A Quick Comment on Government Unions in Illinois

Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI.

Yesterday the Illinois Policy Institute (IPI) released “The Anatomy of Influence: Government Unions in Illinois,” perhaps-not-so-coincidentally on the same day that Governor Rauner passed an executive order prohibiting public sector unions from paying fair share fees to fund union activities. In usual IPI fashion, the report only tells a small component of the whole story. Below are a few thoughts on the report.

Report quote: ” At both the IEA and the Illinois Federation of Teachers or IFT, the top 20 highest-paid employees all are paid salaries of more than $100,000 annually.”

The IEA and the IFT represent about 214,000 workers in Illinois combined, according to the report. These 40 individuals’ salaries represent 0.02% of all members. By contrast, data from the American Community Survey 1-Year Estimates for 2013 reveal that the Top 10% of all workers in Illinois earned at least $100,000 in real total income and the Top 1% earns $475,000 or more [Note: See the STATA output above, which reports weighted estimates for 59,743 Illinois residents who are in the labor force and are employed]. The fact that 40 salaries in the IEA and IFT are above $100,000 is utterly meaningless when contrasted with the rest of the Illinois labor market.

There is a myth about the “overpaid” labor union leader. In a report released last month with the University of Illinois Labor Education Program, ILEPI debunked that myth (PDF) from a national perspective. The report provides a complete story by comparing and contrasting (perhaps a novel idea these days…). We concluded:

Unions raise and compress wages, and union leaders are compensated accordingly. The typical labor union is neither large nor lucrative, with average compensation packages to employees that are similar to social advocacy, community services, and worker services groups. Payroll costs are much lower in labor organizations than they are in business associations (such as chambers of commerce), in law offices, and among managers of companies and enterprises. Additionally, labor leaders and top administrative staff are not paid more than the market rate for other leaders and administrators. In fact, they tend to earn far less than comparable CEOs and executives in relevant industries. Thus, there is no evidence to support any claim of “Big” labor, with unions governed by overcompensated leaders.

Once again, here is a link to that paper.

Report quote: “The Illinois Policy Institute reviewed campaign-finance reports from 2002 to 2014 and found the five major government unions in Illinois spent a combined $46 million in political campaigns in that time.”

According to FollowTheMoney.org, $1.29 billion has been contributed to statewide political campaigns in Illinois since 2002. In the context of all campaign contributions, the $46 million influence of public sector unions represents just 3.6 percent of all campaign contributions. Furthermore, during that exact same time, Bruce Rauner contributed $39.6 million to political campaigns. Once again, that is $46 million dollars representing hundreds of thousands of public sector workers (3.6 percent) versus nearly $40 million from one businessman (3.1 percent). Let’s get real about the influence of money in politics here.

Why single-out public sector labor unions and not include a report on (or at least comparable data on) financial institutions, pharmaceutical companies, real estate lobbyists, or even business and trade associations (which include businesses that contract with the government)? In fact, if the influence of money in politics is such a key issue for the IPI, why would they not call out donors to Illinois’ Republican candidates in the 2014 election, who received $41.1 million compared to $31.8 million for candidates of the Democratic Party? Why not call attention to the fact that Bruce Rauner received $575,000 from the Illinois Manufacturers Association alone (and a total of $3.73 million from “miscellaneous manufacturing and distributing” donors) in 2014 and now Rauner is proposing a permanent extension of the Manufacturer’s Purchase Credit, which was set to expire later this year? How is a beneficial government tax credit subsidizing employers much different from a wage increase for state employees? It is ridiculous to single-out public sector labor unions and completely ignore the larger problem.

The only true way to reduce the influence of money in politics is to pass a constitutional amendment overturning Citizens United and allow for a fair, publicly-funded system of campaign finance. Until then, a public sector employee’s voluntary contributions to a union’s political activities fall under his or her constitutional right to freedom of speech. The IPI is being overtly political here.

Report quote: “It should serve as a tool… to help public employees understand whether they are getting their money’s worth”

The IPI breaks down a union’s “functional spending” into the following categories: 1.) Representation; 2.) Political; 3.) Contributions, gifts, and grants, 4.) Overhead; and 5.) Administrative. The report does not define these categories. Do administrative costs cover the administration of the contract? Does overhead cover employee salaries – i.e., the people who actually do represent the members? Is spending on the union headquarters or on membership events or on meetings covered under representation? Without clarification from the IPI, government employees who are represented by a union should be skeptical of their numbers. Additionally, the amount of time spent on each activity (rather than money, because different items simply cost more) could be what is truly important.

However, regardless of how a labor union apportions its “functional spending,” outcomes matter more than the process. In last year’s The State of the Unions 2014: A Profile of Unionization in Chicago, in Illinois, and in America (PDF), ILEPI, the University of Illinois at Urbana-Champaign, and the University of Chicago found that union membership raises the average worker’s hourly wage by 21.4 percent in Illinois (regardless of whether they are in the public or private sector). Unions also provide members with improved working conditions, better health and retirement benefits, and a voice in the workplace. The typical state employee should be far more concerned with the outcomes of his or her representative collective bargaining unit, not the breakdown of functional spending.

The IPI is condemning Illinois’ hard-working, middle-class teachers, police officers, and firefighters and blaming them for years of mismanagement by Illinois officials (in both Democratic and Republican administrations). It is, to be frank, absurd.

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