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  • Alyse DiNapoli

Public Sector Unions were hit hard in 2018. But don’t expect them to leave the Golden State

Updated: May 19




Labor unions in California received a double blow of decreased membership rates and an unfavorable U.S. Supreme Court ruling in 2018. But a Democratic governor with a proclivity for supporting organized labor and continuing lobbying efforts have proved those blows are not a death knell for unions in the Golden State.


In a state with a strong historical record of backing organized labor rights, union membership among California’s public employees saw a 4.7% drop from 2018 to 2017. That drop in membership occurred in the midst of Janus vs. AFSCME, the Supreme Court case that ended public sector unions’ ability to collect dues from non-members.


Unions, both public and private, have faced sizable hurdles for decades. Private sector unions were significantly weakened in the 1970s and 1980s as the inevitable forces of globalization took root and manufacturing companies moved operations overseas. Enhanced technology automated jobs previously held by workers, leading to U.S. plants shutting down and lost jobs. Nearly half of all private sector union members worked in manufacturing in 1975.


In 1981, Republican President Ronald Reagan famously fired over 11,000 air traffic controllers for illegally striking, a bold action that underlined the conservative stance of condemning union power and distaste for organized labor.


Private sector unions have seen their membership plummet since the early ’70s. Union membership in the U.S. private sector plummeted from 24% of all workers in 1973 to just to 6.4% in 2018. (California private sector unions currently sit at 8.3%.) But public sector unions have not suffered the same fate, with national membership rates actually increasing from 23% in 1973 to 34% in 2018. In California, as of 2018, about half of all public employees are union members.


Steve Smith, communications director of the California Labor Federation, said public sector unions have maintained membership rates of 50% to 60% over the past three decades.

“Whereas in the private sector, they’ve been decimated by attack after attack at the federal level, making it incredibly difficult to join a union in the private sector,” he said.


That steady level of membership rates for public sector unions could face a reckoning in Janus vs. AFSCME. In the landmark case, Supreme Court justices in a 504 vote wrote in favor of Janus, stating that collecting fees from non-union members violated the First Amendment. The justices wrote that prohibiting mandatory fees from non-union members were previously justified largely because unions lawfully had to cover all employees in their collective bargaining agreements, regardless of whether they’re technically a member or not. These “agency fees” were supposed to be used to cover the cost of the negotiations.


Despite that ruling, California has remained relatively friendly toward labor unions. Leading up to the Janus decision, the state passed a couple bills to cushion unions from the possible negative effects of the Supreme Court decision. Instead, the labor unions were likely more concerned of a growing problem — unfunded pensions.


In 1999, at the height of the tech bubble, the state passed SB 400 — following a considerable push from CalPERS, the state’s pension system for government retirees. The legislation opened the door for more generous benefits, such as a lower retirement age and increased retirement income for many employees. Investment returns on the pension funds ran as high as 20.1% at its peak in 1997 (an assumed rate of return usually hovers around 6.25% to 7.5%).


Union lobbyists used those high rates in helping CalPERS sell the bill to legislators, stating that these additional pension costs would never fall on taxpayers. But after the dot-com bubble burst in 2000, the fund could not rely so heavily on overly optimistic investments. Following the 2008 crash, returns plummeted to -24%.


Through collective bargaining, many unions, like the powerful Service Employees International Union (SEIU), have since agreed to contribute more toward their pensions. And in 2012, Democratic Gov. Jerry Brown endeavored to restructure unions’ ailing retirement system by signing the Public Employees' Pension Reform Act (PEPRA), which increased retirement ages and required contributions by employers and employees.

Unfunded pensions are not unique to California. As of 2016, about 25 states — including right-to-work states such as Kentucky, Michigan and Arizona — have public pensions with less funding than California unions. Illinois’ were only 36% funded.


The likelihood of footing a hefty bill for retirees’ income has left many Californians skeptical of the unions’ heavy political influence through statewide lobbying. The three biggest spenders among public sector unions between 2017 and 2018 — the California Teachers Association, Peace Officers Research Association (PORAC) and the California School Employees Association — shelled out $7.1 million combined. (The Service Employees International Union spent a whopping $8.2 million in the state, although they are comprised of both public and private sector workers.)


