Commentary Magazine


Private Sector Voicing Outrage at Bankrolling Public-Employee Benefits

Unions are a declining factor in the U.S. economy, but they still wield enormous political clout. Only about 7 percent of American workers in the private sector are union members, while 37.4 percent of public employees belong to unions. But unions have played an outsize role in American politics by bankrolling Democratic candidates for decades. And Democratic lawmakers have repaid union support by providing generous salaries and benefits for state and municipal workers.

But there is growing resentment among the public at this arrangement, as Gov. Tim Pawlenty points out in an op-ed in today’s Wall Street Journal. Public-employee unions are becoming a huge burden for workers in the private sector, who must pay higher taxes for public-employee salaries, benefits, and pensions that are far more generous than they themselves enjoy.

According to one study, the present value of unfunded liabilities for local-government pensions amounts to $7,000 per municipal household in 2009 (using local-government accounting methods), but the actual cost may be much higher. Several states are already trying to rein in public-employee benefits, according to this Bloomberg Businessweek piece:

Already this year, 16 states have required public employees to pay more into retirement plans or cut benefits for new hires. Nine states increased the number of years new hires must work to earn full retirement benefits. Two states, Missouri and Illinois, raised the retirement age to 67. California’s new budget requires current state workers to contribute more toward their retirement and rolls back new hires’ pension benefits to 1998 levels.

With Republican governors now in control of 30 states, and the GOP in control of legislatures in 25 states (with Dems in control in only 16), public-employee unions may have a real battle on their hands.  And even with the money unions spent in the last election — $91 million in direct contributions, going almost entirely to Democrats — they weren’t able to overcome public outrage. But don’t expect unions to rethink their strategy; the likelihood is they’ll double-down in 2012.