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  • Alyse DiNapoli

A (Very Brief) Look at Public Sector Unions in the Golden State

Updated: Oct 22, 2019




While union membership has drastically shifted over the past several decades, the public sector has been relatively immune from the economic forces that crushed their private sector cousins. But, even though California has historically backed organized labor rights, the percentage of the state’s public employees who are union members is 4.7% lower in 2018 than it was in 2017.  A drop in membership plus a new Supreme Court ruling in Janus vs. AFSCME (which now prohibits collecting dues from non-members in public sector unions) mean that labor leaders are looking for new ways to engage current and prospective members. And for those not involved with a union at all, it means taking an even closer look at how they are impacting the state.


It’s no secret that the weakening of private sector unions in the 1970s and 1980s affected the entire country. As the inevitable forces of globalization took root, manufacturing companies moved operations overseas, and enhanced technology automated the jobs previously held by workers. Approximately half of all union members in the private sector worked in manufacturing in 1975, so when plants began to shut down throughout the US, local economies immediately felt the impact.


In 1981, Republican president Ronald Reagan famously fired over 11,000 air traffic controllers for illegally striking, further solidifying the rhetoric that other conservative politicians would use in condemning union power and promoting a public distaste for organized labor. Union membership in the private sector has since plummeted from 24% of all workers in 1973 to just to 6.4% in 2018 (currently at 8.3% in California). But national membership rates among public sector workers has actually increased from 23% in 1973 to 34% in 2018. In California, as of 2018, about half of all public employees are union members.


“Since we’ve had historically a high-density of public sector union membership, in the 50-60% range, over the last 30 years or so, those unions have tended to be stronger. 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,” said Steve Smith, Communications Director at the California Labor Federation.

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While these unions are not as strong as they were 40 years ago, the Janus vs. AFSCME decision dealt a major blow to the public sector last June. Mandatory fees from non-union members were previously justified largely because by law, unions have 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. Since union membership rates among public employees has been slowly dipping since the 1990s,  it’s hard to pin the most recent decline solely on a brand new Supreme Court case; but in California, a 4.7% drop between 2017 and 2018 has by far been the largest 1-year decrease in  over a decade.


Still, California has been relatively friendly towards labor unions. Even leading up to the Janus decision, a couple of bills were passed to cushion them from the possible hit they were about to take.  But the widely known problem of unfunded pensions can sometimes squash any sympathy that the public has for union workers. In 1999, at the height of the tech bubble, the state passed SB 400  (with lots of push from CalPERS, the state’s pension system for government retirees), which 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%-7.5%), which in turn helped CalPERS sell the bill to legislators, stating that these additional pension costs would not fall on the taxpayer but would be covered by their lofty returns instead. But after the dot-com bubble burst in 2000, it was obvious that 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 towards their pensions. And in 2012, Governor Brown passed the Public Employees' Pension Reform Act (PEPRA), which increased retirement ages and the contributions that employers and employees would have to make. But, while it’s certainly a cause for concern, unfunded pensions are not unique to California. In fact, as of 2016, about 25 states-including right-to-work states such as Kentucky, Michigan and Arizona- have public pensions that are “less” funded than California’s. Illinois’ were only 36% funded. And even among developed nations, the lack of adequate funding for these costly benefits is not uncommon.


In addition to footing a hefty bill for retirees’ income, however, some Californians are also skeptical of the unions’ heavy political influence through statewide lobbying. The 3 biggest spenders among public sector unions between 2017 and 2018 were the California Teachers Association, Peace Officers Research Association (PORAC) and the California School Employees Association, shelling 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 also been staunch opponents of propositions that would’ve likely decreased incarceration rates, such as Prop 5 or Prop 64. They also backed the 1994 Three Strikes Law, which largely resulted in a prison overcrowding issue later condemned by the Supreme Court.


But, according to Smith, if lobbying expenditures are a concern, we should instead shift our attention to corporate influence, since they vastly outspend unions. Together, Pacific Gas & Electric (PG & E) 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 mentioned.


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


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. With Jerry Brown serving 2 terms and now having Newson, this is the first time we’ve had back to back Democratic governors in a long time,” he said.


Since the rights of organized labor have become particularly partisan over the past several decades, it should come as no surprise that California’s public sector unions are not going anywhere anytime soon.








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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