And while they’ve supported hundreds of policies, unions like PORAC and the California Correctional Peace Officers Association (CCPOA) have staunchly opposed propositions that would’ve likely decreased incarceration rates, such as Proposition 5 or Proposition 64. The associations also backed the 1994 Three Strikes Law, which largely resulted in a prison overcrowding issue — later condemned by the Supreme Court.


Smith defended union lobbying expenditures, noting that corporate spending on lobbying far outweighs anything seen by organized labor. Together, Pacific Gas & Electric and Chevron spent approximately $10 million more on lobbying expenditures within California between 2017 and 2018 than SEIU, California Teachers Association, PORAC and the School Employees Association combined.

“We could never match [corporations] dollar for dollar. We can’t devote those resources,” Smith said.


But even with less revenue, membership and an impactful Supreme Court decision, it doesn't necessarily mean union influence is waning. After all, the industry gave more than $1.2 million to back Gov. Gavin Newsom during his campaign, and nationally, public sector unions have given on average 91% of their political donations to Democrats since 1990.

And after the most recent election, Smith thinks California is actually in a pretty good position to protect public workers, despite the court ruling.


“The governor yields great power to determine the future of those in the public sector,” he said. “With Jerry Brown serving two terms and now having Newson, this is the first time we’ve had back-to-back Democratic governors in a long time.”


SOURCES:


Union Stats. Unionstats.com


“What Caused the Decline of Unions in America.” Gunn, Dwyer. April 24, 2018. Pacific Standard. https://psmag.com/economics/what-caused-the-decline-of-unions-in-america


1981: Reagan fires 11,359 air-traffic controllers. History.com.

https://www.history.com/this-day-in-history/reagan-fires-11359-air-traffic-controllers


Supreme Court of the United States, Janus v. American Federation of State, County, and Municipal Employees, Council 31, Et al. Decided June 27, 2018. https://www.supremecourt.gov/opinions/17pdf/16-1466_2b3j.pdf


Associated Press: “Highlights of California’s Pension History”. Sacramento County Retired Employees Association.

http://saccountyretirees.com/pension-reform/associated-press-highlights-of-californias-pension-history/


"If You Think the Bull Market Rescued Pensions, Think Again.” Ring, Edward. December 7, 2017. California Policy Center. https://californiapolicycenter.org/think-bull-market-rescued-pensions-think/


“Setting the Record Straight on CalPERS and SB400.” State Senator John Mooriach. Wednesday, March 7th, 2018. Fox & Hounds.

http://www.foxandhoundsdaily.com/2018/03/setting-record-straight-calpers-sb-400/


CalPERS Releases New Pension Rates for State and School Employers. April 18, 2018. CalPERS.

https://www.calpers.ca.gov/page/newsroom/calpers-news/2018/new-state-school-pension-rates


“The Pension Fund that Ate California.” Malanga, Steven. Winter 2013. City Journal. https://www.city-journal.org/html/pension-fund-ate-california-13528.html


Just the Facts: Public Pension Liabilities in California. Public Policy Institute. https://www.ppic.org/publication/public-pension-liabilities-in-california/


Summary of Public Employees’ Pension Reform Act of 2013 and Related Changes to the Public Employees’ Retirement Law. CalPERS. http://www.counties.org/sites/main/files/file-attachments/calpers_summary.pdf


“How Well-Funded are Pension Plans in Your State?”. May 17, 2018. Tax Foundation.  https://taxfoundation.org/state-pensions-funding-2018/


Cal-Access, Lobbying Activity. California Secretary of State.

http://cal-access.sos.ca.gov/Lobbying/Employers/list.aspx?view=category&session=2017


Proposition 64. Follow the Money, Top Opposing Donors. https://www.followthemoney.org/entity-details?eid=40814643


Proposition 5. Follow the Money, Top Opposing Donors. https://www.followthemoney.org/entity-details?eid=10246626


Proposition 36. Follow the Money, Top Supporting Donors. https://www.followthemoney.org/entity-details?eid=13690359


Gavin Newsom’s Campaign Finances. VoteSmart. https://votesmart.org/candidate/campaign-finance/70386/gavin-newsom#.XIlCWRNKiT8


Public Sector Unions: Long-term Contribution Trends. OpenSecrets. https://www.opensecrets.org/industries/totals.php?cycle=2018&ind=P04

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