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Union Wages Drive Up Costs, Increase Tax Burden for Louisiana Residents

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Right to Work states not immune to rising costs of  public sector workforce

While media attention is now focused on the demands of public employees in the more unionized areas of the country, “Right to Work” states like Louisiana also pay higher costs because of unions, industry experts and policy analysts say.

In fact, Louisiana residents could be paying 13.22 percent less in state income taxes if they were not absorbing the wage costs of the government’s unionized workforce, according to the latest figures compiled by UnionFacts.com. This figure represents the total amount of money the state could save if its entire unionized workforce made non-union wages.

Even so, an emerging trend in the composition of organized labor suggests that the UnionFacts.com figure could be understating the actual costs to Louisiana taxpayers that have built up in just the past two years.

Beginning in 2009, more union members worked for the government than for the private sector (51.8 percent), a trend that continued through 2010, according to the U.S Department of Labor’s Bureau of Labor Statistics. This shift has occurred in tandem with an overall drop in union membership that affects mostly the private sector. After losing over 600,000 members last year, organized labor now accounts for just 11.9 percent of all employees.

The ongoing demonstrations in Wisconsin, New Jersey and Ohio aimed against reduced benefit packages for union members relate back to this fundamental shift, observed Brett McMahon, a representative with Associated Builders and Contractors (ABC).

With the states under severe financial strain, governors have found it necessary to curtail taxpayer financed benefit packages, he explained. States are confronting budget gaps that could reach as high as $125 billion next year, according the Center on Budget and Policy Priorities. Senate President Joel Chaisson, a Democrat from St. Charles Parish, has said Louisiana could face a $2 billion shortfall in the 2012 fiscal year.

Although union power is not as entrenched in Louisiana as it is in other states where budget disputes have captured national attention, it is not immune to the rising costs associated with public sector workers, McMahon points out.

“It is real disservice to the taxpayers for public officials to remain disengaged from doing everything they can to keep costs reasonable,” he said. “That’s the problem we have coming out of collective bargaining. When people get something for free, it starts to get out of hand.”

In Wisconsin, Republican Governor Scott Walker favors legislation that would eliminate collective bargaining for public employees with the exception of police and firefighters. Under the bill, state workers would also be required to pay 5.8 percent of their pension costs; they current pay nothing. Walker has also called for state workers to pay 12 percent of their health-care premiums, up from the current rate of 6 percent.

All 14 Democratic members of the Wisconsin State Senate have left the state and traveled to Illinois in an effort to derail the legislation. With just 19 Republican members, the Senate does not have the 20 Senators required for a quorum to reach a vote. In response, Walker has threatened to lay off state workers unless lawmakers return to take a vote. Republican Senators have also suggested fining and even arresting the “Wisconsin 14.”

Vincent Vernuccio, a labor policy counsel with The Competitive Enterprise Institute (CEI), sees a conflict of interest at work in the collective bargaining arrangement that now exists between public employee unions and government officials.

“Unions and politicians are in a vicious circle,” he said. “Unions give to candidates; the candidates get elected and in turn grow the bureaucracy giving more money to the unions. The unions now have more to give the politician for their reelection. The cycle goes on and on: the politicians are happy because they keep winning and unions keep getting more and more in forced dues. Everybody wins except the taxpayers who are the ones at the end of the day who are stuck with the bill.”

The Louisiana Federation of Teachers (LFA) has donated $191,857 in political contributions between 2003 and 2009, with 91 percent of those contributions going to Democrats, federal campaign records show.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and can be followed on Twitter.

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