Unions & Labor Policy

My four-year old niece likes to get her own way. When things going south—she has to take a nap, or worse, Dora the Explorer is over—no matter how much you try to reason and give her the facts, she employs three tactics: distract, lie, yell.

Liquor store union boss Wendell Young IV has a lot in common with my niece.

Governor Corbett and the majority of Pennsylvanians want the government out of the booze business, and the Legislature is discussing plans to do just that. Seeing the threat, Wendell has tried time and again to distract consumers and the media from the real issue—Pennsylvanians want convenience and choice—most recently by claiming "privateers" were hacking an online poll of the Pittsburgh Post-Gazette. And when the distractions fail, there are plenty of lies about liquor privatization to toss around, but those don't hold water with consumers either.

And so finally, he has to resort to yelling, which he did on Wednesday, in a fashion that would embarrass even my niece. Business groups, including the PA Chamber, NFIB, and Pennsylvania Manufacturers' Association hosted a press conference in the Capitol Rotunda to support ending the government booze monopoly. Wendell and a gang of union members shouted over and bullied the business leaders as they spoke, yelling "That's a picture of profit before people, folks," and "Aw, [expletive], there's not going to be any money."

You can bet that Wendell Young and his protesters will be at the Capitol in full force on Monday, as the House Liquor Control Committee meets in regards to privatization proposals. And while they may out-shout us, as taxpayers and consumers, we outnumber them.

Take a minute to email or call your legislator to encourage them and voice your support to end the government booze monopoly.

What does a Middle Eastern battlefield from biblical times have to do with where you buy your booze? Actually, quite a lot. At the Commonwealth Foundation, we call the government union bosses—the leaders of the Big Government Party—our modern-day political "Goliath." They are the power that maintains the status quo and fights against Pennsylvania's hardworking families and taxpayers—including the effort to get the government out of the booze business.

The word from the frontlines in our current battle for liquor liberty is that Goliath is on the move. With a scheduled House vote next week, Goliath is apparently organizing phone calls out of Philadelphia—replete with the unions' myths and half-truths—and into legislative offices as I type.

The government unions, with their vested interests in keeping government in the booze business, are dependent on taxpayer revenues to maintain their fight against taxpayers' interests. Without the state stores, the union bosses lose their forced dues from employees and they lose some of their political power—neither of which they can survive without.

So whether you drink or not, getting the government out of the booze business is a great opportunity to strike a blow for taxpayer freedom against Pennsylvania taxpayers' #1 political menace. But just like in biblical times, it will take a David—just like YOU—to defeat Goliath by joining this fight and contacting your legislator!

For more information visit BoozeFacts.com.

Businessman Jerry Shenk argues in today's Harrisburg Patriot-News that tough economic realities forced lawmakers to reexamine union privileges in their traditional strongholds of Michigan, Wisconsin and Indiana—and that Pennsylvania faces those realities, too:

Legislation can artificially increase the costs of labor through forced unionization and prevailing wage laws, but cannot increase worker productivity. When labor costs exceed labor productivity, developers import non-union construction labor, unionized companies outsource, move, automate or go out of business. Union jobs are lost. Discriminatory laws favoring unions discourage employers from forming businesses in, relocating to, or expanding businesses in jurisdictions which unions control. Accordingly, non-union jobs are also lost.

The main reform the Midwestern states enacted removed requirements that workers give part of their paycheck to a union just to keep their jobs. These reforms not only protect individual freedom, but bring prosperity too.

In the absence of full reform, Shenk recommends two basic ones—prohibiting taxpayer-funded collection of union dues for government unions, and requiring unions to hold regular elections:

While many Pennsylvanians remain jobless, the commonwealth faces difficult budget choices and worthwhile programs serving deserving citizens are necessarily cut, taxpayers should not bear the cost of automatic payroll deduction of dues owed by public-sector union members and remitting them to their unions. Why should unions enjoy unique privileges at taxpayer expense? The legislature should pass legislation making all unions responsible for collecting their own dues...

...Politicians must periodically convince constituents of their value as officeholders. Similarly, the legislature should require unions to face their constituent members every two years, to prove their value to the workers whose dues Pennsylvania currently confiscates on the unions' behalf, and, using secret ballots, guarantee workers the freedom to re-certify their bargaining units—or to decertify them without lengthy, expensive court challenges.

