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This past November, Bruce Rauner was the only Republican candidate who was able to defeat a sitting Democratic governor, Pat Quinn. He did so in Illinois, a state that has long been subject to an excess of one-party rule, and one where the electorate was obviously weary of the dismal economic performance of the state, constantly illustrated in painful detail by the state’s free-market gadfly, Illinois Policy.
One quick read of Rauner’s inaugural State of the State speech makes it clear that elections have consequences; in this instance, beneficial ones. Rauner’s election breaks the Democratic monopoly over Illinois government. In the face of a Rauner veto, the Illinois Legislature cannot continue to pile on additional laws that hamper growth and development in the state, nor can it advance new taxes and restrictive labor legislation. But stopping new legislation does not roll back the many current laws on the book that continue to drive productive businesses and workers to other states (especially Illinois’ neighbors, where job opportunities are greater and tax levels are lower). Modern federalism ensures that the exercise of these exit rights help discipline wayward state governments. Illinois is learning that lesson the hard way.
Rauner’s proposals for the rollback must have real sting given the fierce union response it has sparked. AFSCME Council 31 director Roberta Lynch has denounced his efforts as “a blatantly illegal abuse of power.” “Our union and all organized labor will stand together with those who believe in democracy to overturn Bruce Rauner’s illegal action and restore the integrity of the rule of law.” Her appeal is designed to make sure that all the special privileges that unions have secured for themselves with respect to pensions and collective bargaining rights will be preserved. The issue goes to the heart of union power, and has led to a system of high taxes and balkanized local government that put the state at an enormous disadvantage relative to its neighbors.
The concrete Rauner proposals that have attracted such wrath have two major components. The first of these is to insist that state workers who are not union members do not have to pay dues to a union that they do not wish to have represent them. This proposal to take on what are called “fair-share” provisions touches a raw nerve insofar as it tackles head-on the traditional compromise as represented by Abood v. Detroit Board of Education, which upheld a scheme that allowed unions to force non-members to fund the economic, but not political portions of their business. That ruling itself is now coming under increasing attack, as Justice Samuel Alito, in another Illinois case, Quinn v. Harris, indicated that he was unhappy with the Abood synthesis, and thought that any compulsory contribution to a union against the will of an individual worker amounted to a violation of First Amendment rights.
In my own view, the correct analysis of this question cuts much deeper. I do not think that any state should grant to its employees the power to unionize. What Ms. Lynch calls “democracy” is no such thing. Right now it is perfectly well understood that if all the firms in a given industry voted to raise prices and restrict output, the democratic process of setting prices and quantities would not insulate it from the operation of the antitrust law.
The same argument applies to workers who organize themselves in ways that permit them to hold up the public at large for wages and benefit packages that far exceed those available in competitive markets. Indeed, the situation is even worse in Illinois, where the state card check law allows public unions to gain members without the need to organize the kind of elections that ordinary democratic institutions allow. Getting rid of that statute should be high on the agenda of the state legislation.
The second of the Rauner proposals is to empower local government units to decide their own collective bargaining arrangements. In his words:
Empowerment means giving local voters the ability to control the collective bargaining issues in their local governments and take more responsibility for their employees’ benefits. Empowerment means giving local government employees the ability to decide for themselves whether they want to join a union. Empowerment means giving governments the ability to lower costs by reforming project labor agreements and prevailing wage requirements that block true competitive bidding.
It is always difficult to determine in the abstract how these changes will play out in particular cases. But in this case, it is likely that they will really matter. The words “prevailing wage requirements” are code words for contracts that will be at union wages so that non-union workers cannot underbid their union rivals. Starting with the Davis-Bacon Act of 1931, these proposals have ratcheted up the cost of contracting by perhaps as much as 20 percent. Allowing these changes on particular projects will have ripple effects that could bring down the cost of the whole system.
There remains huge uncertainty as to whether Rauner can use his executive power to achieve that end. He has already asked the prominent lawyer Dan Webb to seek a declaratory judgment that the current scheme of enforced dues is unconstitutional under the First Amendment, which will set up a certain fight with Illinois Attorney General Lisa Madigan, a Democrat, and Leslie Munger, the Republican Controller, who have both taken public positions that the “fair-share” law is valid. There is a delicious irony in all this positioning, given that the Democrats who have consistently supported President Barack Obama’s use of executive orders are now taking the view that the Governor does not have similar powers at the state level, even for public employees.
My own guess is that the Governor faces an uphill legal battle on these issues, but that, even if he loses these initial skirmishes, he will likely win the long-term political struggle. (Sorry for all these near-military metaphors.) Union privilege is no longer politically unassailable given the successes that nearby states like Wisconsin, Michigan and Indiana have had in taking on the once impregnable bastions of union power by introducing right-to-work laws and stripping public unions of many of their collective bargaining rights. These changes have hit AFSCME in the solar plexus, resulting in the loss of 50 percent of its members in Wisconsin.
No matter what the outcome in the short-term wars, any continued decline of Illinois might well give Governor Rauner the political clout to put major labor market reforms into place—and live to tell the tale.Published in