The Democrats' Big Labor Pains

Are the unions losing their grip?

Despite a pledge to spend $100 million dollars in this year’s midterm election, organized labor is coming under some criticism from Democratic Party operatives for not keeping pace with the enormous sums of money the Republican Party is now taking in.

Whether it is a favorable political environment or the Supreme Court ruling in the case of Citizens United that eased corporate contributions, Republicans find themselves awash in campaign money while Democrats are struggling to keep up.

Although organized labor is not the only Democrat interest group behind in meeting party campaign goals, its inclusion on the list of underachieving contributors has raised concerns about a diminishing role labor may play in future elections as it struggles to deal with a string of unexpected setbacks.

By far, the most shocking disappointment was found in the inability of Democrats to pass Card Check, labor’s legislative Holy Grail. With private union membership declining, labor leaders were eager to alter this trend and Card Check seemed the perfect option. Designed to change how labor organizes by effectively removing the secret ballot from union elections, the policy threatens to open the floodgates of intimidating and coercive tactics, making it far more difficult to resist unionization in the workplace.

Yet somehow on the road to enactment of the full progressive agenda, Card Check never even made it to a vote. While the prospect still remains to pass it during a lame duck session if Democrats lose control of Congress, the odds don’t look good. Even Barack Obama has all but acknowledged its defeat when he recently told a group of supporters, “Frankly, we don’t have 60 votes in the Senate. So the opportunity to actually get this passed right now is not real high.”

Having spent in 2008 over $60 million to elect Obama and more than $70 million on Democrat congressional candidates, the labor movement had thought it had secured its strongest hold on American politics in more than a generation. Allied with Democrat supermajorities in Congress and the most pro labor president in modern times, unions had every right to be giddy about its prominent role at the table, and not without reason.

For generations, organized labor has been the Democratic Party’s loyal cash cow. Election cycle after election cycle it could be counted upon to empty its coffers to fund Democrat campaigns and supply countless workers for get-out-the-vote efforts. In return, Democratic lawmakers at every level of government, from municipalities to state houses to the federal government passed a plethora of laws and regulations designed to benefit organized labor, often at the expense of the US taxpayer.

So, while the failure to pass Card Check may have come as a shock to labor leaders, it fell into line with other signs that labor’s hold on American politics may have finally reached a tipping point. Its cause can be directly traced to the increase in public-sector employees and how this has changed the face of the labor movement: no longer is private sector growth necessary for organized labor success.

While private union membership has been declining over recent years, dropping to 7.3% in 2009, the lowest level since FDR occupied the White House, the opposite can be said of public-sector employees who have seen their ranks swell in the intervening time to now account for more than 50% of all union membership. It’s the first time in American history government workers have comprised the majority union workforce.

It’s not too much of a surprise to have seen private union membership decline as its benefits are driven by market conditions. If a company is too generous with its union benefit package, and as a result can’t compete in the marketplace, the company fails. General Motors was but the largest example of this condition, although its reward was to be bailed out by taxpayers.

Most companies, however, aren’t GM and government bailouts aren’t an option. It’s but one reason why private sector unions are more willing to negotiate with employers. Public unions, however, face no such quandary as their benefits are determined and paid by government, with government default a rarity.

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.

Frank Crimi is a freelance writer living in San Diego, California. You can read more of Frank's work at his blog, or contact him at [email protected].