Shadowbosses: Government Unions Control America and Rob Taxpayers Blind

by Mallory Factor

  In the next chapter, we will tell you how you got in the pot, who turned up the heat, and why you’re starting to feel more than a little woozy.

  Chapter 1 Summary Points

  Union bosses pay themselves rich salaries by getting you to foot the bill.

  Of the 125 million people working in America, only about 13 percent are represented by a union. For private sector workers, less than 7 percent are members of a union. But of the 20.5 million people working for our government, 41 percent are represented by a government employee union.

  One in three federal workers is represented by a union. Thirty-five percent of state workers and almost 47 percent of local workers are unionized, and as much as 60 to 70 percent of government employees are unionized in certain heavily unionized states.

  Two in three teachers, police officers, and firefighters are unionized.

  Government service is now more lucrative than the private sector. Federal workers can earn 30 to 40 percent more in salary and benefits and 22 percent more in cash salary than they would earn in the private sector with the same skills.

  There are over 459,016 federal workers making over $100,000 in salary—over one in five of all federal civil service workers. Federal employees get up to ten weeks of paid leave per year, or almost the equivalent of working only four days a week.

  Government workers retire at full pension substantially earlier than private sector workers retire (usually only with their savings and Social Security).

  The key to union wealth and power is forced-dues contract provisions, which are permitted in twenty-seven states and practiced in at least twenty-two states.

  Federal, state, and local government employees work on union matters for about 23 million hours annually—while being paid by the government. This “official time” costs American taxpayers over $1 billion per year.

  Government employee unions can cripple America’s economy, communities, and national security via strikes.

  Right-to-work laws protect workers against being forced to pay dues to a union in twenty-three states, but in sixteen of these states, government workers can still be forced under union collective bargaining control.

  HOW DOES YOUR STATE RANK?

  States Ranked by Percent of Government Employees in a Labor Union (Right-to-Work States in Bold)

  Rank State Government Employees in a Union (percent) Government Employees in a Union or Represented by a Union (percent)

  1 New York 72.2 75.3

  2 Connecticut 64.5 66.3

  3 Massachusetts 62.9 64.2

  4 Rhode Island 62.6 63.7

  5 Minnesota 60.0 61.8

  6 Oregon 59.4 62.9

  7 New Jersey 58.9 60.4

  8 California 56.9 60.0

  9 Alaska 53.2 56.0

  10 Washington 52.4 56.5

  11 Illinois 52.0 54.1

  12 Michigan 52.0 55.0

  13 Pennsylvania 51.8 56.6

  14 Hawaii 50.7 53.4

  15 Wisconsin 50.3 53.4

  16 New Hampshire 48.8 54.6

  17 Vermont 48.7 52.2

  18 Maine 45.8 55.5

  19 Ohio 42.6 45.6

  20 Nevada 40.9 47.1

  21 Montana 38.4 41.9

  22 Delaware 36.7 39.5

  23 Iowa 35.9 46.0

  24 Maryland 31.0 34.8

  25 Indiana 28.3 31.4

  26 West Virginia 26.9 30.2

  27 Colorado 26.4 29.8

  28 Florida 26.4 31.8

  29 Nebraska 25.4 32.6

  30 Alabama 24.8 26.8

  31 Missouri 21.4 28.1

  32 Kentucky 19.9 24.6

  33 Kansas 19.7 27.8

  34 Utah 17.6 22.2

  35 D.C. 17.5 19.7

  36 New Mexico 17.4 23.8

  37 Texas 17.1 21.1

  38 Arizona 16.6 21.2

  39 Oklahoma 16.6 21.1

  40 North Dakota 16.5 21.2

  41 South Dakota 16.3 21.9

  42 Tennessee 15.3 20.0

  43 Idaho 14.9 17.1

  44 Virginia 14.1 17.1

  45 Wyoming 13.5 16.2

  46 Arkansas 12.2 13.9

  47 South Carolina 11.8 15.4

  48 Mississippi 10.4 15.3

  49 Georgia 9.9 12.4

  50 Louisiana 9.8 13.9

  51 North Carolina 9.1 13.3

  Based on data provided by Unionstats.com.

