Unintended Consequences of the "Evolving" Constitution

Sometimes when the Court creates new constitutional doctrine in one area, it causes unintended consequences in another area.

For example, when the court expands Congressional power to regulate local economic activity as interstate commerce (local equals interstate, non-commerce equals commerce--see Wickard), it brings state and local government employment within the scope of the new & improved Commerce Clause. Thus, when Congress seeks to impose federal wage and hour laws on state government as an employer, a clash between sovereigns that could not have occurred under the original Commerce Clause becomes a serious problem under the new & improved Commerce Clause.

Does Congress' power to regulate interstate commerce apply when Congress enacts laws regulating the activities of state government? Who should decide the terms and conditions of employment between state government and state employees performing the functions of state government? Congress? Or state law?