Why Give Public Sector Unions So Much Bargaining Power?
It has been six years since Wisconsin Governor Scott Walker signed a law that severely restricted the power of public-employee unions to bargain collectively. Many found it easy to sympathize with the workers whose bargaining rights would be circumscribed, people doing valued work such as teachers, nurses, and prison guards. But public-sector workers have enormous clout at the bargaining table, compared to their private-sector employees. Is it justified?
Since the battle of Wisconsin, the issue has arisen on the other side of the Atlantic. The U.K parliament limited public sector employees’ right to strike, requiring that 40 percent of all eligible members of unions vote yes in order to trigger a strike in important public services such as health, firefighting, transport, and elementary and secondary education – making non-voting effectively a no vote. In Ireland, newly elected Taioseach Leo Varadkar has indicated he will propose legislation to make Labour Court recommendations binding on employers and unions in “essential public and security services” to be determined by the Irish legislature. Varadkar specifically mentioned public transit and air traffic control, as well as emergency services “where it is a matter of life and death,” as areas where his legislation might prohibit strikes.
Given the essential nature of these jobs, it is easy to see why people would be loath to allow strikes to interrupt their provision. On the other hand, it is their very essential nature that provokes considerable sympathy for those that provide the services. Who doesn’t respect the work of teachers, nurses and first responders? But one should consider the enormous advantages public-sector workers have compared to private-sector workers. The deck is actually stacked in their favor, in four ways:
One, public-sector workers provide a monopoly service. When they withdraw it, they have the public over a barrel. When private-sector workers strike, on the other hand, consumers are left with other options. If GM is shut down, one can just buy a Ford, or a Toyota. For that matter, one can just wait until the strike is over. But if sanitation workers strike, all you can do is watch the garbage pile up.
Two, because government employees do not face direct competition their ultimate fallback is not circumscribed by concern any settlement might undermine the ability of their employer to compete for market share. If a motorist isn’t happy with GM’s prices, she is free to buy a car from another company. If a resident isn’t happy with local policing or garbage collections, she is free – to move to another city. Not much of an option.
Three, unlike private-sector workers, public-sector workers get a say in picking the members of management. UAW members don’t get a say in who becomes the CEO of GM or Ford. But public-sector unions can help elect the person who is going to be sitting across the bargaining table from them.
Four, public-sector employees have an employer that is presumed to have deep pockets. Perhaps they aren’t as deep as they used to be, but still deeper than private-sector companies. Union members feel bolder about hitting them up for more generous contracts, and public officials are more inclined to agree to avoid or shorten a strike.
Perhaps it is not surprising that no state allowed their employees to strike until 1959. (Ironically, the first was Walker’s Wisconsin.) At one time, the right of public sector workers to strike might have seemed justified. People going to work in the public sector engaged in a trade-off – they often accepted relatively low pay and poor working conditions in return for job security. But today, it is hard to see the trade-off. Private-sector workers suffer from a huge disadvantage compared to their public-sector counterparts. The impact can be seen in the prevalence of defined benefit pension plans for public employees – and the exponential growth of unfunded liabilities. The enormous bargaining advantages of public-sector employees is one of the reasons.
The unique nature of secure public-sector jobs doesn’t justify their stronger bargaining position. It actually warrants a weaker one.