Tag: collective bargaining

Scott Walker’s Reforms Are a Good Start

All eyes are on Wisconsin today to see whether Governor Scott Walker’s budget and public-sector union reforms will be validated by the voting public. I applaud Walker’s reforms. But his reforms should be just the first step. Virginia took the next step two decades ago and completely repealed collective bargaining in the public sector.

I happened to hear conservative radio talker Chris Plante this morning discussing his support of Walker, but saying something like “But I’m not against collective bargaining rights in either the private sector or the public sector.”

Too many conservatives, and maybe even some libertarians, seem to buy the labor union line that collective bargaining is somehow a fundamental “right,” like the freedom of speech. It isn’t. Collective bargaining in both the private and government sectors is monopoly unionism. It represents a violation of the freedom of association.

Here’s what Charles Baird says on www.DownsizingGovernment.org:

The ideas embodied in the federal union laws of the 1930s make no sense in today’s dynamic economy. Luckily, constant change and innovation in the private sector has relegated compulsory unionism to a fairly small area of U.S. industry. But the damage done by federal union legislation is still substantial. Many businesses and industries have likely failed or gone offshore because of the higher costs and inefficiencies created by federal union laws, while other businesses may not have expanded or opened in the first place. So the damage of today’s union laws is substantial, but often unseen, in terms of the domestic jobs and investment that the laws have discouraged.

Davis-Bacon, the Norris-LaGuardia Act, and the National Labor Relations Act serve the particular interests of unionized labor rather than the general interests of all labor. These laws abrogate one of the most important privileges and immunities of American citizens—the rights of individual workers to enter into hiring contracts with willing employers on terms that are mutually acceptable. …

The principle of exclusive representation [collective bargaining], as provided for in the NLRA, should be repealed. Workers should be free on an individual basis to hire a union to represent them or not represent them. They should not be forced to do so by majority vote. Unions are private associations, not governments. For government to tell workers that they must allow a union to represent them is for government to violate workers’ freedom of association. Restrictions on the freedom of workers to choose who represents them should be eliminated.

Wisonsin Supreme Court Upholds State Law Curtailing Collective Bargaining Powers

Ruling just a week after hearing oral arguments in the case, the Wisconsin Supreme Court has overturned a lower-court ruling that had struck down the law. Though other challenges are foreseen, the law reining-in collective bargaining powers for public school employees and other state workers is now likely to go into effect – at least for the time being.

Collective bargaining was always a bad idea for workers employed by a state-run monopoly, because it lacks the checks and balances of the private sector. When UPS went on strike, customers could – and did in great numbers – shift their business to FedEx, DHL and others. But taxpayers must keep paying for the public schools despite their rising costs and collapsing productivity.

Still, it is unlikely that this measure will control public school costs as well as many observers hope. I explain why in a feature story I wrote for the current (June) issue of The American Spectator. It’s on newstands now, and should also be up on the Spectator’s website within the next few days. [Hat tip for the breaking news to Bill Evers].

Wednesday Links

Ditching Collective Bargaining Won’t Control Public School Costs. Here’s What Will…

Lawmakers in Wisconsin and elsewhere are seeking to eliminate collective bargaining rights for public school employees as a means of controlling runaway spending (it has tripled in real terms since 1970, despite stagnation or decline in student achievement at the end of high school–see the last chart in this post). But even if collective bargaining is forbidden to state school employees, the savings will likely be negligible.

Surprising as it may seem, that conclusion follows directly from the research on school employee unions, which I reviewed last year for the Cato Journal. Differences in spending between school districts with and without collective bargaining are modest to non-existent. Does this mean that the unions are impotent and that their members have been wasting their $600 annual dues payments? Not quite.

Though employee compensation varies little from one school district to the next, based on the presence or absence of collective bargaining, public school employees enjoy far better compensation than their private sector counterparts. The combined salary and retirement benefits of public school teachers are 42 percent larger than those of private school teachers (see link above).

Public school employees win this generous compensation premium through political action backed by monumental campaign contributions. Democrats receive the overwhelming share of these contributions (93% from the NEA; 99% from the AFT, see Cato Journal link), but many Republican lawmakers are also swayed, fearful that the unions will finance their primary opponents the next time they face voters.

To further increase their clout, union leaders have sought to grow their membership. More members mean more dues revenue with which to influence legislators. In this regard, too, they have been enormously successful: the number of public school employees has grown ten times faster than the number of students for two generations—a major factor in the system’s exploding cost and collapsing productivity (see figure below).

Public school employees clearly understand that union membership has benefitted them handsomely in both compensation and job security. Over the past forty years, union membership as a share of the public school workforce has increased from 42 percent to 70 percent. Even if collective bargaining were eliminated tomorrow, school employees would have every reason to continue funding the self-interested political action that has served them so well in the past.

So what would provide a counterbalance to unsustainable union demands?

To find the answer, it helps to know that while union membership was rising in the public sector it was falling steadily in the private sector—to just 6.9 percent of the workforce in 2010 (see figure below). The reason is simple: when a business makes excessive concessions to a union and is thereby forced to raise prices above those of its competitors, it loses customers. As it loses customers, it lays off workers. If this situation continues, the business fails. Private sector unionization is thus self-regulating to a significant degree.

