From ProfessorBainbridge.com and ADF:
02/17/2011
The case against public sector unionism
As a non-unionized public sector employee who studies organizations for a living, I am in favor of unions in theory. Indeed, there is a strong case to be made for unionism from the perspective of new institutional economics, which is the theoretical foundation on which my work in the field rests. I long ago summarized that case in these very pages (here). In practice, of course, the history of the American labor movement is far too replete with mob involvement, thuggery, intimidation, political machinations, and a host of other abuses to give one much confidence in translating theory into practice.
The case for private sector unionism, however, does not extend to the public sector. As Daniel DiSalvo writes, leading labor and political figures long recognized that public sector unions were a bad idea:
Prior to the 1950s, as labor lawyer Ida Klaus remarked in 1965, "the subject of labor relations in public employment could not have meant less to more people, both in and out of government." To the extent that people thought about it, most politicians, labor leaders, economists, and judges opposed collective bargaining in the public sector. Even President Franklin Roosevelt, a friend of private-sector unionism, drew a line when it came to government workers: "Meticulous attention," the president insisted in 1937, "should be paid to the special relations and obligations of public servants to the public itself and to the Government....The process of collective bargaining, as usually understood, cannot be transplanted into the public service." The reason? F.D.R. believed that "[a] strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable." Roosevelt was hardly alone in holding these views, even among the champions of organized labor. Indeed, the first president of the AFL-CIO, George Meany, believed it was "impossible to bargain collectively with the government."
He further explains that:
In 1943, a New York Supreme Court judge held:
To tolerate or recognize any combination of civil service employees of the government as a labor organization or union is not only incompatible with the spirit of democracy, but inconsistent with every principle upon which our government is founded. Nothing is more dangerous to public welfare than to admit that hired servants of the State can dictate to the government the hours, the wages and conditions under which they will carry on essential services vital to the welfare, safety, and security of the citizen. To admit as true that government employees have power to halt or check the functions of government unless their demands are satisfied, is to transfer to them all legislative, executive and judicial power. Nothing would be more ridiculous.
The very nature of many public services — such as policing the streets and putting out fires — gives government a monopoly or near monopoly; striking public employees could therefore hold the public hostage. As long-time New York Times labor reporter A. H. Raskin wrote in 1968: "The community cannot tolerate the notion that it is defenseless at the hands of organized workers to whom it has entrusted responsibility for essential services."
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.
Even if the public's representatives at the collective bargaining table are not de facto union representatives, the nature of public sector collective bargaining inherently leads to inefficiencies. As far back as 1971, in their book The Unions and the Cities, Harry Wellington and Ralph Winter argued that "there are sound reasons for concluding that government is not just another industry" (Book Review, 13 Wm. & Mary L. Rev.):
Foremost of these reasons is the unreliability of transplanting the private sector labor legislation's operating assumption that the employer's superior bargaining power should be equalized. That power in a given city may already be equal or tipped in favor of public employee unions due to the very nature of the public employer who, unlike the private employer, is not subject to market restraints but is subject to political restraints. Government decisions are properly political decisions and economic considerations, although para- mount to the private employer, are but one criterion among many for the public employer. Market restraints in the private sector are such that increased benefits will cause higher prices for the employer's product which in turn, in a system of tradeoffs, causes possible unemployment of some employees. No such market restraint exists in the public sector except in theory since discharging teachers, sanitation workers, or police- men as a result of granting higher benefits raises very real political pressures from within the affected government department and from an inconvenienced public. 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 municipal 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. ...
Add to this political power of public employee unions the private sector strike weapon and they may have, argue the authors, a disproportionate quantum of power sufficient to distort the normal political process. Their power may be so effective a means of redistributing income that they will have "an institutionalized means of obtaining and maintaining a subsidy for union members."
In sum, public sector unionism lacks the economic justifications for private sector unionism. It results in significant distortions of the political process, which have real adverse consequences for the taxpayers. What's happening in Wisconsin (as ably monitored by University of Wisconsin law professor/blogger Ann Althouse) thus is quite heartening. The efforts by the Governor and the republican legislative caucus to reform public sector collective bargaining rights is an essential step towards fiscal sanity and political democracy.
