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Taxpayers in union chokehold

| Tuesday, Oct. 26, 2010

"I thought unions were great -- until at Chrysler, the union steward started screaming at me. Working at an unhurried pace, I'd exceeded 'production' for that job."

That comment, left on my blog by a viewer who watched my Fox Business Network show about unions, matches my experience. No one ordered me to slow down, but union rules and union culture at ABC and CBS slowed the work.

Now unions conspire with politicians to rip off taxpayers.

Steve Melanga of the Manhattan Institute complains that politicians get union political support by granting government workers generous pensions and health benefits. After those politicians leave office, taxpayers are liable for trillions in unfunded promises.

"It's squeezing out all other spending," Melanga says. "Where are we going to get this $3 trillion dollars• ... When they're (government workers) allowed to retire at 58 and the rest of us are retiring at 60 and 67."

John Gage, president of the biggest federal workers union, the American Federation of Government Employees, disagrees: "This thing about unions and the public sector and bankrupting America, that's very far from the truth. Yes, we have a problem with pensions. Basically because these pension plans haven't been properly funded."

Melanga's response: "Fund public-sector pensions at a level that we can afford, (and turn) the pension system into a defined-contribution system. Public-sector employee unions and states have refused to do that."

A defined-contribution plan is like your 401(k). Your pension benefits depend on how well your investments do. State and local unions, by contrast, have "defined-benefit" plans, which simply force taxpayers to send retirees a monthly check.

Gage doesn't like Melanga's suggestion: "Can you imagine working 30, 35 years ... and (with) what just happened with the (stock) market, suddenly you're left holding nothing?"

I don't think they'd be holding "nothing." Yes, the market crashed, but the Dow is still above 11,000. Twenty-eight years ago, it was below 800. Over time, 401(k)s provide a decent retirement.

When I said that we in the private sector have such plans, Gates responded, "Only because of the laws in this country which make it almost impossible for private-sector workers to organize and to have a union. ... (W)ithout unions, we'd have a 'race to the bottom.'"

But this makes no sense. Do all employers move to Mexico because wages are lower there•

But many viewers side with Gage:

Grover said: "Stossel's take on Unions is nothing but appalling. According to him, workers have no rights. Workers are the ones who make a company profitable, not CEOs."

Jakob wrote: "Are you really this stupid• ... Would you like for us to go back to a time in America before we had unions• When children worked in factories for 14-hour days and health and safety standards simply did not exist?"

These are popular views. But they are wrong. Factories are safer because of free markets. Companies want better workers and must compete to get them. Unions once helped to advance working conditions, but now union work rules mostly retard growth and progress.

In the private sector, wage and pension demands are tempered by competition. If one company pays too much, a competitor takes his business.

But governments are monopolies. They face no competition and get their money by force. So they can conspire with public-sector unions to milk taxpayers. That explains the fix we're in today.

Something's got to give.

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and "Myths, Lies, and Downright Stupidity."

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