Chronicle of Philanthropy
June 24, 2012
by William A. Schambra
When Wisconsin’s governor, Scott Walker, turned back the effort to recall him by winning 53 percent of the vote this month, his victory did more than ensure that the state’s cutbacks in government-worker wages, benefits, and collective-bargaining rights would remain in place. It also dashed the hopes of progressives who had come to believe that the situation in Wisconsin signaled a grand new progressive coalition, with labor unions reaching beyond their embattled borders to embrace farmers, students, pensioners, and social-service providers in defense of a generous welfare state.
As John Nichols put it in Uprising, his saga of the union-driven unrest in Wisconsin: When the “whole state” chose to “rise up in open revolt against a governor who pushed too far,” it refuted the “lie that says organized labor, social-justice movements, and democracy itself are relics to be tossed aside.”
But the Wisconsin results should raise serious questions among progressive foundations and nonprofits about the alleged identity of interests between organized labor and social-justice movements. In fact, social justice may be better served by distancing itself from the causes promoted most aggressively by public-employee unions.
This was the lesson of another election decided the same day as the Wisconsin vote. In the City of San Jose, Calif., social justice and organized labor were all too clearly at odds.
The problem: As is happening in cities and states across America, exorbitant pension costs for public employees, aggressively negotiated and defended by unions, were quickly crowding out the generous government services at the heart of liberalism.
San Jose’s retirement payments had exploded from $73-million to $245-million a year in the past decade, now consuming 20 percent of the city’s budget.
As a result, San Jose had shuttered community centers, public pools, and libraries, and couldn’t adequately staff police and fire services.
Chuck Reed, San Jose’s proudly progressive mayor, decided to tackle this problem head on, insisting in an interview with Steven Greenhut for the Manhattan Institute’s City Journal that “there’s a difference between being a liberal and progressive and being a union Democrat.”
In his experience with the unions, Mr. Reed noted, “it’s always about the money, not about the public,” about “enhancing an already generous retirement,” which is “different than a focus on public service.”
Mayor Reed propelled Measure B onto the June ballot, proposing a range of measures designed to trim current and future pension obligations.
Sam Liccardo, a liberal Democrat on the San Jose city council, maintained that he “supported these measures, not in spite of my progressive values but because of them. Progressive advocacy for affordable housing, environmental stewardship, marriage equality, and immigrant rights doesn’t preclude the pragmatic pursuit of fiscal reform.”
Measure B stormed to victory with almost 70 percent of the popular vote. A similar ballot provision attracted a two-thirds majority in San Diego, which also faces exploding retirement costs.
These results led Andrew Rotherham, a Time magazine education writer, to comment the day after the election: “Forget Wisconsin. The unions’ biggest loss was in California.”
Other progressive political leaders around the country, including Rhode Island’s treasurer, Gina Raimondo; San Francisco’s public defender, Jeff Adachi; and New York’s Gov. Andrew Cuomo, are also pursuing government-salary and pension reforms. They have come to realize, often reluctantly, that swelling costs for salaries and benefits of service providers diminishes the resources available for those they serve.
Granting generous health and retirement benefits is an easy way for city and state officials to placate unions while pushing off most of the outlays into the distant future. But some money must be set aside each year against those obligations, and as governments have struggled to balance budgets in the face of the recession, the shortfall in pension and health-plan contributions has been mounting steadily.
The Pew Center on the States noted last week that the gap between what states have promised their employees in pensions and health-care benefits and the assets set aside to pay for them has climbed to $1.38-trillion in 2010, up from $1.26-trillion the year before. Some estimates put this figure at $3-trillion.
While progressive political leaders have struggled to deal with this problem in the face of fierce union opposition, liberal nonprofits and foundations have contributed precious little to the debate. They are mired in the politics of the past, in which challenging the unsustainable compensation levels of state and local workers remains the exclusive province of mean-spirited, anti-government conservative Republicans.
“Advocacy” invariably means simplistic support for continued government spending and increased taxation without taking into account the growing conflict between outlays for services and service providers.
