Big Labor-Dominated States Headed Down Puerto Rico’s Disastrous Path

Although Puerto Rico’s fiscal downfall is now at a more advanced stage than that of any state, a number of states where compulsory unionism is entrenched are manifestly moving in the same direction. Image: Christopher Gregory for Al Jazeera America

In 1998, public-sector union bosses and lobbyists arm-twisted elected officials in the Commonwealth of Puerto Rico into handing Big Labor statutory monopoly-bargaining power to negotiate municipal employees’ working conditions.

At the time, the union-label politicians who bore the responsibility for adopting the monopoly-bargaining law vowed that it would not hurt taxpayers or undermine the territory’s solvency. But over the past 18 years, and especially since the union political machine helped install Alejandro Garcia Padilla of the territory’s Popular Democratic Party as governor in 2012, it has become increasingly clear that all such promises were hollow.

Puerto Rico is now struggling under the weight of $72 billion in debt, and desperately needs to cut the territory’s heavily unionized government payrolls, which consume more than two-thirds of the commonwealth budget.

In principle, this shouldn’t be so difficult.  In 2015, according to the U.S. Bureau of Labor Statistics, non-federal government employees represented 24.1% of all nonfarm payroll employment in Puerto Rico, while nationwide combined state and local government made up 13.5% of all nonfarm payroll jobs.

Yet Padilla is so beholden to government union kingpins that he has publicly committed himself to opposing any layoffs of government workers, and refused to budge even after Puerto Rico’s bond rating fell to “junk” status.

In addition to bloated and Big Labor-dominated government payrolls,  a secular shrinkage of the entire territorial workforce is a major reason why Puerto Rico can’t pay its bills. The commonwealth’s total payroll employment fell by 14.4% from 2005 to 2015, and rather than remain jobless a substantial share of Puerto Rico’s working-age population has moved to the U.S. mainland.

Early this month, as a Washington Examiner editorial yesterday reported, “Puerto Rico’s Government Development Bank, one of the quasi-governmental institutions the territory uses to circumvent borrowing limits, defaulted on a $422 million loan payment.” In the near future, it is virtually certain the government itself won’t be able to keep up making payments on its general obligation debts. (See the link below to read the entire editorial.)

When Puerto Rico commences repudiating its debts, the pressure on the U.S. Congress to bail out the commonwealth will intensify. But rather than lobby the Beltway to help them avoid repaying the money they’ve borrowed, what elected officials in Puerto Rico really need to do is reform their laws governing labor-management relations.

While Puerto Rico undeniably has several unique problems, its debt crisis stems primarily from the same source as the fiscal woes of many states: government-promoted monopolistic unionism. And although Puerto Rico’s fiscal downfall is now at a more advanced stage than that of any state, a number of states where compulsory unionism is entrenched are manifestly headed in the same direction.

An Institute analysis published in March, citing U.S. Census Bureau data, reported that the 12 states with the greatest absolute state-and-local government debt per capita (New York, Massachusetts, Alaska, Connecticut, Rhode Island, Illinois, New Jersey, Washington, California, Pennsylvania, Hawaii and Colorado) all lack Right to Work protections for employees.

On average, the 26 states that still permitted forced union dues and fees in 2013 (the most recent year for which government-debt data are available) had an average per capita state-and-local debt of $10,918, or nearly $3500 higher than the average for Right to Work states that year.

What New York, Massachusetts, Alaska, Connecticut and many other states all need are legislative rollbacks of their statutes empowering agents of a single government union to act as the “exclusive” spokesmen for all front-line employees and force such employees to pay union dues or fees, or be fired.

Decades of experience show that, as long as government union bosses retain monopoly privileges, they will virtually always use them to perpetuate counterproductive work rules and outrageous featherbedding.

That makes it all but impossible for elected officials and government managers to get public spending under control.

Puerto Rico, Illinois or bust