Notes From Babel

What’s the Difference Between Public and Private Sector Unions?

with 14 comments

Many supporters of public sector unions suggest there are no meaningful differences between public and private sector unions when it comes to collective bargaining.  As I explain below, however, there are in fact several fundamental differences, many of which have been pointed out since the inception of public sector collective bargaining.  Prior to the rise of public sector unions in the 1960s and ‘70s, a number of courts across the nation routinely observed the dissimilarities between public- and private-sector collective bargaining.  For example, Florida’s Supreme Court observed in United Teachers of Dade v. Dade County School Board, 500 So.2d 508 (1986) that “[i]t would be impractical to require that collective bargaining procedures … be identical in the public and the private sectors. [Citation.] Myriad distinctions, not just those of procedures, exist between public and private collective bargaining, and have been noted by the highest courts of several sister states.” The conclusion, solemnly held until social and political factors led to the rise of public sector unions, was that to grant those unions the powerful tool of the strike and collective bargaining was profoundly anti-democratic.

A Brief History of Collective Bargaining Rights in the Public Sector

First, a brief history of the inception of public sector unions is in order.  Daniel DiSalvo has provided a nice treatment of the subject, which I will draw from here.  DiSalvo describes three general conditions that led to the advent and growth of public sector unionization and collective bargaining.  The first was the weakening of party machines.  By the 1960s, after reformers weakened those machines, most large US cities had civil service protections providing nearly lifetime job security.  The second condition paving the way to public sector unionization and collective bargaining was economic and demographic change, particularly with respect to the increased demand for teachers in the wake of the Baby Boom.

The third and most profound factor, following this empowerment and growth of the public employee class, “was the solidification of the alliance between organized labor and the Democratic Party”:

Franklin Roosevelt’s signing of the Wagner Act (which protected the rights of private-sector workers to organize and bargain collectively) in 1935 fully bonded labor to the Democrats; their partnership was reinforced during the fight over the Taft-Hartley Act of 1947, which was a Republican initiative to rein in union power. By mid-century, Democrats began to rely on labor unions for both funding and on-the-ground campaign organizing. In the 1950s and ’60s, according to political scientist J. David Greenstone, "labor functioned as the most important nation-wide electoral organization for the Democratic Party." As a political tag team, both Democrats and labor had an incentive to broaden the base of the labor movement — and they came to see public-sector workers as the most promising new hunting ground, especially as private-sector union membership began to decline.  [¶] . . . . [¶]

From the mid-1960s through the early ’70s, states and cities followed with a plethora of laws providing public-employee unions with collective-bargaining rights. In many cases, the consequences were almost immediate. In New York state, one year after the passage of the so-called Taylor Law in 1967, 360,000 state- and local-government employees became unionized; the New York Times described the law as having an "almost revolutionary effect." Other states and cities experienced similar expansions in the number of public-sector union members. For example, in 1968, California passed the Meyers-Milias-Brown Act — a law granting local-government workers bargaining rights — and then extended those rights to teachers a few years later; in the 1970s and ’80s, both membership in public-sector unions and the number of strikes in California skyrocketed. Nationwide, by 1970, the AFSCME had negotiated more than 1,000 collective-bargaining agreements, nearly twice the number in place in 1964. And by 1972, nearly half of the states had public-employee collective-bargaining laws in place at either the state or local level.

Thereafter, from the mid-1960s through the early ‘70s, state and local governments en masse began authorizing public employee unions to collectively bargain.  Incidentally, it was Wisconsin who, in 1959, became the first state to enact a public employee bargaining bill.  Today, 45 other states have passed similar measures.