  Data Sources: Current Population Survey (CPS) Outgoing Rotation Group (ORG) Earnings Files, 2011. Sample includes employed wage and salary workers, ages 16 and over.

  © 2012 by Barry T. Hirsch and David A. Macpherson. The use of data requires citation.

  CHAPTER 2

  The Union Fist

  IN a small city in upstate New York, near Buffalo, the bosses of a local union are on trial. They are charged with federal racketeering and extortion conspiracy in their efforts to encourage local companies to sign labor contracts with the union. What did they do? They allegedly threw boiling coffee at nonunion workers and committed $1 million in vandalism of company property.1 Court documents also charge them with sending threatening letters to company officials at their homes, stabbing a company president in the neck, and telling another company executive that they were going to his home to sexually assault his wife.2

  But the most unbelievable part of the case was an alleged conversation between a union boss and a company president. The president allegedly asked the union boss why he should sign a collective bargaining agreement with the union: “You guys slash my tires, stab me in the neck, try to beat me up in a bar. What are the positives to signing? There are only negatives.”

  “The positives,” the union boss allegedly replied, “are that the negatives you are complaining about would go away.”3

  This story sounds like it has to be a joke, but it is taken directly from the grand jury indictment in the case.

  How did the unions get so brazen about their power over companies—and now our government? Unions have a long history of thuggery, and the rise of government employee unions is likewise mired in corruption and deceit. It involves egregious threats of violence and high-level manipulation. But it started, as most awful things do, with good intentions.

  Labor Unions Rising

  In the mid-1800s, labor unions started out as voluntary organizations of workers in particular trades. Workers joined unions of their own free will, and the unions bargained for better salaries, benefits, and working conditions on behalf of their members. In some cases, labor unions helped workers improve dangerous and unhealthy working conditions. The meatpackers unions, for example, were backed by the public thanks to the muckraking work of Upton Sinclair, author of the 1906 novel The Jungle. In that book, he depicted meat workers toiling under terrible working conditions; some stumbled into rendering tanks and were made into lard, which went on grocery shelves nonetheless.

  In many cases, labor unions coerced workers to join their unions and brought violent, bloody strikes to their industries. Bashing heads and breaking kneecaps were accepted weapons in the union arsenal. But the important point is that unions started out as voluntary associations—even if those associations became less voluntary over time. So how did forced unionism begin and then spread to the government sector?

  It started during World War I, when President Woodrow Wilson relied on labor unions to organize workers for the war effort, as an emergency measure to increase productivity and preserve labor peace.4 But it took the Great Depression to truly legitimize labor unions. The Depression—and President Franklin Delano Roosevelt’s class-warfare rhetoric—made people believe that the rich were making their money on the backs of poor workers. These people also came to believe that labor unions would rebalance the power between workers and business owners.

  President Roosevelt was one of the biggest proponents of labor unions and redistribution of wealth. Despite being an immensely rich white fellow, FDR despised the so-called moneyed class. The rich, he claimed, were trying to take excess profits from their businesses and, in the pro
cess, cheating workers out of what was rightfully theirs. Thus, laws needed to be changed to give labor unions more power to grab a bigger chunk of the profits.

  Fighting against excess profits by businesses was a popular rallying cry of the time, mainly because of its populist message: soak the rich. In a way, FDR was the first member of the broad Occupy Wall Street coalition.

  End of Voluntarism

  The father of the American labor union movement, Samuel Gompers, had opposed forcing workers into labor unions when he led the American Federation of Labor through 1924. “No lasting gain has ever come from compulsion,” he said.5 Furthermore, Gompers believed that man’s ownership of his own labor is a precious right: “The only difference between a free man and a slave is the right to sell or withhold his labor power. This precious right must be cherished and guarded against all invasions.”6 Gompers had articulated a very important principle of workers’ rights—everyone has the right to sell or refuse to sell his labor in the marketplace. If workers decide to sell their labor collectively, that is fine as long as it is their choice to do so and they are not forced into collective bargaining.

