A Happy Result of the Elections: The Blow to Public Sector Unions

There are no permanent partisan victories. The gains of the Republicans on Tuesday are likely to give more opportunities for victories for the Democrats sometime in the future as the party in power exhausts it agenda, makes mistakes, or is blamed for issues over which it has little control. But elections can have more enduring effects on policy and social structures.

One of the most notable consequences of this election was the setback it dealt to public sector unions. Importantly, the losses came at hands of both parties. Republican Scott Walker was reelected in Wisconsin after rolling back the power of public sector unions. Gina Raimondo gained the governorship of Rhode Island despite using her position as that state’s Treasurer to restructure public pensions and thereby earning the enmity of public sector unions. In my own home state of Illinois, Governor Pat Quinn lost in state where the most important mainstay of his party is public sector unions, whose pensions and other exactions have made Illinois the state with one of the lowest credit ratings and worst business climates in the nation.

The decline in political power and legal privileges of public sector unions would be the single most salutary structural improvement in the states where they enjoy such privileges. The right of public sector unions to check off dues, to mandate collective bargaining, and/or to strike gives them unaccountable power in the delivery of public services. As a result such public services are often more expensive and less efficient. Worst of all public sector unions exercise this leverage to gain above-market, unfunded pensions that need to be financed later—at a time when those who have negotiated those pensions have left government.

It is mistake to analogize unions in the public sector to those in the private sector. In the private sector, negotiations over wages are genuinely two sided with management vigorously representing the interests of shareholders. By contrast, in the public sector the real party in interest—the citizens of the city or state—are generally not well represented at the bargaining table. The elected officials cannot be counted on to negotiate effectively because they want the campaign contributions and political muscle that unions can bring.

The recurring dilemma of democratic politics is that politicians often benefit by giving away benefits to such concentrated groups at the expense of the rest of us. Privileges for public sector unions exacerbate this fundamental problem rather than diminish it.

Fortunately, the problems such unions are creating are becoming more apparent as Detroit and cities in California burdened by municipal pensions declare bankruptcy. The election returns this year show that voters are approving solutions that politicians like Walker and Raimondo are devising.