The Die Is Cast For Organized Labor

 

By Richard Colman, 

An aide to Julius Caesar said it best:  “Alea iacta est.” (“The die is cast.”)

Caesar heard these words in 49 B.C. as he crossed the Rubicon River in Northern Italy to march on Rome.

For public-sector unions, the die was cast on June 27, 2018, when the U.S. Supreme Court barred public-employee contracts from requiring workers to pay union dues.

The case grew out of an Illinois public employee’s objections to paying union dues.

In California, public-employee unions have grown very powerful.  Their pension benefits could bankrupt the Golden State.  (By law, states of the United State are not allowed to file for bankruptcy.)

No one knows exactly how much pension money is owed to California’s public employees.  Estimates range from $300 billion to $1 trillion.  Local governments, when paying for large pension benefits, may have to curtail services to such public institutions as schools, libraries, police departments, fire departments, and street-repair crews.

For example, suppose a city has an annual budget of $10 million.  If pension benefits go from 10 percent to 30 percent of the budget, the city will either have to raise taxes or cut union benefits — benefits that the courts may say cannot be cut.

A city with too much debt, may have to file for bankruptcy as Stockton, California, did in 2012.  At the time, Stockton’s bankruptcy was the largest municipal bankruptcy in the United States.

A bankrupt city that cannot pay funds to hold onto its police force is likely to experience a crime wave.

Many public employees in California cities belong to the California Public Employees Retirement System (Calpers).

Calpers has a rule that a city’s investment retirement portfolio produce a seven percent annual return.  Typically, an investment portfolio has about a return of five percent a year.  If a given California city does not meet or exceed the seven percent threshold, taxpayers are required to make up the difference.

According to a January 2018 report from the federal Bureau of Labor Statistics, about 33 percent of public employees in the United States are unionized.  In the private-sector, the figure is 6.5 percent. 

Currently, 55 percent of government employees in California belong to unions.

What are likely to be the consequences of allowing employees not to pay union dues?

In 2011, Wisconsin adopted Act 10, which made the payment of union dues voluntary.  By 2016, union membership in Wisconsin dropped by nearly 40 percent.

In California, the effect of the June 27, 2018, Supreme Court decision will likely engender robust debate and bring action from the California State Legislature.

 

Richard Colman is the founder and president of Biomed Inc., a biotechnology, publishing, and informatics company.  He is a biochemist and earned masters and doctoral degrees from the University of California at Berkeley.  He lives in Orinda, California.


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