Lexington for the Economist:
(…) it is worth knowing what Mr Obama’s most powerful backers want. Unions spent hundreds of millions of dollars on electing Democrats in 2008, and provided an army of campaign volunteers. They expect something back, and Mr Obama is keen to oblige—up to a point. Union leaders such as Mr Trumka and Andy Stern, the leader of the more moderate Service Employees International Union, are regular guests at the White House. Mr Obama has revoked some Bush-era executive orders that unions hate and issued a few they adore. He has appointed union insiders to top jobs, allowed Congress to add “buy American†provisions to the stimulus bill, risked a trade war with China to please tyre-workers, let other trade deals wither and brazenly favoured unions when bailing out car firms.
But his biggest favour has been green, foldable and borrowed. For example, he encourages the use of “Project Labour Agreements†on big federal construction projects, whereby contractors must recruit through a union hiring hall. Such agreements inflate costs by 12-18%, according to David Tuerck of Suffolk University, and were banned under Mr Bush. Even where PLAs are not in force, federal contractors are obliged to pay “prevailing†wages. That actually means something close to the union rates, which is nice for the workers in question but means that taxpayers get fewer roads and schools for their money.
For the unions, public cash is a lifeline. The proportion of American workers at private firms who belong to unions tumbled from more than 30% in 1960 to 7% last year. By contrast, a hefty 40% of government workers are unionised and the rate has remained stable for decades. Under Mr Obama, the private sector has haemorrhaged jobs but the number of government workers has fallen only slightly. Last year for the first time more than half of American union members worked for the government.
(…) Such checks do not apply in the public sector. The government cannot easily go bust. When a company pays over the odds for labour, the money comes straight out of its owners’ pockets. They usually object. But when a politician hikes public servants’ pay, he wins votes. If this year’s budget is tight, he can promise lavish pensions, secure in the knowledge that the bill will come due only in the distant future. Unfortunately, that distant future is now, which is why so many states are in a fiscal pickle. Per hour worked, state and local government workers enjoy 34% higher wages and 70% more benefits than their private-sector counterparts, calculates Chris Edwards of the Cato Institute, a libertarian think-tank. But are the unions satisfied?
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