  But FDR wasn’t concerned with preserving voluntarism in the labor movement. In 1935, Congress passed and FDR signed the National Labor Relations Act (NLRA). The chief Senate sponsor of the NLRA was New York Democrat Robert Wagner—which is why the law is still commonly referred to as the Wagner Act. Wagner was a member of Roosevelt’s “Brain Trust,” and a true believer in the “excess profits” line of reasoning. The Wagner Act gave labor unions extensive powers to unionize workers in American businesses. Those powers would be extended to allow unions to organize government workers around a quarter century later.

  After the Wagner Act passed, workers could be forced to join a union and forced to pay union dues to get or keep their jobs. So, if you worked in a factory and a majority of workers decided to accept a union as their representative, you’d now be represented by the union, and you’d have to pay dues. Only later, in 1947, did the Labor-Management Relations Act (also known as the Taft-Hartley Act) allow individual states to pass right-to-work laws giving workers protection against being fired for not paying union dues, and there are now twenty-three right-to-work states with these laws on the books.

  After passage of the Wagner Act, businesses had a much harder time resisting labor unions who came in to unionize their workforce. As historian Burton Folsom explains, “The Wagner Act certainly weighted the scales toward labor.”7 The Wagner Act requires employers to bargain collectively with unions. It also forbids employers from using certain “unfair labor practices” to prevent employees from unionizing. The Act also put into place a watchdog organization to make sure that businesses were abiding by the new restrictions: the National Labor Relations Board (NLRB). As you’d expect, the NLRB is usually used as a pro-union club against businesses. (In 2011, the NLRB brought suit against Boeing for opening a new factory in right-to-work South Carolina instead of expanding its operations in union-dominated Washington State, which NLRB dropped when Boeing reached an agreement with the union in its Washington plant to expand production there.)8

  For nearly two years after the Wagner Act was adopted, it had relatively little impact because employees and businesses expected the law would be overturned by the U.S. Supreme Court as unconstitutional—as it should have been. In April 1937, the Court, under intense pressure from FDR, who threatened to pack the Court with additional justices to get the decision that he wanted,9 upheld the constitutionality of the Wagner Act in a 5–4 decision. Once approved by the Court, the Wagner Act accomplished what Wagner and FDR had intended it to do—increase unionization. Membership in labor unions soared—the United Auto Workers actually experienced a tenfold increase in membership in the year the case was decided.10

  The other corollary was that within just a few months after the Supreme Court’s decision upholding the Wagner Act, business profits fell dramatically. After job growth of almost 7 million jobs over the previous five years, the economy turned downward again in 1937, and 1.9 million jobs were lost from the economy. Private sector employment didn’t reach its pre-Depression level until 1941, as industry mobilized for World War II.11

  With the labor unions owing their prominence to FDR, an unshakable alliance was formed between unions and Democrats. FDR and other politicians had pushed for the Wagner Act based on their progressive worldview, of course—but their support also had something to do with their campaign coffers, which were increasingly full of labor union cash.12 As the unions prospered, so did their favored politicians.

  Meanwhile, labor unions were focused on growing their membership and their bottom lines. “We are in business to make money,” said thug-boss Jimmy Hoffa of the Teamsters, who would disappear mysteriously in 1975. “We are out for every quarter we can get.” James Peirce, the president of the National Federation of Federal Employees, agreed: “We all need more members, greater representation, more money for our political funds.”13 William W. Winpisinger, the International Association of Machinists president, focused on socialist goals: “I am convinced the only way organized labor can repel the armies of right-wing radicalism is by fighting for total redistribution of this nation’s income and wealth.”14 The mission hasn’t changed. Unions are still pushing for forced redistribution of income—from everyone else to them.

