Big Labor Taking 'Silver' Out of 'Silver State'

(Source: January 2011 NRTWC Newsletter)

This winter, as state legislatures across the country prepare to go into session, many elected officials are looking for a practical way to get skyrocketing tax expenditures for compensation of state and local government employees under control.

For many years now, Big Labor featherbedding and counterproductive work rules have been key factors in causing government payrolls to spiral at an alarming rate.

In fact, according to inflation-adjusted U.S. Commerce Department data, taxpayers’ aggregate real costs for compensation of state and local government employees soared by almost 30% between 1998 and 2008 — an increase more than 50% greater than the total real growth of private-employee compensation.

In 2009, even as the nation’s economy endured a severe recession, state and local employee real compensation rose by 2.6%. Meanwhile, businesses whose revenues were plummeting had no choice but to cut back real compensation for private-sector employees by 4.3%.

Right to Work States Haven’t Been Immune From Government Union Virus

And last fall, American voters expressed their alarm at this trend by ousting hundreds of government union boss-friendly legislators in state after state and replacing them with candidates pledging to revoke union monopoly-bargaining policies that favor government employment growth over business job growth.

Grossly bloated public payrolls haven’t been confined to notorious forced-unionism stronghold states like New York, Illinois and California. Even a number of states with Right to Work laws prohibiting forced union dues are suffering from somewhat less virulent strains of the same malady.

Right to Work Nevada is a case in point. Unlike neighboring forced-unionism California, Nevada has had strong private-sector job growth over the past decade (+14.4% from 1999-2009, vs. -1.4% for the Golden State).

Both states have been hit hard by the recent recession. But Nevada’s Right to Work law and its generally more job-friendly tax and regulatory climate can potentially help it recover smartly over the next couple of years — if policymakers succeed in slowing the growth of government payroll expenditures.

A big part of Nevada’s challenge stems from the fact that, unlike many other Right to Work states like Utah, Texas, North Carolina and Virginia, the Silver State has a monopoly-bargaining statute.

Nevada labor law denies school boards and other local elected officials the option to refuse to recognize government union bosses as public employees’ monopoly-bargaining agents. Consequently, it is extraordinarily difficult for local officeholders to reform Big Labor-backed work rules and other personnel policies that render the costs for public services far higher than they need be.

Largely as a result of Nevada’s monopoly-bargaining law, many of the state’s local governments have almost 85% of their revenues tied up in compensation costs, according to Stacy Woodbury, assistant chief of staff of outgoing Gov. Jim Gibbons (R).

Genuine Reform Won’t Come Without a Bitter Fight

Having recognized that unwarranted increases in government payrolls are undermining Nevada’s ability to maintain vital services while keeping per capita state and local taxes at the national average (in dollar terms), Mr. Gibbons is now calling for repeal of mandatory monopoly bargaining.

National Right to Work Committee President Mark Mix commented:

“Today in Nevada, like in many other states, Big Government has become Big Labor’s bread and butter. In this environment, laws and other policies handing union bosses monopoly power to negotiate with government employers over employee pay, benefits, and work rules result in catastrophic outcomes for taxpayers.

“Incoming Gov. Brian Sandoval [R] and Nevada legislators will have to fight Big Labor tooth and nail to repeal the monopoly-bargaining law. But that fight is absolutely necessary to keep the state safe for taxpayers.”