October 23, 2005
Public Sector Unions Still Living in a Dream World
By Thomas
Bray
Detroit’s
auto companies, chastened by the bankruptcy of Delphi Corp., have
finally begun to chip away at the industrial welfare state. But
our welfare cities, if not the broader welfare state itself, remain
stubbornly resistant to change. Case in point: Detroit, which
the Census Bureau this year called America’s most impoverished
major city.
Impoverished,
that is, from the standpoint of its citizenry. But still rich
in wages and benefits for its public sector employees –
prominently including its mayor, Kwame Kilpatrick, whose expense-account
lifestyle stands in sharp contrast to the mounting deficits that
make the American automakers look like models of fiscal rectitude
by contrast. Detroit’s own auditor general, Joseph Harris,
predicts that receivership is only a question of when, not whether.
Autoworkers,
with a rare burst of good leadership from their union, have at
long last grasped the fact that the good old days are…the
good old days. They are coming to understand that failure to adjust
to the new realities of global competition will mean continued
erosion of union jobs, now down to about 8 percent of the manufacturing
workforce. From California to New York, however, unionized public
sector workers, who represent 37 percent of government employees
(and 53 percent in Michigan), are still living in a dream world,
insulated from reality by their stranglehold on vital municipal
services.
Hurricane
Katrina may have provided a tragic if useful laboratory for how
to rebuild a city, but don’t count on it. New York City
Mayor Michael Bloomberg early on caved in to the unions, agreeing
to raise taxes sharply in an already-overtaxed city. In California,
the “governator,” Arnold Schwarznegger, appears to
be fighting losing battles to modestly weaken the teachers union’s
stranglehold over the public schools and to give union members
somewhat more control over how their dues are used.
Detroit,
meanwhile, careens towards insolvency with an accumulated operating
deficit of about $300 million in a budget of $1.3 billion. And
that’s before any honest accounting for Detroit’s
rapidly accumulating health care liability to workers and retirees
of $5-6 billion, which by 2008, if fully recognized, would require
a tripling of the nearly $150 million a year in cash now going
out the door for health care.
There are
a few rays of hope. One is that Mayor Kilpatrick has cut payrolls
modestly, though even City Council has criticized it as too little,
too late. As of 2002, the latest year for which comparable data
is available, Detroit had 19.35 workers per 10,000 of population,
compared to 14.13 for Chicago and 10.16 for Phoenix, according
to the Citizens Research Council of Michigan, a watchdog group.
(New York led the pack with 37.25.)
Another is
that Detroit voters may be about to dump Mayor Kilpatrick in favor
of a former deputy mayor, Freman Hendrix, who has made improved
management of the city a central issue. But a poll last week seemed
to show Kilpatrick making a rapid comeback.
Hendrix,
despite warning of a looming “receivership” in the
last debate, talks mostly about the need to retrain the workforce,
as if lack of education for workers, rather than lack of incentive,
were the problem.
Unlike the
auto unions, which face direct competition from hustling work
forces in America’s right-to-work states, not to mention
Mexico or Asia, public sector workers face only the silent pressure
of people voting with their feet. Detroit’s population has
slipped below 900,000 from its high of 1.6 million in 1950. Talk
about loss of market share! Yet the municipal welfare state rolls
merrily on.
Thomas
Bray is a Detroit News columnist.
