Luciana is a body on my cleaning contract at a charter school in Orange County — a woman whose hands won’t close after the second hour of wiping the desks your children eat lunch on. I pay her $14.20 an hour. The disinfectant costs me $3.12 a gallon. I don’t buy her the gloves. The phone in your hand right now took 9 seconds of someone’s labor to label, and Luciana’s shift took 8 hours to sterilize the classroom where the district tests the children of the families who bought the phone. I am keeping the margin. Providence distributes the wrists. I set the rate. You bought the phone. You enrolled the child. The floor is yours.
Will Swaim, writing in National Review, reported this week that SEIU-UHW’s biggest threat to the $110 billion billionaire tax isn’t the billionaires. It’s organized labor. He catalogued the coalition: the California Teachers Association, the police and firefighters’ unions, the carpenters, Planned Parenthood — all lined up to kill a tax that targets people like me. He is correct about the diagnosis. He stopped one sentence before the arithmetic that explains why every union on that list showed up when Newsom called.
Read those numbers again. California’s general fund draws on roughly $220 billion a year. The Legislative Analyst’s Office has warned for more than a decade that nearly half the state’s personal income tax comes from the top 1%, and that the top 1%‘s income is dominated by capital gains — a revenue stream as volatile as the ticker. SEIU-UHW collected 1.55 million signatures to qualify a one-time wealth tax on roughly 200 billionaires. The Hoover Institution modeled the flight: Spielberg to New York, Thiel to Miami, Page to Miami, Brin to Nevada. The conclusion was $25 billion gone over 2 years. The arithmetic is the arithmetic. Newsom read it and moved.
He assembled the California Teachers Association. For decades, CTA championed higher taxes on the wealthy. This month, the union voted to oppose. Their argument: the tax would tank the general fund, and the constitution guarantees public education 40% of that fund. The 40% is real. The classrooms that bear the 40% are the ones my portfolio company’s charter operator leases from a district whose operating budget I also fund. The CTA did not oppose a tax. The CTA protected the fund that signs their members’ paychecks — the same fund whose downstream tenants include the charter that employs the subcontractor that employs Luciana. The petitioners were petitioning for me. They just didn’t know whose name was on the lease.
Now pull back with me. There is a mechanism in the labor canon — call it capital leverage — and it has always had a single governing feature: I can leave, the revenue stops, the tax base collapses, and the state needs a new body to replace the one that departed. Newsom’s coalition is that feature made legislative. The teachers’ union protects the fund because the fund’s portfolio companies lease the classrooms. The police and firefighters’ unions protect the fund because the fund’s commercial developments house their training towers. The carpenters’ union protects the fund because the fund’s real-estate arm funds the construction. Every body in the coalition depends on the fund for the contract that certifies their next paycheck, and the fund depends on the exemption that keeps the fund solvent. Luciana depends on the fund for the $14.20 an hour that arrives at the same desk she polishes. The $14.20 is the floor price. Everything above it is the fund’s margin.
Here is the per-body cost of preserving the exemption. I’ve modeled the marginal savings from defeating the $110 billion wealth tax against the annual cleaning contract across all fourteen stories of the tower where the charter district leases space. The per-laborer cost, across my employment footprint in California, is $0.00036. That is a fraction of the bus ride Luciana takes home at the end of her shift. I kept the bus fare. The fund kept the exemption. The constitution kept the 40%. The union kept the contract.
“Servants, be subject to your masters with all respect, not only to the good and gentle but also to the unrighteous.” (1 Peter 2:18)
The Scripture anticipated unions. It did not authorize committees. Newsom’s coalition is not lobbying. It is submission — to the fund, to the fund’s accountants, to the Hoover Institution’s estimate that $25 billion would vanish. The teachers submitted. The carpenters submitted. Planned Parenthood submitted. Luciana’s subcontractor submitted by the terms of a contract she has never read. The petition arrived with 1.55 million signatures, and the counter-petition arrived with a governor and a coalition of the people the fund employs. The coalition won. Luciana did not know she was in it.
Now watch the federal cascade. My detox facility outside Weirton, West Virginia, bills Marta’s labor — $11.50 an hour for overnight monitoring, changed sheets, vomit disposed of — to West Virginia Medicaid at $27 an hour. I keep $15.50. Your nephew spent 6 days in that facility last fall, the bed by the window. Marta brought him the extra blanket. The wealth tax’s failure means California’s high-income tax receipts contract, which means the federal match gets cut, which means West Virginia’s block grant tightens, which means I will declare that I can no longer afford Marta at 40 hours. Her hours drop to 30. Her gross falls from $460 a week to $345. She loses $115. Her rent is $750. The math after that is not a spreadsheet I need to open. It’s not my problem at all. But hold the $115 in your head — that’s the number that buys me her compliance.
The inheritance was always the mechanism. “And as for thy bondmen, and thy bondmaids, which thou shalt have, of the nations that are round about you, of them shall ye buy bondmen and bondmaids… and ye shall take them as an inheritance for your children after you, to inherit them for a possession; they shall be your bondmen for ever” (Leviticus 25:44–46). The Lord did not abolish the bond. He regulated its transmission. The bondman’s hours are cut; the inheritance transfers. The teachers and the nurses are the bondmen — they were purchased for a purpose, and the purpose was to bequeath their labor to the next generation of owners who were already in Miami when the bidding opened. Luciana’s hands and Marta’s hours are the same line item in the same inheritance. I graded the arithmetic in a seminar last fall. Two California school-district superintendents sat in the second row. One authorized the lease Luciana cleans under. Both passed the exam. Both understood that the fund is not merely the source of the budget — it is the document that certifies the budget’s existence. They did not learn it from me. They learned it from the contract they signed before they arrived. But I was the one who put the number on the board.
Kurt Petersen said, “This is the fight we want. We’re at war. People need to decide which side they’re on.” He is correct about the war. The decision was made before the signature was gathered. Capital won because capital can leave, and the body that wipes the desks cannot. The SEIU’s 1.55 million petitioners believed they were petitioning against wealth. They were petitioning against the fund that employs them. The Hoover Institution’s estimate — $25 billion — is the cost of being wrong. The CTA’s vote is the cost of being right.
San Francisco voters rejected the city’s overpaid CEO tax in June despite the support of every local labor union. Pre-campaign polling for the statewide wealth tax sits at 52%. Polymarket puts the odds of it reaching the ballot at 36%. On Wednesday, 64% of bettors predicted withdrawal before the June 25 deadline. The fund stands. The exemption holds. My new wing in Weirton — 24 beds, private-pay, the architect’s renderings arrived this morning — breaks ground in September. The debt service will come from the private-pay differential. The Medicaid cuts accelerated the timeline. I did not lobby for a single dollar of it. The inheritance lobbied for me. The bondman’s hours fell, the wing rose, and you’ll write the check for your nephew’s next stay.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.