Posted at 03:02 PM in Current Affairs
02/17/2011
The case against public sector unionism
As a non-unionized public sector employee who studies organizations for a living, I am in favor of unions in theory. Indeed, there is a strong case to be made for unionism from the perspective of new institutional economics, which is the theoretical foundation on which my work in the field rests. I long ago summarized that case in these very pages (here). In practice, of course, the history of the American labor movement is far too replete with mob involvement, thuggery, intimidation, political machinations, and a host of other abuses to give one much confidence in translating theory into practice.
The case for private sector unionism, however, does not extend to the public sector. As Daniel DiSalvo writes, leading labor and political figures long recognized that public sector unions were a bad idea:
Prior to the 1950s, as labor lawyer Ida Klaus remarked in 1965, "the subject of labor relations in public employment could not have meant less to more people, both in and out of government." To the extent that people thought about it, most politicians, labor leaders, economists, and judges opposed collective bargaining in the public sector. Even President Franklin Roosevelt, a friend of private-sector unionism, drew a line when it came to government workers: "Meticulous attention," the president insisted in 1937, "should be paid to the special relations and obligations of public servants to the public itself and to the Government....The process of collective bargaining, as usually understood, cannot be transplanted into the public service." The reason? F.D.R. believed that "[a] strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable." Roosevelt was hardly alone in holding these views, even among the champions of organized labor. Indeed, the first president of the AFL-CIO, George Meany, believed it was "impossible to bargain collectively with the government."
He further explains that:
In 1943, a New York Supreme Court judge held:
To tolerate or recognize any combination of civil service employees of the government as a labor organization or union is not only incompatible with the spirit of democracy, but inconsistent with every principle upon which our government is founded. Nothing is more dangerous to public welfare than to admit that hired servants of the State can dictate to the government the hours, the wages and conditions under which they will carry on essential services vital to the welfare, safety, and security of the citizen. To admit as true that government employees have power to halt or check the functions of government unless their demands are satisfied, is to transfer to them all legislative, executive and judicial power. Nothing would be more ridiculous.
The very nature of many public services — such as policing the streets and putting out fires — gives government a monopoly or near monopoly; striking public employees could therefore hold the public hostage. As long-time New York Times labor reporter A. H. Raskin wrote in 1968: "The community cannot tolerate the notion that it is defenseless at the hands of organized workers to whom it has entrusted responsibility for essential services."
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.
Even if the public's representatives at the collective bargaining table are not de facto union representatives, the nature of public sector collective bargaining inherently leads to inefficiencies. As far back as 1971, in their book The Unions and the Cities, Harry Wellington and Ralph Winter argued that "there are sound reasons for concluding that government is not just another industry" (Book Review, 13 Wm. & Mary L. Rev.):
Foremost of these reasons is the unreliability of transplanting the private sector labor legislation's operating assumption that the employer's superior bargaining power should be equalized. That power in a given city may already be equal or tipped in favor of public employee unions due to the very nature of the public employer who, unlike the private employer, is not subject to market restraints but is subject to political restraints. Government decisions are properly political decisions and economic considerations, although para- mount to the private employer, are but one criterion among many for the public employer. Market restraints in the private sector are such that increased benefits will cause higher prices for the employer's product which in turn, in a system of tradeoffs, causes possible unemployment of some employees. No such market restraint exists in the public sector except in theory since discharging teachers, sanitation workers, or police- men as a result of granting higher benefits raises very real political pressures from within the affected government department and from an inconvenienced public. 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 municipal 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. ...
Add to this political power of public employee unions the private sector strike weapon and they may have, argue the authors, a disproportionate quantum of power sufficient to distort the normal political process. Their power may be so effective a means of redistributing income that they will have "an institutionalized means of obtaining and maintaining a subsidy for union members."
In sum, public sector unionism lacks the economic justifications for private sector unionism. It results in significant distortions of the political process, which have real adverse consequences for the taxpayers. What's happening in Wisconsin (as ably monitored by University of Wisconsin law professor/blogger Ann Althouse) thus is quite heartening. The efforts by the Governor and the republican legislative caucus to reform public sector collective bargaining rights is an essential step towards fiscal sanity and political democracy.
Posted at 03:02 PM in Current Affairs
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