Public school employee unions, by contrast, have no direct competitors. They cannot drive their employer out of business because there is only one employer in the sector and its existence is mandated by law. The only real solution to the spiraling cost of our state school monopolies is thus to open them up to private sector competition, so that both parents and taxpayers have an alternative to the no-longer-affordable status quo.

There are several ways of doing this, of which education tax credits seem the most promising. In Florida, Arizona and other states, taxpayers can claim a dollar-for-dollar credit for donations to non-profit scholarship organizations. These organizations, in turn, subsidize private school tuition for low-income families. In Illinois and Iowa, families who pay for their own children’s education are eligible for tax credits to directly offset part of the cost.

Though most of these programs currently impose tight caps on the total value of credits available, they are already generating substantial savings to taxpayers while simultaneously expanding the choices available to families. Florida’s k-12 scholarship donation credit saves taxpayers $1.49 for every dollar it reduces state revenue, and the new private sector competition has improved achievement in public schools.

So while curtailing collective bargaining won’t rein in out-of-control spending, introducing real private sector competition will. And as the final figure reveals, we have got to get spending under control….

…..

Update: I should add that, as NRO’s Rich Lowry notes, the plan for the state to stop garnishing public school employees’ wages and sending the money to the union is highly commendable. If employees want to pay union dues, they should be free to do so, but the choice should be theirs.  Of course, since public school employees benefit very handsomely from the status quo monopoly (see below), it’s likely that most will continue to pay voluntarily for the lobbying and political contributions that will preserve their above-market compensation. So it’s still the case that introducing private sector competition is the best way to control education costs.

Government Unions — beyond Wisconsin

As Scott Walker in Wisconsin and other governors try to rein in the soaring costs of government employee pay and pensions, the Cato study ”Vallejo Con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Representative Government” takes on new relevance. Here’s the executive summary:

High rates of unionization in the public sector have led to very high labor costs in the form of generous collective bargaining contracts. Now state and local governments are under increasing financial pressure, as a worsening national economy has led to decreased revenues for states and municipalities—many of which remain locked into the generous contracts negotiated in more flush times. Thus, as businesses retrench, governments find themselves in a financial straitjacket. In addition, as government unions grow stronger relative to private-sector unions, their prevalence erodes the moderating influence of the market on the demands that unions make of employers.

Now, as an economic downturn threatens state and local government revenues, officials who want to keep their fiscal situations under control would do well to look skeptically at public-sector bargaining—especially since the existing political checks on it have proven ineffective. Public officials should eschew public-sector bargaining when possible, or at the very least, seek to limit its scope.

As keepers of the public purse, legislators and local council members have an obligation to protect taxpayers’ interests. By granting monopoly power to labor unions over the supply of government labor, elected officials undermine their duty to taxpayers, because this puts unions in a privileged position to extract political goods in the form of high pay and benefits that are much higher than anything comparable in the private sector.

This paper shows how the unionization of government employees creates a powerful, permanent constituency for bigger government— one that is motivated, well-funded, and organized. It also makes some recommendations as to how to check this constituency’s growing power—an effort that promises to be an uphill struggle.

Indeed it does. The study makes another point that is worth keeping in mind during these battles. Many discussions of government unions, such as this one on Friday’s Newshour, tacitly or explicitly assume that we’re talking about teachers, police officers, and firefighters. But the study notes:

Of course, while these “heroic” public servants are the ones who are most visible in public disputes over collective bargaining, a large number of unionized state and local employees fall into more mundane categories such as secretaries, middle managers, engineers, administrative law judges, school custodians, and cafeteria workers.

Postal Union Wants More

The finances of the U.S. Postal Service are deeply in the red. The agency faces a permanently reduced demand for its services and its labor accounts for almost 80 percent of its costs. Thus it is not a good time for postal employees to get an increase in wages and benefits, right?

According to one postal union, the USPS’s deteriorating condition isn’t relevant. The American Postal Workers Union, which represents more than 200,000 employees, has recently entered collective bargaining negotiations for a new contract. In an interview with Government Executive, APWU President William Burrus calls a pay increase for his members an “entitlement”:

“More – more control over activities at work, more money, better benefits – we want more,” said Burrus. “We will try to fashion our proposals to reflect the entitlement to more.”

An arbitrator will most likely determine whether APWU workers get their raises. Oddly, according to federal law an arbitrator can’t take the USPS’s financial condition into account when weighing a decision. This is like instructing the captain of a ship that’s struck an iceberg to ignore the gaping hole in the boat when deciding whether or not to abandon it.

USPS management has asked Congress to change the law, which Burrus preposterously calls “antidemocratic”:

Burrus said he resents the idea that an arbitrator should be required to take into account the Postal Service’s financial situation. He called the idea antidemocratic and said it interferes with free collective bargaining.

Having watched the unionized workforces at GM and Chrysler receive preferential treatment from the federal government, there’s little incentive for Burrus and the postal unions to not ask for more. The postal unions are likely betting that in a worst case financial scenario for the USPS, policymakers will tap taxpayers for a bailout. Unfortunately, if recent history is a guide, they’re probably correct.