Collective Bargaining in the Public Sector Is Anti-Democratic

Public sector union advocates suggest that collective bargaining in the public sector is essentially no different than in the private sector, and that far from being a problem, it is a positive good.  To evaluate this argument, first briefly consider the policy reasons for authorizing private sector unions.  Primarily due to unequal bargaining power, negotiations between employers and individual workers in many circumstances result in working conditions and compensation below desired public policy standards.  In order to improve these conditions and compensation levels to meet those standards, the government can do one of two things:  (1) it can pass legislation requiring by law that industries meet those minimum desired standards; or (2) it can pass legislation permitting workers in those industries to collectively bargain, and thus to more collaboratively and efficiently meet those standards within the confines of market realities.  It is easy to see why collective bargaining is the more attractive approach in the private sector context.

With that in mind, consider now the public sector.  Again, assuming working conditions or compensation fall below desired policy standards, consider again the government’s above choices:  (1) it can require the employer to meet those standards; or (2) it can authorize collective bargaining.  Obviously, this is an absurd choice when the employer is the government:  Conceptually, the working and compensation standards of the government-employer could never fall below the standards of the government in the first place.  And if it somehow did, what help could a collective bargaining agent provide in ameliorating it?

In this context, public sector unions are anti-democratic.  To permit a public entity to specially negotiate with a special interest group, behind closed doors, subverts the democratic process. Collective bargaining, striking, and mandatory collection of union dues by the employer, among other things, are all ways that public employee unions gain disproportionate political advantage at the expense of other groups.

It is one thing to decide that market forces produce an unsatisfactory result and to attempt to restructure the relative strength of economic participants.  It is quite another to decide that political forces produce an unsatisfactory result and to attempt to change the democratic process itself by giving preferred economic and political status to one of many interest groups.

In this respect, Harry H. Wellington and Ralph K. Winter emphatically argued in their 1971 book, The Unions and the Cities, that government was not just another industry; the assumption that the employer’s superior bargaining power should be equalized did not translate to the government workplace.  In his review of Wellington and Winter’s work, Ronald C. Brown summarizes:

Government employers too frequently yield to constituents by a grant of increased benefits to employees and then either bury the increases in the “bowels of an incomprehensible budget,” seek new funds, or reduce other services by reallocating the city’s treasury.  Thus, normal market restraints are often supplanted by political restraints regardless of economic or social impact.

Wellington and Winter presciently intuited the enormous harm that could occur by leveraging the strike weapon against the public:

if unions are able to withhold labor—to strike— … they may possess a disproportionate share of effective power in the process of decision. A large part of a mayor’s political constituency will in many cases, press for a quick end to the strike with little concern for the cost of settlement. Interest groups other than public employees … may be put at a significant competitive disadvantage in the political process. . . . [I]n the long run strikes may become too effective a means for redistributing income; so effective indeed that one might see them as an institutionalized means of obtaining and maintaining a subsidy for union members.

The government is not just another industry, and leveraging collective bargaining against it yields unpredictable and undesirable results to the disadvantage of the public.

Collective Bargaining in the Public Sector Constitutes an Improper Delegation of Power

Prior to the social and political forces giving rise to the growth of public union collective bargaining in the 1960s and ‘70s, courts routinely struck down collective bargaining laws on the grounds that they constituted an improper delegation of political power.  That is, setting legislative policy is the sovereign power of the legislature.  To provide an unelected body the tools—especially, the strike—to wrest this sovereign power is undemocratic and tyrannical.

For example, in 1945, Mugford v. Mayor and City Council of Baltimore held that a municipality could not bargain collectively or even agree to a dues check-off provision, because “city authorities cannot delegate … their continuing discretion” over labor relations.  In 1946, Nutter v. City of Santa Monica overturned a lower court ruling that permitted collective bargaining with city workers, explaining that the authority of public officials “may not be delegated or surrendered to others, since it is public property.”  Some courts strongly implied that they would not defer even if local governments voluntarily attempted to share power with unions, appealing to democracy itself.  In the 1947 opinion in City of Springfield v. Clouse, the Supreme Court of Missouri refused to permit city workers engaged in street cleaning and sewage disposal to collectively bargain. “Under our form of government, public office or employment … cannot become a matter of bargaining and contract,” because wages and working conditions involved “the exercise of legislative powers.”  Local officials, the Court observed, could not bargain such power away.

