California Forum

California’s economy depends on the future, but labor here is stuck in the past

Yuba City teachers vote to end a strike in 2016. Public employee unions increasingly underpin California’s middle class.
Yuba City teachers vote to end a strike in 2016. Public employee unions increasingly underpin California’s middle class. jvillegas@sacbee.com

In 1983, just after Gov. Jerry Brown’s second term ended, private unions had 1.6 million members, comprising 18 percent of the workforce. Those numbers have dropped to 1.2 million and 9 percent.

Now is a good time to assess the role private and public unions will play in California’s future. Unions still play very important roles, including apprenticeships to fill the current job training void. But as private unions have declined, public unions, representing local, state and federal employees, have grown to 1.4 million members. Funded by taxpayer dollars, these jobs are the major force keeping the union movement alive in California.

Forty years ago, a Sacramento Bee editorial cautioned against legislation championed by then-Gov. Brown: “[A] system of union elections and collective bargaining for state employees could … put union leaders in positions where they could dictate to elected officials on government policy.”

The practices of the past keep public employee unions focused on salary increases and benefits rather than reforms needed to grow middle-class jobs and tax revenues.

That editorial ran on Aug. 29, 1977, and no editorial by this paper has been more prescient.

Today, despite California’s economic innovation and global impact, middle-class job growth is obstructed by labor practices stuck in the past and by their impact on state government policies.

California’s job growth and the income taxes generated for state services now depend on the high-tech Bay Area. Once a bastion of the union movement, the Bay Area now is home to the least-regulated, least-unionized and most-successful economic sector on the planet. Though it represents fewer than 20 percent of the state’s population, this region produced 30 percent of our job gains since 2010 and more than 41 percent of net job gains since 2007.

But the rest of California, with declining middle-class, private-sector jobs once built on manufacturing and private labor, is now a two-tier economy. While it grows some high wage jobs, most are low wage.

Those at the bottom struggle with an ever-increasing cost of living, especially housing, which contributes to our highest-in-the-nation poverty rate. Labor-force participation is at a historic low. One million workers who should be pulling a paycheck are no longer even looking for a job.

Meanwhile, our information and technology economy continues to transform. Automation, driverless cars and other disruptive technologies will soon impact private sector and private union jobs. Public policy must keep pace to modernize education, workplace regulations, and build infrastructure and housing.

But the practices of the past keep public employee unions focused on salary increases and benefits rather than reforms needed to grow middle-class jobs and tax revenues. Once near parity, average compensation for state and local workers in 2015 was 31 percent higher than private workers, and 42 percent higher for state workers.

Taxpayer-funded, public-employee jobs are now our new middle class and tax increases that previously went to improve public services currently fund salaries, pensions and health care.

Left with little choice, private unions now follow the public union line, increasing the cost of the jobs that remain rather than modernizing policies and working to build a broader recovery. For example, housing costs drive more workers into poverty with each passing day, yet private unions now support policies such as Assembly Bill 1701, which will increase the cost of housing by creating expensive litigation and exposing builders to paying twice for the same work.

We agree there is much to do on all sides. Modernizing public policies can grow jobs in all sectors while creative disruptions lead our economy into exciting and unimagined new technologies.

But to get there all unions must be willing to adapt their thinking to the realities of California’s economic future. Future Labor Days depend on it.

Rob Lapsley is president of the California Business Roundtable. He can be contacted at rlapsley@cbrt.org.

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