Unionized Government Takes and Spends More

Capitol Confidential ^ | 10/14/2011 | Jack McHugh

[MichCapCon]

An organization with close ties to government employee unions is trumpeting pronouncements by a university “labor studies” department (that’s also closely aligned with unions), claiming the unionization of government employees has “no link” with state “deficits.”

Michigan’s largely unionized state, local and school employees, however, are granted fringe benefits exceeding what they would get in the private sector by $5.7 billion every year. The figure may start to fall now that Michigan Gov. Rick Snyder has signed legislation capping local government and public school employee health insurance benefits at $15,000, which represents a haircut for many, but is still 46 percent more than what the average employer in Michigan pays.

On retirement benefits also, Michigan’s unionized government employees also take more than their private sector counterparts. The benefits offered under the school pension system — the largest government pension system in the state — cost three to five times more than private-sector averages.

So how could anyone possibly think that state and local government overspending has anything to do with unions?

Actually, some informal Mackinac Center research suggests more broadly that the level of government employee union penetration is closely related to state employment and economic growth. My colleagues James Hohman and Paul Kersey created an index that identifies 29 “strong public unionism” states (Michigan is one of them) based on government employee collective bargaining and binding arbitration laws, and right-to-work status.

Here’s how the “strong public unionism” states did economically between 2000 and 2010: Strong union Weak union Michigan Personal Income Growth 40.5% 52.7% 17.1% Real GDP growth 14.8% 20.3% -7.1% Employment Growth -3.4% 1.8% -17.4%

More importantly, granting government employee unions the privilege of collective bargaining corrupts our democratic process, because the politicians representing “management” are chosen by a political process in which the unions exercise tremendous influence. In a hundred direct and indirect ways, this creates obstacles to desperately needed reforms, and incentives to overspend.

Claims by union allies of “no link” to overspending are just a desperate last stand in defense of unfair, unsustainable and unaffordable government and school employee benefit levels that far exceed what their neighbors in the private sector get.