Labor policy jumped to the forefront of the nation’s political debate following the election of Barack Obama as president. Obama got a boost from organized labor support, and when he came into office he indicated that he would pursue the most pro-union agenda of any president in years.
A midterm election later, and Big Labor’s big legislative plans seem dashed following the Republican takeover of the House of Representatives. But the labor policy fight is far from over.
The Obama administration is still trying to advance a pro-union agenda through regulation and litigation.
More importantly, the issues that motivate union leaders are not going away, regardless of who controls the White House or Congress.
Arguably, chief among these is pensions.
In the private sector, pensions give unions a big selling point for attracting members: the promise of a stable and secure retirement. However, for years pensions funds also gave unions huge amounts of cash, which was often used for purposes not directly related to increasing the fund’s value, such as activist investing.
The s0-called Employee Free Choice Act (EFCA), which would have allowed unions to circumvent secret ballots in organizing elections, would have helped unions shore up their pensions by making it easier for them to sign up more members, through high-pressure tactics which secret ballots are intended to avoid. More union dues meant more payments into pension funds.
EFCA and a taxpayer-funded pension funded bailout proposal both went down to defeat in the last Congress and have no chance of passage in the current one. However, as long as union pension funds remain severely underfunded — which is for the foreseeable future — union leaders will remain motivated to pursue some sort of bailout.
In the public sector, pensions allow politicians to reward government employee unions for their support, without sparking taxpayer ire — at least in the short term — by backloading compensation to be paid for in the future.
In other words, while political pressure from taxpayers may limit politicians’ ability to spend money today, the check on spending doesn’t extend into the future. Thus, when the pension bill comes due, it’s somebody else’s problem, as the politicians who put taxpayers on the hook are out of office by then.
In Washington and in state capitals across the country, the policy debate over pensions — both public and private — has a long way to go.
For more detail see here for my recent posts on public sector and private sector pensions.
