(FORTUNE Magazine) – Dwelling as he does in New York City, and conditioned as he therefore is to see municipal labor relations as lowbrow comedy, your servant has had more belly laughs than usual lately. They were occasioned by a sequence of events that began this summer and triggered certain dark reflections, in between the guffaws, on the new role of municipal unionism in America. You may notice that the sequence shows our pols to be somewhat overmatched when going up against Big Apple labor: -- In September the administration of Mayor David N. Dinkins produces the usual gargantuan budget. The bill for fiscal 1991: $27.9 billion. Compensation for the city's 250,000-odd unionized employees accounts for 53% of the total. -- On October 1, the city stuns everybody by agreeing with the teachers' union on a generous 5.5% raise. The mayor calls it ''a triumph of collective bargaining.'' -- A few days later, the administration acknowledges that it expects sizable revenue shortfalls. The city comptroller talks of a budget gap of around $2.6 billion. -- Meanwhile, Dinkins sadly says the city's fiscal condition requires mass layoffs. -- Next, Standard & Poor's warns New York that its A- credit rating is looking wobbly and BBB could be imminent. -- By mid-October the major municipal unions are saying they too need 5.5% and adding that layoffs are unacceptable. -- By late October the unions are talking strike. New York's so-called Taylor Law bars strikes by municipal unions but is seldom enforced. Teamster boss Barry Feinstein says he personally is ready to strike and gets off a great line: ''The Taylor Law prohibits strikes. It doesn't prevent them.'' By the usual measures, unions of government workers in the U.S. look quite healthy. While private-sector unions continue to lose ''market share'' -- and now represent only about 12% of private workers -- the public unions have a share that is still rising and will soon hit 40%. What looks unhealthy is the market itself, i.e., city governments flirting with bankruptcy. Traditionally, the country's wariness about public unions centered on the threat to public services in strikes. Calvin Coolidge arguably got to be President because he crushed the 1919 Boston police strike and proclaimed: ''There is no right to strike against the public safety.'' In the modern era we take such strikes for granted and are unsurprised when striking New York teamsters disable crucial drawbridges (as happened in the Seventies). But the country now has a new reason for wariness: the economic effect of public-sector unions on government bodies drowning in red ink. The U.S. economics profession has worked hard at quantifying the cost of unionism to employers generally, and typically comes up with estimates of 10% to 20% for the ''union premium'' (i.e., for the additional labor costs associated with union monopoly power). Most economists would say the premium is lower for public-sector unions -- probably a bit under 10%. But in a period when Philadelphia is close to bankruptcy, and New York, Detroit, and several states may not be far behind, endless upward pressure on public-sector employment costs looks disastrous. Or, at least, a lot less funny.