Collective Bargaining in the Public Sector Employs Political Rather than Economic Leverage

In the private sector, a strike is designed to put economic pressure on an employer.  It involves several factors for both the employer and the union:  the employer faces decreased supply due to the lack of workforce, and the possibility that customers will find alternate sources, putting pressure on the employer to settle.  At the same time, the striking private union must consider the possibility that the employer will go out of business, move, or downsize, and the public may or may not be supportive of the union.

A fundamentally different analysis occurs in the public context.  Here, a strike does not put any economic sanction on the employer, as taxes still flow in to the government.  Instead, the pressure a public union brings to bear is purely political, and is designed to hurt those who depend on the public services provided by the striking employees—i.e., the public.  The members of the public especially harmed by such strikes are typically the poor—who make more use of police and fire services—and parents and children who depend on the regular operation of public schools.  Thus, in the public sector, a strike is won or lost on the basis of political, not economic factors.  This is an unfair, disproportionately powerful, and anti-democratic weapon.

Because of Public Sector Unions’ Disproportionate Electoral Impact, Collective Bargaining Occurs at Less than Arms’ Length

Steve Bainbridge nicely summarizes this point:

A core problem with public sector unionism is that it creates a uniquely powerful interest group. In theory, bureaucrats are supposed to work for and be accountable to the elected representatives of the people. But suppose those bureaucrats organize into large, well-funded, powerful unions that can tip election results. With very few and very unique exceptions, no workplace in which the employees elect the supervisors functions well for long. Yet, research by Terry Moe (22 J.L. Econ. & Org. 1) into the electoral power of teachers’ unions finds just such an outcome:

The first study … provides evidence that teachers, acting through their unions, are quite successful at getting their favored candidates elected to local school boards. When a candidate is supported by the unions, her probability of winning increases dramatically, so much so that the impact of union support appears to be roughly the same as the impact of incumbency. In terms of total impact, union influence may be even greater than this suggests, because union victories literally produce incumbents—and the power of incumbency then works for union candidates to boost their probability of victory still further in future elections.

The second study … shows that public bureaucrats’ turnout advantage over other citizens is much greater than the existing literature would lead us to expect. It also offers persuasive new grounds for believing that their high turnout is indeed motivated by occupational self-interest—and more generally, that they are actively and purposely engaged in an electoral effort to control their own superiors.

Moe concludes:

The prevailing theories treat bureaucrats as mere subordinates, controlled from above by political authorities. But the control relationship can run both ways, and not just because bureaucrats have expertise and other sources of private information. In a democratic system the authorities are elected, and this gives bureaucrats an opportunity to exercise electoral power in determining who will occupy positions of authority and what choices they will make in office. It would be odd indeed if public bureaucrats and their unions did not invest in this kind of reverse control—and there is ample evidence that they do.

In effect, public sector unionism thus means that representatives of the union will often be on both sides of the collective bargaining table. On the one side, the de jure union leaders. On the other side, the bought and paid for politicians. No wonder public sector union wages and benefits are breaking the back of state budgets. They are bargaining with themselves rather than with an arms’-length opponent.

Conclusion

Collective bargaining in the public sector is fundamentally different than in the private sector.  Put most simply, the government is not simply another market actor, because the government lacks the same economic incentives as private industry.  Perhaps more importantly, the government is uniquely entrusted with the political power of the people to act for the benefit of the entire public.  To provide to a special interest group unique tools and procedures to use as leverage to wrest that power for itself is anti-democratic and tyrannical.  Finally, the public sector collective bargaining, unlike in the private sector, permits a union political leverage over the employer, making negotiations less than arms’ length.

For all these reasons, it cannot plausibly be maintained that there is no meaningful distinction between the ways public sector unions wield collective bargaining rights and the ways private sector unions do.

