over the course of the past century, officials and politicians of both parties have sought to shut unions out of government or, when that failed, constrain their power within government. Early 20th-century strikes by police and other public employees were effective but proved politically damaging. Over time, the unions opted for a more quiet form of coercion -- what might be called compensation coercion. Their success in this area brought them to the privileged ground they hold today.

The origins of our current predicament began back in 1912. Presidents Theodore Roosevelt and William Howard Taft placed gag orders on postal employees to prevent them from communicating with Congress on any matter, including wages. The gag offended many members of Congress, who then supported a bill sponsored by the progressive Robert La Follette that aimed to curtail presidential authority by making it harder to fire public employees.

The Lloyd-LaFollette Act of 1912 gave federal workers the formal right to organize. What that might portend did enter the minds of the bill supporters. But many thought wholesale unionization too remote for possibility. Others saw Lloyd-Lafollette as a relatively tame statute, a lesser evil that might stall the progressive movement. Unions took Lloyd-LaFollette as the base for a movement.

Many people assumed that public unionism was emasculated for good by the city of Boston's refusal to rehire striking police officers after the Boston Police Strike of 1919. The circumstances of the strike were such that it was nearly impossible not to side with the patrolmen. Police wages were not keeping up with inflation. Their working conditions were appalling. When the police went on strike, the city and state delayed before calling in outside help and the city descended into riots and chaos.

Calvin Coolidge, then Massachusetts governor, saw the strike as inexcusable and rejected the idea that any blame be assigned to authorities. Any failure to adequately respond, he said, "cannot justify the wrong of leaving the city unguarded," which furnished the opportunity for riots. He then made it clear the policemen would not get their jobs back. "There is no right to strike against the public safety by anybody, anywhere, any time," he said.

On the question of militant action, Franklin Roosevelt proved similarly stalwart. In a 1937 letter on collective bargaining to Luther Steward, president of the National Federation of Federal Employees, Roosevelt warned that "government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. Roosevelt added that "I want to emphasize my conviction that militant tactics have no place in the functions of any organization of government employees." Roosevelt did permit aggressive union action in the private sector by signing the Wagner Act of 1935.

In 1962, President John F. Kennedy signed Executive Order 10988, which permitted collective bargaining by federal employees. Widely seen as a gift to George Meany, the AFL-CIO head who helped Kennedy win the White House, the executive order was also a gift to government unions, both because it widened federal membership and because it signaled national approval of unions for state and local employees.

Public workers took a blow to their dignity in 1981 when President Ronald Reagan, following Coolidge's lead, fired 11,000 striking air-traffic controllers of the Federal Aviation Administration. Forgotten is that the Reagan, Bush, Clinton and Bush years were the period when the tenure rules, pay schedules and compensation packages of today were signed.

Another factor leading to the rise of the public unions is the decade-over-decade increase in the size of government. Not only through the New Deal, but also through the 1950s and onward the number of workers in the public sector grew. By 1962 they represented an eighth of the national work force. If we did not have so many government employees today, the cost of sustaining them would not be so high.

Another contributing factor was union sentimentalism. Union law governing private business, from the Wagner Act on, did permit strikes and more dramatic forms of bargaining than often allowed public workers. Some states, out of a sense of fairness, gave public workers similar rights.

One was Wisconsin, where heirs to LaFollette passed laws strengthening public unions in the early 1960s. But in many states, lawmakers and citizens alike, sympathetic to public workers, sought to compensate them for this difference with job security and good pensions. States like New York even wrote into their constitutions guarantees that the pension amounts promised employees at hiring would be paid out decades later, no matter what happened to the state budget in the interim. To cover those pensions set decades ago, lawmakers must increase taxes today.

Fifty years ago in Wisconsin, the American Federation of State, County and Municipal Employees charged a critic of collective bargaining with wanting to make the public worker "a second-class citizen." Tolerance for such arguments has permitted construction of a new system in which it is the private-sector employee who finds himself second class.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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