Read the rest of Shenk's insightful article here.

AFSCME's counter proposal to the Pennsylvania Lottery private management agreement (PMA) provides no guaranteed revenue for senior services, no new jobs and no protections for taxpayers if profits fall short. Below is a side-by-side comparison.

For more facts on the benefits of a private lottery manager, read our Lottery FAQ's.

AFSCME Council 13, the union representing state lottery employees, released its "Alternatives" to a lottery private management agreement.  However, their document doesn't represent a serious counter-proposal that would help Pennsylvania's growing senior population, but simply an attack on private lottery operator Camelot and the Department of Revenue.  Instead of offering policies with credible data, much of the document is pocked with juvenile jabs, like questioning the guaranteed $34 billion profit Camelot has promised the state:

We are not surprised the residents of this Commonwealth, major newspapers, elected officials, and your employees are skeptical that these "Annual Profit Commitments" are any more real than Gus, the Second Most Famous Groundhog in Pennsylvania.

AFSCME goes on to criticize the new contract, which guarantees profit growth significantly above historic growth, with more rhetoric, dismissing that as "comparing apples to screwdrivers." 

Moreover, AFSCME's critique includes misleading information.  For example, they claim:

[S]ince the addition of the Millionaire Raffle 2005-06 [sic], the Lottery's net operating revenues after the cost of sales are deducted have not dropped below approximately $1 billion.

Lottery profits were less than $1 billion per year prior to 2012—hence the use of the word "approximately"— with years of growth and years of decline. In fact, Lottery profits declined in three consecutive years, from 2007 to 2009.  

While Camelot's bid includes precise annual profit commitments for the next 20 years,  AFSCME's attack piece offers no such guarantee, but claims they can provide more, because government can always do better than for-profit companies:

[B]ecause there is no profit-taking through public operation, AFSCME members will always be able to produce more net revenue than your lone bidder. It's not about politics; it's about arithmetic. When all the numbers are crunched, at the end of the day, Camelot's numbers come up short.

Citizens with commonsense, experienced in inefficiency within government programs will find this laughable.  In their bid, Camelot would only share in the profit after the guaranteed $34 promised to the state, which creates an incentive for Camelot to be more efficient.  That is more funding for seniors programs than current Lottery forecasts, and it is guaranteed by the PMA.

Finally, AFSCME's proposed recommendations include "Development of an Annual Business Plan (including a marketing strategy) by the Pennsylvania Lottery."  That is to say, they don't offer their own business plan, but expect the Lottery to come up with a plan.  Of course, that is exactly what the contract with Camelot would do, while also guaranteeing results.  Oh, and without the bureaucracy and unfunded pension, too.

Here's a letter to the editor I wrote identifying the connections between special interest groups who oppose a lottery contract, and their motives for undermining a deal that would generate more revenue for seniors programs:

A recent Lancaster Online piece repeats several myths of special interest groups about the proposed lottery contract, offering little balance and overlooking the clear and sustainable benefits to our commonwealth's seniors.

The leading critic of the contract, American Federation of State County and Municipal Employees (AFSCME) union boss David Fillman, could personally lose under the proposed deal.  His union collects about $100,000 in forced dues from state lottery workers who would transition to the private manager.  These dues, which total about half of Fillman's $200,000 compensation, support AFSCME's lobbying and political spending: nearly $1 million last year.

The article cites the Keystone Research Center, without noting they are another arm of government unions. AFSCME gave $50,000 to Keystone Research Center last year, and two AFSCME employees sit on the KRC board.  Is it any wonder they are reading from the same playbook?

In contrast to claims that the process has been rushed, the Department of Revenue issued the invitation for bids almost nine months ago, testified to a legislative hearing in April 2012 and posted the full agreement on its Web site. 

The reality is this: Camelot, which runs the U.K. lottery, won an open and competitive bidding by guaranteeing a minimum of $34 billion in Lottery profits over the next 20 years.  This would generate $2.3 billion more for senior services over the first decade compared with historic lottery growth.  

Privatizing the lottery puts the needs of seniors and taxpayers ahead of special interests.

A faux-grassroots group funded by government unions is protesting a proposed contract for a private company to manage the Pennsylvania Lottery.

