A review of Plunder: How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation, by Steven Greenhut.
Will a deep recession, mounting fiscal crises, and new revelations of gross abuse finally lead citizens to say "Enough!" to unionized public employees who have amassed power and benefits at the expense of the common good? Journalist Steven Greenhut hopes so. He has long decried public sector excesses in his columns for the Orange County Register. Now the head of the Pacific Research Institute's Journalism Center and editor-in-chief of Calwatchdog.com, Greenhut has stepped up his attacks in Plunder! How Public Employee Unions are Raiding Treasuries, Controlling our Lives, and Bankrupting the Nation. This well-timed manifesto focuses on California, a union stronghold that endlessly teeters on the edge of insolvency mostly because of unsustainable salaries, benefits, and pensions to public employees. "Don't laugh at California," Greenhut writes. "This disaster is coming to a state near you."
Too many people, he argues, accept the myth that "public service" is somehow nobler, more self-sacrificing than private sector work. Although he allows that "there are plenty of dedicated and decent public employees" and that "many of them perform necessary tasks," he insists that, like anyone else, government workers seek to improve their salaries, benefits, working conditions, and power. Thus they "have manipulated the system to enrich themselves…at a big cost to the rest of us."
Sometimes, the manipulation leads to criminal prosecution—as in the case of Bell, California, where this summer charges were brought against the city manager, mayor, and six other city leaders for misappropriating over $5 million in unauthorized pay raises. But Plunder! argues that public employees and their unions are even more insidious when they enrich themselves and drain treasuries without violating the law.
For example, Greenhut explains how public employees have secured defined-benefit pension plans that guarantee them a long, comfortable retirement at the taxpayers' expense. Police, firefighters, prison guards, and a growing number of other public safety workers receive a gold-plated "three percent at 50" pension plan that allows them to retire at age 50 and begin collecting a pension equal to 3% of their final year's pay multiplied by the number of years worked. A public safety worker who starts at age 20 can retire after 30 years with 90% of his final salary until he or she dies, at which point his spouse receives the pension for the rest of his or her life. Other government workers are not far behind, often eligible to retire at age 55 with 80% of their final year's pay. Moreover, Greenhut shows how many public workers "spike" their pensions by increasing their salaries in the last year before retirement and "double dip" by working new government jobs after retirement, accruing new pension benefits in a second or third job. Unfunded pension liabilities are at the heart of the fiscal crises facing state and local governments in California and elsewhere.
But the pension scam is a part of a deeper crisis: public employees have established themselves as an unaccountable governing class. Through collective bargaining and interest group politics, unions have placed the special interests of public employees over the general well-being of the public they are supposed to serve. Unions have made it virtually impossible to fire incompetent or abusive public employees or to fix underperforming agencies. This institutional sclerosis is particularly damaging to the public schools, where aggressive unions have resisted much-needed reforms and sacrificed students' futures to protect even the worst teachers' security and privileges.
Greenhut points out that many elected officials now come from within the ranks of public employee unions and others are completely dependent on unions for campaign contributions and support. Democrats are the worst offenders, virtually none of whom will challenge the power of public sector unions. According to the author, some Democrats worry privately that public employee pay and benefits are devouring so many public resources that there won't be enough left to fund other priorities—but they are too craven to challenge their union masters.
But Greenhut condemns Republicans, too, for their complicity. In particular, he argues that the GOP, driven by a "law and order" ideology, has blindly supported police unions as they've enriched themselves and created a culture of entitlement in which "the brotherhood" of police officers protects its own in cases of corruption and unjustified violence.
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Plunder! concludes with a long list of ways to rein in public employee unions, ranging from moderate reforms—such as increasing the retirement age of public employees or ending pension-spiking schemes—with more radical proposals including the nuclear option: "Public unions should be outlawed." That solution is improbable, to say the least, in California. Greenhut believes easily devised technical fixes could remedy the situation if so many political and legal hurdles didn't stand in the way. "[B]ecause the courts have ruled that pension increases granted by public bodies are vested benefits that must be paid no matter what, policymakers cannot simply go back and change past agreements."
Even action-hero turned politician Arnold Schwarzenegger was thwarted in this fight. Two years after his historic victory in the 2003 recall election, the Governator declared war on public employee unions, calling a special election to enact a number of reforms, including proposals that would make it easier to dismiss public school teachers for poor performance and would require unions to get member consent for dues used for political purposes. Schwarzenegger withdrew a third proposition that would have changed pension rules for public employees from a defined-benefit to a defined-contribution system. The state unions spent $100 million to defeat the two measures on the ballot, and after the election the president of the California Teachers Association crowed, "The governor owes all Californians an apology. Voters saw through his attempt to create a ‘phenomenon of anger' against teachers, nurses, and firefighters."
Is the situation any different today? Maybe things have gotten bad enough that reform is finally possible. In California, while Governor Schwarzenegger devoted his waning days in office to negotiating new contracts with some public sector unions to limit pension benefits—at least for new hires—the candidates to succeed him, Democrat Jerry Brown and Republican Meg Whitman, each vied to be the candidate more willing to stand up to the unions. One doubts that the winner, Brown, can be trusted to do so. In his previous terms as governor from 1975 to 1983, Brown signed the Dills Act, the law that formalized collective bargaining for public employees and created the state's union-dominated nightmare. Three decades later, Brown's 2010 campaign was almost wholly bankrolled by the state's public employee unions.
Greenhut scoffs at the idea that elected officials will ever effectively limit the power of public employees. "The public cannot count on their political leaders having sufficient spine to stick with such important reforms," he writes. Instead, he believes the people will have to take matters into their own hands. "In California and other states with liberal initiative requirements," he argues, "the best hope lies in direct democracy."
Considering the depth of the crisis, it is likely that initiatives to rein in public sector unions will soon appear on the ballot in California and other states. But as California's 2005 special election showed, any serious proposal will face intense and well-funded opposition. Reformers will have to counter this opposition and mobilize the electorate, in part by invoking the finely honed arguments in Steven Greenhut's Plunder!