In their latest editorial the editors of the Chicago Tribune declaim that “the days of extraordinary public-sector union wage hikes must end”:
The budgetary backdrop for the county and the city has changed dramatically since most of the exissting labor arrangements were negotiated in the hyperinflationary period immediately following the pandemic.
Do our political leaders actually understand that?
For example, city of Chicago workers generally will get raises exceeding 3% in 2027. Additionally, many of their union contracts tie their pay to the consumer price index, ensuring city workers’ compensation will not fall below the rate of inflation.
I wonder if the editors realize that these “cost of living” increases are themselves inflationary? That is true of all wage increases public or private unless the workers’ productivity has increased. Higher public wages are funded either by increasing taxes, cutting other spending, or running a budget deficit. If funded by deficit spending, it introduces new money into the economy, increasing aggregate demand without a matching increase in the supply of goods and services, which is structurally inflationary. The editorial seems to regard inflation protection for public employees as an ordinary contractual benefit while treating its cumulative fiscal consequences as extraordinary.
A significant question is how? The governor of Illinois, the mayor of Chicago, the president of the Cook County Board and most other major elected officials in Illinois either financed their own elections or depend on public employee unions to fund them. Said more bluntly they owe the unions.
Cook County Board President Toni Preckwinkle is, essentially, running without serious opposition for re-election. No Republican is running. A libertarian candidate few have ever heard of is running against her.
The “why” of the editors’ plaint is easy: the state, county, and city can’t afford it and neither can their residents. The how is considerably harder. How do elected officials restrain public employee compensation when the organizations representing those employees are among the political constituencies on which their careers depend? It’s the how our political leaders make that choice without committing political suicide that’s hard.
