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Unions' label fading fast

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Saturday, Sept. 3, 2011

James Sherk is a labor law expert and the senior policy analyst in labor economics at The Heritage Foundation. We spoke by phone Monday as the country readied for Labor Day 2011.

Q: What's the state of the labor movement today?

A: In the private sector, unions are not doing very well at all. ... They're down to below 7 percent union membership in the private sector. That's actually about half the rate that prevailed when FDR signed the National Labor Relations Act of 1935.

And the reason for that is basically unions don't add value to an enterprise. In many ways, they reduce value by making these companies less flexible and less nimble in the marketplace. ... What the studies show pretty strongly is (unionized companies) just don't grow as quickly or they shrink more rapidly.

Q: What about the public sector?

A: Now the public sector is a different animal. In the private sector, you have to earn profits to stay competitive or you lose your marketplace. But if you live in California, you don't have the opportunity to say, "You know what• I'd rather pay taxes to Texas and receive their services." You don't have the option of buying your services from a different government.

So as long as the people aren't actually physically moving away from the state or from the city, the unions have a far greater capacity to be inefficient.

All that happens is your taxes go up. If you're a taxpayer, you don't like that, but from unions' perspective, they don't care if you don't like it as long as you pay. And so in the public sector, they're steady in their market share -- between 35 and 40 percent. They've been at that level for basically the past generation.

But the problem they've started to face, and they're going to be increasingly facing, is that ... you're going to have just tremendous financial stress placed on all levels of government. With the retirement of the baby boomers, the demands of the recession, there's going to be an immense fiscal crunch. So the question is going to be: Is this an inefficiency the government can afford anymore• And more and more states and localities are saying, "No we can't."

Q: The long-term consequences of Wisconsin's law will be pretty sweeping?

A: Well, I don't want to say that Wisconsin is the causal effect because I think Wisconsin was reacting to the same pressures that are hitting everywhere. But I think it's more the canary in the coal mine -- that it was the first major case where this had happened.

I think you're going to see perhaps not laws identical to Wisconsin but along that same vein of rolling back the ability of government unions to basically extract money from the taxpayers.

Q: AFL-CIO chief Richard Trumka said Big Labor was going to build its own political structures and give less money to others. Is labor disappointed with the president and the Democrats?

A: They're very difficult to please. I think (President) Obama has given them everything he possibly could. You are seeing (this) more and more as the union movements shift toward government. You've got like 52 percent of union members in government, and my bet is a decade from now, that figure is going to be higher.

If you're a player in the political process in government, you can elect your own boss. You can't do that in the private sector.



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