Typical is the exuberant and indiscriminate pro-government sentiment voiced at almost every annual meeting of Independent Sector by its president, Diana Aviv. At last year’s convention, for instance, she extolled the “deep infrastructure that ensures our streets are clean, our refuse removed, our neighborhoods safe, our buses in good working order,” which is “our government at work.”
But today, she warned, some “seek to eviscerate government programs that have provided essential services to frail populations and starve those foundational layers of infrastructure that sustain society.”
Against them we should “unleash” the “mighty weapon” of “our arsenal: our grass-roots communities.”
This fails to deal with the ever more urgent questions faced by progressive leaders like Mr. Reed, the San Jose mayor: What do you do when overly generous support of the “layers of infrastructure” is itself the chief threat to services for frail populations? Will the mighty arsenal of grass-roots communities leap to the barricades to defend government salaries and benefits far in excess of what they themselves enjoy?
Some courageous voices in liberal think tanks, nonprofits, and foundations are at last being raised against what the Manhattan Institute’s Steven Malanga aptly calls “the compensation monster.”
Will Marshall at the Progressive Policy Institute cautions his fellow Democrats that “reflexive defense of public-sector unions pits Democrats against a public that wants leaner, more efficient, and less costly government.”
Daniel Stid, a partner at the nonprofit management-consulting firm Bridgespan, has begun to write about the “clear trade- offs between pay and benefits for teachers, police, and prison guards on the one hand and the money available to support services for homeless families, foster youth, and low-income elderly people on the other.”
When the “lion’s share” of public funding goes to “current public employees and retirees,” he notes, then “the nonprofits delivering services to the marginalized that are being underwritten by public funding will be left struggling.”
One particularly welcome development has been the entry of Houston’s Laura and John Arnold Foundation into this arena. As the Arnolds—strong supporters of Barack Obama in 2008—searched for neglected niches of public policy with potentially substantial payoffs, they soon landed on the government-pension problem.
Josh McGee, vice president of the Arnold Foundation, observes that “failing to address the public-pension crisis promptly would be economically catastrophic, triggering bankruptcies of cities, school systems, and potentially even entire state governments.”
Recognizing that “without significant changes in the current systems, public pensions will quickly begin to crowd out discretionary spending,” the Arnold Foundation is now promoting the suggestions for more sensible and affordable government benefits outlined in its report “Creating a New Public Pension System.”
But such voices are far too rare. With nothing but echoing silence from most liberal foundations and nonprofits, the powerful, well-financed unions are free to define the progressive agenda as they wish. And they wish, of course, to keep the maintenance of generous compensation for government workers at the heart of that agenda.
One expects this sort of behavior from the unions, because their first responsibility is, indeed, to look out for the welfare of their membership.
For them, it will always be, in San Jose Mayor Reed’s words, “about the money, not about the public.”
But we expect more from progressive foundations and nonprofits. Their proudest claim, as Jeffrey Berry and David Arons put it in A Voice for Nonprofits, is that they are the chief advocates for “the disadvantaged and the dispossessed, those who are poor and those who are forgotten.”
They aren’t living up to that obligation as long as they fail to wrestle with the mounting tension between the public-spirited provision of government services and the self-interested demands of the providers.
As difficult and contentious as it will be for progressive groups to tackle this issue, it’s not as if their silence sustains an electorally fruitful progressive solidarity from which unions and nonprofits alike benefit.
The June elections in California and Wisconsin made clear that the public is increasingly disinclined to support an expansive government if that means not compassionate provision for the poor but rather the transfer of scarce dollars from the pockets of hard-pressed taxpayers directly into the health and retirement accounts of comfortable government workers.
Foundations and nonprofits would serve their noblest cause in the most politically savvy fashion by challenging the grip of labor unions on the progressive agenda.
Senior Fellow William A. Schambra is the director of Hudson Institute's Bradley Center for Philanthropy and Civic Renewal.
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