Olympia Playbook Parallels Labor's National Agenda, Will Add to Job Losses

A must-read article in The Economist incisively examines organized labor's attempts to bend national policy to promote the union agenda. (H/T LaborPains.org) As you might expect, the efforts mirror what we're seeing in Olympia and other state capitals. AFL-CIO president Richard Trumka, the magazine reports, has a jobs plan.

It can be summarised in a single word, the same one that Samuel Gompers, one of Mr Trumka’s predecessors, used to describe what his members wanted: “More.”

Washington must spend more on unemployment benefits, on roads, on schools, on green energy projects and on aid to state and local governments.

The agenda sounds familiar. In an action alert released yesterday, we called foul on efforts in the legislature to increase unemployment benefits. assuring even more hikes in UI taxes on struggling firms. Washington's UI taxes are already second highest in the nation, reflecting correspondingly high benefits.  

Similarly, job creation proposals promoted by legislative Democrats tilt heavily toward green projects. We can endorse these measures, while also noting that such targeted efforts cannot replace an overall emphasis on controlling employer costs and putting people back to work.

The unions' appetite for massive injections of public spending comes with strings. like Project Labor Agreements requiring contractors to hire union workers.

Such agreements inflate costs by 12-18%, according to David Tuerck of Suffolk University, and were banned under Mr Bush. Even where PLAs are not in force, federal contractors are obliged to pay “prevailing” wages. That actually means something close to the union rates, which is nice for the workers in question but means that taxpayers get fewer roads and schools for their money.

Similarly, the influence of public employee unions has become a major driver in increasing government costs. (I wrote about this here.) This is how The Economist explains it.

Market forces place a natural check on unionisation at private firms. In the short term, collective bargaining can raise wages. But if unions demand above-market pay and impose cumbersome work rules, unionised firms will gradually lose market share to non-unionised competitors.

...Such checks do not apply in the public sector. The government cannot easily go bust. When a company pays over the odds for labour, the money comes straight out of its owners’ pockets. They usually object. But when a politician hikes public servants’ pay, he wins votes. If this year’s budget is tight, he can promise lavish pensions, secure in the knowledge that the bill will come due only in the distant future. Unfortunately, that distant future is now, which is why so many states are in a fiscal pickle. Per hour worked, state and local government workers enjoy 34% higher wages and 70% more benefits than their private-sector counterparts, calculates Chris Edwards of the Cato Institute, a libertarian think-tank.

Case in point: Washington's public employees aggressively oppose suggestions that they reopen their collective bargaining agreement to reduce costs. Even relatively benign furlough proposals are challenged.

Hard to argue with the conclusion.

... union bosses can sound jarringly out of touch.

And yet, they're driving the agenda in Olympia, adding to private sector job losses.