Why Collective Bargaining Is Bad

By Howard Rich
Thursday, March 03, 2011

A decade ago, when our national debt stood at a “mere” $5.6 trillion, the federal government was already dramatically overpaying its employees to perform all sorts of non-core functions.

According to the U.S. Bureau of Economic Analysis, compensation for the average federal position in 2000 exceeded compensation for the average private sector job by $30,415 – a sizable gap that has since exploded to $61,998. Now the average federal employee’s compensation totals $123,409 – or more than twice the average private sector salary.

Federal workers have seen their total compensation soar by 36.9 percent since 2000 – after adjusting for inflation. By comparison, private sector compensation has increased by only 8.8 percent.

Also, in spite of a recession that saw the loss of 8 million private sector jobs there are more federal employees working today – 2.15 million – than ever before.

In addition to generous salaries, health care coverage and inflation-protected pensions, public sector employees also receive more vacation time, holidays and sick days than their private sector counterparts.

Needless to say, federal workers have secured much of this largesse thanks to collective bargaining. The same can be said of public school teachers in Milwaukee, Wisconsin – where the average compensation package was recently valued at $100,005.

But public sector collective bargaining isn’t your typical collective bargaining. In fact, it represents an unnatural perversion of a failed private sector experiment – an unfair tactic that continues to be exploited to the detriment of taxpayers. In fact, only now that a line has been drawn in the sand in Wisconsin (one of dozens of states struggling to balance its budget due to the stranglehold of public sector unions) do we see the true cost to taxpayers coming into focus.

In the private sector, collective bargaining is ostensibly driven by market forces. Both workers and managers rely on profits, and so negotiations are (in theory, anyway) conducted with the goal of creating a larger pie for everyone to share. Obviously this hasn’t been the objective of union bosses, which is why the free market has largely weeded their unions out of the economy.

Currently only 7.2 percent of America’s private sector workforce is unionized – down from a World War II-era peak of 33.9 percent. This trend is reversed in the public sector, however, where unions now comprise 36.8 percent of the workforce – up from 9.8 percent in the 1940s.

Why this dichotomy? One reason is that collective bargaining in the public sector is a self-perpetuating process – one that is rigged to continue funneling benefits to workers regardless of whether those benefits are deserved (or whether the work being performed by these employees is even necessary).

For example, not only is government in charge of regulating its interaction with the private sector but unlike the private sector, it is funded by a compulsory revenue stream. And with no balanced budget requirement at the federal level, politicians act as if there is a limitless supply of tax dollars with which to continue feeding union demands. Meanwhile state governments continue to be bailed out by the federal government’s borrowed billions – dumping disproportionate percentages of this money into generous employee salaries and benefits while complaining when core services go unfunded.

Also the structure of collective bargaining in the public sector is fundamentally out-of-balance – which invariably results in unions being represented on both sides of the negotiating table. Not only are union demands voiced by their immediate representatives, they are echoed by numerous bought and paid for politicians (who are supposed to be negotiating on behalf of the taxpayers). Even politicians who are not in the pocket of unions are subject to the political pressure this uniquely powerful special interest can apply.

Obviously the money extracted during this perverse “bargaining” process must come from somewhere – a reality that even supporters of big government are beginning to acknowledge.

“Collective bargaining in the public sector serves to reduce benefits for citizens and to raise costs for taxpayers,” writes David C. Crane, a Democrat who serves on the California Board of Regents.

That is the true war being fought in Wisconsin – and make no mistake that its outcome will go a long way in determining whether government at all levels rids itself of this menace or becomes even more hopelessly enslaved to its demands.