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14 Responses

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  1. [...] Kain chose to engage only the noisy and debatable points about public sector unions rather than the serious and systemic ones.  I have been writing about these problems at great length here, and have shared [...]

  2. Tim, the problem you are describing is not the problem of public sector unions. The problem you’re describing is the problem of ALL special interest groups of which public sector unions are a relatively small part (in terms of dollars).

    Special interest relationships between monied interests and government is harmful, but it makes no more sense to argue for the elimination all public sector unions than it is to argue for the elimination of all government contractors and corporations that receive government subsidies. What’s needed is a reform of the rules governing the relationship between government and special interest groups.

    The oil, agriculture, financial, defense and pharmaceutical industries (to name a few of the big ones) directly benefit from government contracts and subsidies and so they should be restricted in the amount of lobbying they can do and prohibited from contributing to political campaign. Unions should be treated no differently.

    Also, I read into your arguments a mistaken notion of government as a single interest. Government is a marketplace made up of competing services and interests. Independently operating branches of government are divided again into competing and independently operated local, regional, state and federal factions that are again themselves made up of departments which compete for money from limited budgets. Each department is subject to downsizing or termination when they do not perform. There are real market pressures here that should not be ignored.

    The primary difference in the public sector market vs the private market is that the currency is votes and each person only gets one. But it’s wrong to suggest that market pressure do not exist. The result of those market pressures on public sector employee compensation is evidenced by the fact that public sector employees are compensated less than their private sector counterparts (when education and experience are factored).

    Riley

    March 6, 2011 at 8:48 pm

    • Riley,

      I agree one must wage the argument against public sector unions that they “are bad because they’re a too-powerful special interest” with equal force as the argument same argument against any other too-powerful special interest. I do maintain, however, that public unions are in a heightened class of special interests, as they have negotiated special legal status which most other special interests don’t have and which entitle them to large amounts of power over the public fisc and the police power. This is separately problematic. But yes, a powerful special interest is bad because it is a powerful special interest.

      As to your other very good point, I provided the beginnings of the response in a previous post, as follows:

      Public sector union advocates suggest that collective bargaining in the public sector is essentially no different than in the private sector, and that far from being a problem, it is a positive good. To evaluate this argument, first briefly consider the policy reasons for authorizing private sector unions. Primarily due to unequal bargaining power, negotiations between employers and individual workers in many circumstances result in working conditions and compensation below desired public policy standards. In order to improve these conditions and compensation levels to meet those standards, the government can do one of two things: (1) it can pass legislation requiring by law that industries meet those minimum desired standards; or (2) it can pass legislation permitting workers in those industries to collectively bargain, and thus to more collaboratively and efficiently meet those standards within the confines of market realities. It is easy to see why collective bargaining is the more attractive approach in the private sector context.

      With that in mind, consider now the public sector. Again, assuming working conditions or compensation fall below desired policy standards, consider again the government’s above choices: (1) it can require the employer to meet those standards; or (2) it can authorize collective bargaining. Obviously, this is an absurd choice when the employer is the government: Conceptually, the working and compensation standards of the government-employer could never fall below the standards of the government in the first place. And if it somehow did, what help could a collective bargaining agent provide in ameliorating it?

      https://notesfrombabel.wordpress.com/2011/02/22/whats-the-difference-between-public-and-private-sector-unions/

      Tim Kowal

      March 8, 2011 at 7:36 am

      • Thanks Tim,

        I’ve read your other article and I still think that the central flaw I see in your argument remains unaddressed. What you call an “Obviously absurd choice when the employer is the government” is not absurd, for the reasons I explained above, primarily: “government” is a not single entity or interest. Government is a marketplace made up of independently operating competing services and interests. Any one of these independent interests can influence change in working conditions and compensation and can be appealed to for redress against the will of another interest. For example, a legislative body can require the ‘employer’ (the Mayor/Governor/President) to meet some desired policy standard. That act could be characterized as government negotiating with itself and so be dismissed as “absurd”, but only as a play on words. It’s not reality.

