In 2018, the U.S. Supreme Court dealt what some said would be a death blow to public worker unions. But recent events show predictions of the unions’ demise were greatly exaggerated.

Last month, after Gov. David Ige announced big cuts in hours – and pay — for government workers to address a predicted budget deficit, the government unions rose up, the governor backed down and the furloughs went off the table, at least through June 30.

The unions showed they still have muscle. And the numbers bear that out. Despite recent declines, more than 68,000 employees fill the combined rolls of the Hawaii Government Employees Association, Hawaii State Teachers Association, United Public Workers and University of Hawaii Professional Assembly. This generates more than $47 million in annual membership dues, supporting a robust roster of executives earning six figure salaries and deep war chests for political lobbying.

Tony Gill, a Hawaii lawyer who represents the UH faculty union, agrees that the Supreme Court’s 2018 decision in Janus v. AFSCME hasn’t hurt the unions as much as some people predicted.

“It wasn’t the mass exodus that the right-to-work people were expecting,” he said.

The unions weren’t the only factor weighing against Ige’s proposed furloughs. There was also the chair of Hawaii’s House Finance Committee, Rep. Sylvia Luke, who said the state could save $130 million on state worker salaries and benefits simply by not filling recently vacated positions.

And there was the federal government, which announced more relief money in December, as well as President-elect Joe Biden’s promise for even more money to help state and local governments later this year.

“After an initial review of the new, $900 billion federal COVID-19 relief bill, we found it provides enough direct support to programs in Hawaii that I am able to delay furloughs for executive branch employees until at least July 1, 2021,” Ige wrote in a memo to state workers on Dec. 29.

In the longer-term, Biden has said help to state and local governments must be included in a new round of relief funds.

HGEA Headquarters located at 888 Mililani Street.

With almost 40,000 members, the Hawaii Government Employees Association remains a powerful player in state politics despite a small decline in recent years.

Cory Lum/Civil Beat

Regardless of whether the unions made Ige blink or the feds bailed Hawaii out just in time, it’s clear that the organizations weren’t gutted by the Janus decision, as some prominent economists predicted would happen.

Janus turned on whether government workers covered by a union contract could be required to pay a portion of their paychecks to help fund the union’s administrative activities if the workers didn’t want to be in the union. For years, under a case called Abood, such fees were allowed, even though workers could opt out of paying for political lobbying. Janus essentially overturned Abood and said government workers didn’t have to pay any fees if they did not want to.

At the time, some leading economists predicted a mass exodus from the public union rolls. Rational people simply wouldn’t pay a union fee when they could get the same benefit without paying, wrote a group of economists including three Nobel laureates, a former Federal Reserve vice chairman and a former U.S. Labor Secretary in a friend of the court brief filed in the Janus case.

“In fact, ‘rational, self-interested individuals’ often ‘will not act to achieve their common or group interests,’ even when they agree about those common interests and how to achieve them,” wrote the economists. “This is not only well established in economic theory, it is also confirmed by empirical data — including the results of recent union-recertification elections.”

But that hasn’t happened.

“The public sector unions are not doing that bad after Janus,” Gill said.

“What has been amply demonstrated by events is that government action, or more generally ‘collective action,’ plays a vital role in our economy, and the well-being of our residents,” said Lawrence Boyd Jr., a Hawaii labor economist and retired University of Hawaii professor.

Boyd cited both the 2008 financial crisis and the COVID-19 pandemic as showing the importance of government’s response.

“Furloughs were a policy discussion that went beyond balancing the budget — namely they would damage the economy and citizens health,” he said. “There were no clever tactics involved, just the self-evident fact that furloughs were a bad idea, just like leaving a union is.”

Christian Fern, executive director of the UH faculty union, noted: “We look at government as one of the pillars of the economy.”

And many economists agree. In fact, an article by economists from the University of Hawaii Economic Research Organization that is often cited by unions estimated that, because of multiplier effects of money circulating in the economy, every $1 in government spending resulted in a $1.50 increase in gross domestic product, a measure of all goods and services produced.

“Given the severity of the economic downturn, this may well underestimate the true impact at present,” UHERO said. “That means every dollar of federal spending that comes here has a substantial positive overall economic impact. It also means that any large cuts to federal or state spending would have large adverse impacts, as well.”

In other words, the argument went, a time when industries like tourism were dead was not the time to cut government payrolls.

But calling to maintain government employment to stimulate the economy was just one piece of a multi-pronged campaign. UHPA also made a legal challenge, arguing in federal court that the furloughs violate the Contract Clause of the U.S. Constitution. The Hawaii State Teachers Association, meanwhile, filed a complaint with the state labor board.

And there were other issues. In an interview, Corey Rosenlee, president of the Hawaii State Teachers Association, said previous furloughs, imposed by former Gov. Linda Lingle in 2009, had produced what amounted to a long-term pay freeze for some teachers.

Finally, there was the need for government services, including the need for public health resources and the need to get kids back to school.

Union Leaders Flush With Cash

Despite Ige’s letter to employees, Gill said UHPA is still awaiting a clear promise from the Ige administration that it will not come back later and require furloughs before July. He said the governor’s letter to state workers was merely “happy talk.”

“There’s been a broadcast of happy talk to the employees, but no official commitment,” Gill said.

In the meantime, union rolls and finances remain strong. The public unions represent a range of workers, including teachers and librarians, principals, court administrators, county workers and the like. UPW also has private members, including workers at a number of hospitals. Although financed indirectly by state taxpayers, the government worker unions are private, nonprofit organizations, and they have deep pockets to support members in things like grievances and to lobby state officials.

For instance, according to its latest available 990 federal tax return for 2018, HGEA generated more than $17 million in revenue, virtually all from membership dues. UPW reported $9.6 million in revenue in 2018. The teachers union had $9.3 million in revenue, including $8.7 million from dues for 2017, its most recent available year. And UHPA reported just less than $3 million in revenue for 2018.

This gives the unions substantial coffers for executives, political campaigns and lawyers.

Randy Perreira, executive director of the HGEA, made a base salary of $308,000 in 2018 for his 40-hour per week job. That compares to Ige’s salary of $158,700, and it doesn’t count Perreira’s benefits, which totaled more than $132,000. Altogether eight HGEA employees had six-figure salaries for the year. HGEA donated another $65,000 to its political action committee, the HGEA Political Contribution Account.

While Perreira’s salary dwarfs those of other government union bosses, it’s not unusual to have a solid bench of highly paid executives.

HSTA, for instance, had a half dozen executives earning six figures in 2017, with Wilbert Holck, the organization’s executive director, leading the pack with just over $190,000 in salary and benefits, slightly higher than Rosenlee’s $186,000 compensation package. The teachers donated $118,900 to its PAC that year.

UPW’s statewide director Dayton Nakanelua got a compensation package worth more than $220,000, and the union spent another $2.1 million for legal fees, including $1.8 million to the law firm Takahashi and Covert.

Though smaller, UHPA was in the same ballpark: Fern made more than $167,000 plus $48,500 in benefits, topping a roster of four executives with salaries and benefits totaling almost $200,000 each. UHPA donated just less than $98,000 to its PAC and paid another $613,000 to Gill’s law firm, Gill, Zukeran & Sgan.

In order to maintain such robust finances at a time when members have the power to opt out of paying dues, it’s important to show members that the organization is providing value, UHPA’s Fern said.

University faculty are hardly “afraid to share their opinions,” Fern said.

“We need to be much more responsive than we’ve been in the past,” he said.

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