We Don’t Have to Surrender to Public-Sector Unions

Commentary, Workplace, Frontier Centre

In the Great Depression, Franklin Roosevelt declared categorically that he would not give government workers the right to strike. “A strike of public employees manifests nothing less than an intention on their part to obstruct the operation of government until their demands are satisfied,” he said. “Such action, looking forward to the paralysis of government by those who have sworn to support it, is unthinkable and intolerable.” Even in the late 1950s, the big labour unions themselves largely agreed. In 1959, AFL-CIO president George Meany said it would be “impossible” for a union to bargain with a government.

What caused liberal politicians and progressive unionists to change their minds – with such predictable and disturbing consequences? Manhattan Institute scholar Fred Siegel advanced a plausible historical explanation in a Wall Street Journal column earlier this year, and it provides a cautionary tale on either side of the border.

In 1958, New York City mayor Robert F. Wagner Jr., a Democrat, broke new ground when he gave New York’s employees the right to bargain collectively and the right to strike. Running for re-election in 1961, he won an extremely close race with public-sector-union support. “His re-election resonated at the Kennedy White House, which had won office by only the narrowest of margins in 1960,” Mr. Siegel writes. “Ten weeks after Wagner’s victory, Kennedy looked to mobilize public-sector workers as a new source of Democratic Party political support.” In 1962, he issued an executive order giving federal workers the right to organize and to strike. With this order, Kennedy turned federal workers, hitherto public servants, into a partisan political force.

Public-sector unions expanded rapidly across the county. “In 1958, there had been but 15 public-employee strikes nationwide, involving a handful of workers,” Mr. Siegel says. “By 1968 … more than 200,000 union members, mostly in local and state government, were involved in 254 strikes.” Mob action ensued when the newly unionized workers turned on the Democratic politicians who had empowered them. In 1975, New York sanitation workers went on strike, “allowing garbage to pile up in the streets of a Gotham already in the throes of a fiscal crisis.” In the same year, New York police went on strike, with marchers carrying signs that read “Burn City Burn.”

In both strikes, New York’s political leaders caved – and, in capitulation, learned how to live with public-sector unions: Give them (and keep giving them) more or less what they want.

Canada followed the U.S. example. In 1965, the Canadian Union of Postal Workers waged its famous illegal wildcat strike and stayed off the job for two weeks until Lester Pearson surrendered unconditionally. The prime minister could have fired them all (as Ronald Reagan would memorably do in a similar situation with air traffic controllers in 1981); instead, he enacted the Public Service Staff Relations Act, extending the right to strike to federal employees.

Canadian governments learned the same lesson U.S. governments learned: Give them more or less what they want. Give them big wage increases. Give them work-to-rule. Give them the contract language that multiplies overtime compensation. Most of all, give them gold-plated pension plans. The consequences are stark. When governments negotiate with public-sector unions, they tend to surrender their own authority, tend, indeed, to swap it – turning the unions, however episodically, into governments.

As George Meany said so long ago: Impossible. A Canadian public-sector worker can retire at 55 and collect as much as $1.4-million. This worker can now earn more in retirement than he or she earned (on average) in their careers – a generosity few private-sector workers will ever enjoy. The C.D. Howe Institute, meantime, reports that the federal pension plan is underfunded by $200-billion, most of which must be made good by private-sector workers.

We could tinker with the public-sector pensions (and we should), but we would be wiser to tackle the public-sector unions directly. We could justifiably eliminate them. We could justifiably eliminate the right to strike. Or we could justifiably adopt the American model: Wisconsin’s reform law that limits public-sector collective bargaining to wages only (excluding benefits, work rules and pensions) and ends the right to strike. FDR would approve. With hindsight, Lester Pearson might, too.