        That being said, however, I think we agree that there is a problem. What I think we primarily disagree about is the solution. I’m assuming that you believe that the solution to this problem is to prohibit labor groups from engaging in collective bargaining with government. I think you se this as the solution because you misidentify the crux of the problem.

        Here’s what I see:
        ———————————————————
        1) It is good that government enters into contracts with people and organizations.
        2) It is good that people and organizations (i.e. special interest groups) lobby their government and contribute to political campaigns.
        ———————————————————

        Both of these activities are goods and all organizations should be free to engage in them.

        The problem occurs when that entity receiving contracts or subsidies from a government is also lobbying and/or contributing to the political campaigns of that same government. That’s the problem.

        Happily, that problem is solved entirely and for all cases by saying: if you are an entity receiving government money from subsidies or contracts (ANY entity, not just unions), you are prohibited from lobbying and/or contributing to political campaigns from that government.

        An approach that singles out unions does not address the actual problem. It simply addresses one of the actors that contribute to the problem and as such is arbitrary.

        Riley

        March 18, 2011 at 12:22 pm

        • I acknowledge your objection on the first point; that particular argument of mine is probably limited to contexts where the state is the employer, rather than one of several “competing” local governments.

          Yes, I think we disagree on the solution, but I enjoyed reading your thoughtful analysis/proposal. Here’s my response:

          First, my proposal, very briefly stated, is that collectively bargaining with the government is generally a bad idea. More to the point, though, it’s just not necessary, even if it was historically. There just aren’t examples like 1968 Memphis or the pre-Civil Service Reform Act anymore.

          As to your proposal, here’s where I see problems. One, just as a matter of political theory, I’m circumspect of your first point, that “It is good that government enters into contracts with people and organizations.” Certainly, it is necessary in certain, limited instances for government to act. But it should be regarded as just that: “necessary.” Government action is not “good,” and once it is seen as such, we are on a road to many, many problems.

          Two, and following from the above, I obviously reject your second point, that “It is good that people and organizations (i.e. special interest groups) lobby their government….” A citation to Federalist no. 10 should suffice to explain the objection here.

          But even accepting your premises, your model is problematic when it posits that “th[e] problem is solved entirely and for all cases by saying: if you are an entity receiving government money from subsidies or contracts (ANY entity, not just unions), you are prohibited from lobbying and/or contributing to political campaigns from that government.” What this amounts to is a sale of fundamental political liberty. Again, Federalist No. 10 is instructive:

          “There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests.

          It could never be more truly said than of the first remedy, that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency.”

          Thus, it will not do to simply deprive unions or any other faction of political liberty to solve the problems they cause—that cure would be worse than the disease. Not to mention, unconstitutional.

          Tim Kowal

          March 18, 2011 at 4:33 pm

  3. [...] I discussed at length in a previous post, public sector unions present, at a minimum, the following forms of procedural [...]

  4. This is an awesome statement. “It is one thing to decide that market forces produce an unsatisfactory result and to attempt to restructure the relative strength of economic participants. It is quite another to decide that political forces produce an unsatisfactory result and to attempt to change the democratic process itself by giving preferred economic and political status to one of many interest groups.” Can I use it?

    Aaron

    March 13, 2011 at 8:50 pm

  5. I suppose one could also characterize laws against bribing public officials as being a “sale of fundamental political liberty”. Making a law against giving money to a government official who is in a position to give you taxpayer money in return, is in principle no different than a law against bribing public officials.

    And, because this solution would solve not just the small problem of the conflict of interest that exists between public sector unions and government, but also the much larger problem of corporate influence on government (in terms of dollars a much *much* larger problem), it’s also the more economical and just approach.

    I guess I’ve said all I have to say! Thanks for the thoughtful conversation!

    Riley

    March 19, 2011 at 9:43 am

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