The Magazine

The New Tammany Hall

Public sector unions have become a labor aristocracy--and they are bankrupting states and municipalities.

Oct 12, 2009, Vol. 15, No. 04 • By DANIEL DISALVO and FRED SIEGEL
Widget tooltip
Single Page Print Larger Text Smaller Text Alerts

Consider what happened in Washington State. After helping Democrats win full control of the legislature in 2002, the state affiliate of the Association of Federal, State, County, and Municipal Employees (AFSCME) and other unions persuaded lawmakers to lift the collective bargaining restrictions. Within three years the number of union members had doubled. With more state employees paying dues, the amount of union dollars flowing into the coffers of Democrats running in state elections also doubled. A prime beneficiary of such union generosity was Christine Gregoire, who became governor in 2004 after one of the closest elections in the state's history. (AFSCME gave $250,000 to the state Democratic party to help pay for the recount that handed her the election by 129 votes). Once in office, Gregoire negotiated contracts with the unions that resulted in double-digit salary increases, some exceeding 25 percent, for thousands of state employees. In 2007, J. Vander Stoep, an adviser to Republican Dino Rossi, Gregoire's 2004 opponent, prophetically remarked that the unions' arrangement with the Democrats was "a perfect machine to generate millions of dollars for her reelection. .  .  . They are building something that conceivably can never be undone--at taxpayer expense." In their 2008 rematch, Rossi lost again to Gregoire, this time by 194,614 votes.

Public sector unions with political influence can negotiate detailed work rules in which they largely exempt themselves from accountability in return for providing political support for their nominal managers. In New York City, Mayor Michael Bloomberg and the United Federation of Teachers (UFT) have created a cartel to advance their own interests at the expense of the citizens and students. The teacher's contract is over 200 pages of small print. Reminiscent of the 12,000 United Auto Workers (UAW) who were paid not to work in the heyday of the UAW, nearly 800 Gotham "rubber room" teachers who have problems on the job are being paid not to work. The UFT has also negotiated with Bloomberg, mistakenly called an education reformer, a reduction in the number of days they must work to prepare for classes before school begins in September at the same time as their salary increases have been running at better than twice the rate of inflation.

But the teachers are not the only politically powerful labor force in New York, the nation's most-unionized state where 69 percent of public sector workers belong to collective bargaining units. In the nominally private health care sector, employees depend heavily on government programs, principally Medicare and Medicaid, for their livelihood. In the 1970s and 1980s, the local 1199 Drug, Hospital and Health Care Employees Union fought a running battle with New York's largely state and federally funded voluntary hospitals. Under the brilliant leadership of Dennis Rivera, 1199 built a top-notch political operation, and with the hospitals, which were barred from political activity, formed a partnership to maximize the flow of government revenue. The union-hospital alliance has been so successful in aligning itself with politicians, Democrat and Republican alike, that not only has 1199 been largely untouched by the downturn, but New York spends as much on Medicaid as California and Texas combined. And come boom or bust, hospital and health care employment in the state keeps growing. Rivera, who merged his local with the SEIU (Service Employees International Union), has now brought his political acumen to Washington as the SEIU's point-man on health care reform.

The combined power of the teachers and health care workers has made the New York state legislature a wholly owned subsidiary of the public sector unions. The law mandates that all new legislation be evaluated for its fiscal impact. In recent years those calculations were performed by an actuary named Jonathan Schwartz. In 2008, when Schwartz found that a piece of bipartisan legislation allowing city workers to retire early with full pension benefits would impose no new costs, the New York Times blew the whistle. Schwartz, who had been fired from a city job, worked not only for the state assembly but also, it turned out, for District Council 37 of the SEIU. When asked which other unions he had worked for, he replied, "How many unions are there?" His client list included the teachers, firefighters, detectives, correction officers, and bridge and tunnel officers. Not surprisingly New York State has the highest per-employee pension costs in the country.