  Even FDR felt that extending collective bargaining to government workers would be disastrous because it could lead to government workers striking against the government, which would be “unthinkable and intolerable.”15 The unthinkable and intolerable, however, would soon become the law of the land.

  From FDR to JFK

  A little more than a quarter of a century later, another friend of labor would open the gate to government workers unions. In January 1962, President John F. Kennedy signed Executive Order No. 10,988, granting unions monopoly bargaining power over federal employees.16 The Executive Order was supposed to promote the idea that “orderly and constructive relationships be maintained between employee organizations and management officials.”17 And for Kennedy, this meant interposing unions between government workers and their employer through collective bargaining.

  By extending collective bargaining to federal government workers, the Executive Order would prove to be a win-win for the unions and Democrats. And more union power meant getting a little closer to the permanent establishment of a dominant Democrat Party.

  Before Kennedy’s Executive Order, many federal employees, like private workers, had the right to join a union. The National Treasury Employees Union was founded in 1938;18 the American Federation of Government Employees (AFGE), now the largest union representing federal workers,19 was founded in 1932. And our foreign service employees could join the American Foreign Service Association as early as 1924.20

  But JFK’s Executive Order changed everything. For the first time, federal employees could be forced to accept a union as their “exclusive” bargaining representative, just like in the private sector.

  Not a big deal, right? Wrong. Having unions represent private workers in their dealings with business owners is vastly different from having unions represent government workers in their dealings with their government employer, as we’ve explained. “You know,” F. Scott Fitzgerald is said to have told Ernest Hemingway, “the rich are different from you and me.” “Yes,” Hemingway replied. “They have more money.” The government is different from the rest of us, too. It can hand out as much cash as it wants to anybody and never has to face any real consequences. No bankruptcy. When government employee unions wrest concessions from the government, the cost comes right out of the taxpayers’ pockets—the government officials supposedly negotiating for the taxpayers don’t feel a thing. It’s good to be the government. But it’s even better to be the union bargaining against the government.

  Now, JFK didn’t go so far as to allow unions to collect dues from every federal worker that they represent. He actually carved out a provision allowing em
ployees to decide whether or not to join a union and pay union dues. Those federal right-to-work protections have now become a critical right for federal workers.21 In the federal government and the right-to-work states, unions cannot force the workers that they represent to pay dues. This means that the unions’ real payout comes from the states that permit forced-dues collection.22

  But JFK let the camel’s proverbial nose under the proverbial tent. Quite quickly after that, the camel came all the way into the tent and brought a bunch of his friends with him. More specifically, this Executive Order triggered a wave of copycat legislation in the states. These new laws authorizing collective bargaining over state and local government workers started in Wisconsin in 1959 but proliferated once Kennedy’s Executive Order was issued. Labor commentator Daniel DiSalvo notes, “In 1959, only three states had collective-bargaining laws for state and local employees; by 1980, 33 states had these laws.”23 Now, forty-three states permit collective bargaining over state or local government employees.24 And twenty-seven states permit forced-dues provisions in union contracts, and twenty-two states actively force unionized state and local workers to pay union dues as a condition of employment.25 These forced-dues states include heavily populated California, New York, Illinois, Pennsylvania, Ohio, and Michigan.

  But how did things go so terribly wrong in most of the states? To tell this story, you will have to go back a few years and meet a little, bespectacled, unpleasant man named Jerry Wurf.

  Angel of Death

  Jerry Wurf had been afflicted with polio from the age of four, making even walking a struggle, but Wurf never shied away from a brawl. He got his start in union agitation organizing cafeteria workers in New York City in the mid-1940s. To get inside the cafeterias to organize the workers there, Wurf got himself hired as a cashier. Then he played rough. If a cafeteria owner resisted the union’s demands, Wurf suggested that busboys “drop a tray laden with dirty dishes at the end of a serving line.”26 The Yiddish-speaking cafeteria owners quickly gave Wurf the nickname of mal’ach hamaves, which means the “angel of death.”27