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So now with more of its members currently working for the government, the union movement’s priorities have shifted. Because taxes fund government pay and benefits, unions are now pushing for tax increases across the country. The union movement that once campaigned to raise private-sector workers’ wages has transformed into a government union movement that campaigns to raise public taxes.
Of course, the labor caveat to all of this is to have other people pay those taxes, most specifically top income earners and businesses. An example of labor’s reticence to open its wallets was demonstrated in the healthcare debate when unions lobbied heavily against having their own high-value health plans taxed. Threatening to oppose the entire healthcare bill unless this demand was met, the Democratically-controlled Congress quickly caved.
However, the need to increase revenue to pay for its benefits has seen since 2008 an avalanche of campaign initiatives calling for increased taxes on business and the wealthy. By the most recent count over 28 states have had initiatives with this aim, all supported by organized labor.
States facing $10 billion plus budget deficits have seen ballot initiatives calling for heavy increases in business taxes, as in California, or faced organized labor protests demanding lawmakers raise the state’s top income tax rates, as is the case in New Jersey and Illinois. While in the past, unions may have made public demands for a bailout, that’s no longer the case. When members of Illinois teacher unions and others stormed the state capitol in the spring of 2009 demanding that lawmakers “raise my taxes,” the secret was out.
It was open displays like this, coupled by it own dire economic situation, that finally turned public anger against the unions. Support for labor has dropped to new lows in recent polling, with a majority of Americans now demanding an end to union influence in government. What underlined this anger was the spectacle of public employees demanding benefits from a private sector that does not receive the same generous benefits and which operates in an economy that does not afford the same iron clad job security.
Government workers are by and large immune from the effects of a recession. Since the start of this current recession in December 2007, private-sector employment has fallen by 6.8 percent while the growth of federal, state, and local government workers has risen by 10%. Furthermore, the average federal employee earns hourly cash wages 22 percent above what a similar private sector worker receives.
However, wages do not make for the biggest discrepancy between the two workforces — that can be found in the exorbitant pension and healthcare benefits promised to government workers. These benefits are more lavish than those found in private industry and come attached with little or no out-of-pocket cost to the government employee.
The result of these commitments has been to drive many state and local governments to the brink of fiscal insolvency. Obligations owed to government workers are protected by law and are not affected by shifts in economic cycles. Therefore, they eat up a larger share of government revenue each year, producing catastrophic budget deficits in lean economic times when traditional sources of revenue are bare.
To square this problem has been a recipe of taxes and deficit spending but public antipathy toward this solution has now reached critical mass. The era of the Tea Party and its attachment to fiscal sobriety has now captured the public mood and the attention of lawmakers.
While a still powerfully entrenched force with enormous cash reserves and an army of workers ready to engage in campaigning, it would be foolhardy to permanently count out the labor movement anytime soon. However, the genie of fiscal responsibility has been removed from its bottle this year and will be hard to put back. For unions, long accustomed to avoiding economic realities, it will be the beginning of a very difficult time.
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