Today’s big win at the Supreme Court for free speech in the public‐sector union context, which Ilya summarizes below and Wally expands on, has implications beyond protecting public employees from having to pay “agency fees” to support union activities they may oppose. Writing for the Court in Janus v. AFSCME, Justice Alito touches on that when he notes that the ascendance of public‐sector unions, which originated in Wisconsin in 1959, “has been marked by a parallel increase in public spending.” While “not all of that increase can be attributed to public‐sector unions,” he continues, “the mounting costs of public‐employee wages, benefits, and pensions undoubtedly played a substantial role.” And he adds, citing the brief for the state of Michigan, that “unsustainable collective‐bargaining agreements have also been blamed for multiple municipal bankruptcies.” Detroit comes to mind, of course.
The connection, such as it has been, between public‐sector unionization and increased public spending is nicely summarized by Cato adjunct scholar Richard Epstein in a piece he wrote just before oral argument in the Janus case. Unlike private‐sector unions, he writes, pubic‐sector unions operate in a context free from market discipline. For the services those unions offer state and municipal employees,
the state usually operates as the sole supplier. Hence the corresponding power of the union is extraordinary, and it is made even more powerful because legislators elected with strong union support let powerful union forces sit on both sides of the bargaining table. The effort to limit union power by forbidding strikes and compulsory arbitration offers no solution to the problem: Unions can still demand top dollar and unsustainably large pensions, which helps explain why so many state and local pension funds are in such desperate shape. A decision that lets dissident workers out from under the union thumb is an important counterweight to these dangerous manifestations of union power.
It’s no accident, therefore, that a state like Illinois, from which Janus came to the Court, has a bond rating just above junk status—with no way in sight to address the parlous state of its finances. It’s too early to tell just how today’s decision will impact public‐sector unions—Justice Alito notes that they continue to thrive in the 28 states that now prohibit union fees. But as recent experience in a state like Wisconsin suggests, union membership will likely drop, along with union funds. And the need to attract dues‐paying members may discipline union demands.