The deal would guarantee a minimum of $34 billion in lottery profits over 20 years—far exceeding current lottery profit forecasts. Lottery funds are used to fund the Department of Aging and other programs for seniors, which are seeing costs rise partly due to Pennsylvania's aging population. Utilizing the expertise of a private management company offers an alternative to cutting programs that seniors rely on or raising taxes to sustain them.

But government union bosses aren't concerned about the billions in additional revenue for seniors. The number they are really fighting over is $100,000. That is the approximate amount of forced union dues AFSCME could lose if 160 state lottery employees transition to jobs with a private company.

Those dues, which state government deducts from workers' paychecks and sends directly to the union, cover about half of AFSCME Executive Director David Fillman's $204,000 compensation package. Those dues also support AFSCME's lobbying and political activity—the union spent nearly $1 million on political activity from dues in 2011-12.

Union boss David Fillman may act like he is fighting for seniors or state workers, but really he is lobbying (with taxpayer-collected dues) to keep forcing workers to pay dues to sustain his six-figure salary.

Following the passage of Right to Work in Michigan, pundits are wondering about the prospects of similar reform here in Pennsylvania.

The Philadelphia Inquirer correctly notes Right to Work faces an uphill battle in Pennsylvania, along with New Jersey, but incorrectly assesses the politics behind this:

In Pennsylvania, it is not so much the perceived power of labor unions that tamps down any fervor for pursuing such a law - though, with 14.5 percent of its total workforce unionized, Pennsylvania ranks 15th in the nation and has an organized-labor machine with potent electoral muscle.

Rather, it's that Republican lawmakers may be loath to take on the political risk of further eroding middle-class wages and benefits by taking such a direct swipe at unions. The market has done an efficient job so far of whacking union wages and benefits without legislative intervention.

Wrong on both charges. In fact, Right to Work states have higher job growth, higher wage growth, and higher compensation adjusted for cost of living than forced union states. Despite forced unionization, Michigan lost 300,000 union members from 2001 to 2011—more than any other state. This is primarily because Michigan lost more jobs than any other state. Other forced union states also lost both jobs and union members; Pennsylvania lost 114,000 union members over that time.

Rather, it is the political power of government unions that hold back Right to Work, pension reform, private liquor stores, school choice, and other critical policy reforms. A recent Fordham Foundation report found that the Keystone State had the 4th most powerful public school unions.

To understand this power, let's look at the political spending of government unions in Pennsylvania and Texas—a state twice our size, but with a Right to Work law. Pennsylvania's government unions spent $37 million from union dues on politics and lobbying from 2005 to 2011 (dues cannot be used for campaign contributions, but can be used for independent advertising, lobbying, and other political action) and $13 million in Political Action Committee (PAC) contributions to candidates from 2005 to 2012. This $50 million binge represents four times what government unions in Texas spent over that time.

Collective bargaining agreements, including state union contracts, often require school districts, state, and local governments to deduct union dues and even PAC money from workers' paychecks without them ever seeing the money. The effect of these special privileges for government unions is that union bosses spend far more money on politics here in the Keystone State than those in Texas.

For more on how unchecked government union power and political influence hurts Pennsylvania taxpayers, workers, and even union members, read our report The Squeeze.

Yesterday, Jon Delano of KDKA Pittsburgh asked the question: Could Pennsylvania be next for right-to-work legislation?  As you know from the lessons learned from Michigan's recent passage of worker freedom legislation, Pennsylvania's prospects are more encouraging now more than ever.

But that's not what union bosses want you to hear.  Leo Gerard of the United Steelworkers says that hardworking men and women that don't think their union representation is worth the dues they pay are "freeloaders."

"The benefits that come from health care, maybe life insurance, in a collective agreement - the freeloader in right to work gets to have that representation and not participate in the financial structure that allows us to have that voice at work," Gerard said.

Is this true? Are non-union members that work in a business that has a union freeloading off their union colleagues?

The freeloader—or "free-rider"—problem is an issue only if unions have to represent all the workers in a particular bargaining unit, even the non-members.  If you give workers their constitutional freedom not to join a union, they should be allowed to represent themselves.  The free rider problem is solved by relieving unions of their "duty" to represent non-members.

As it is, forcing workers to pay for the "benefit" they receive is only necessary when workers don't actually think they are getting any benefit—or at least not as great a benefit as they will be forced to pay.  Giving workers freedom to choose whether or not they want union representation makes the union more accountable, and more valuable, to their members.