Unions and Government Employment
MARCH 01, 1984 by DENNIS BECHARA
Mr. Bechara is an attorney in Mayaguez, Puerto Rico.
September 9, 1919 was a date that altered government employment and the duties associated with it. For this was the time the Boston police force went on strike, causing an alarming state of violence, riots and looting previously unheard of in the country. The Boston police strike marked the beginning of a long and protracted struggle aimed at the unionization of government employees.
The strike at that time was doomed to failure, for public opinion was against it. The policemen who participated in the strike were discharged, with public approval. When Samuel Gompers, head of the American Federation of Labor which had called the strike, petitioned Governor Calvin Coolidge to reinstate the strikers, the Governor replied: “There is no right to strike against the public safety by anybody, anytime, anywhere.” This statement enjoyed almost unanimous approval, and helped Coolidge attain national recognition which ultimately catapulted him to the vice-presidential nomination in 1920.
The Boston police strike occurred as the economy was readjusting from the severe pressures of the First World War. During the war, a War Labor Board was formed by the federal government, which encouraged the organization of labor unions. This was the first time the government created conditions favorable for the unionization of employees. So, it is not surprising that as many as five million employees were union members by early 1920.
The Boston police strike was only one of many strikes that took place during this time. It has been estimated that over 3,000 strikes occurred in 1919 involving approximately 4 million employees. Yet, the difference between the Boston police strike and the others was that the latter were aimed at private industry whereas the former was directed not only against the government but against the entire Boston population. People instinctively knew the unfairness of such a strike since it touched everyone in Boston, whether or not they wanted to be involved in the controversy. The stark differences between public and private employment became clearer, and people generally agreed that there could not be such a thing as a right to strike against the public safety.
Compulsory Union Bargaining Began in Private Sector
In order to understand the full measure of compulsory public-sector bargaining, it is instructive to study the origins of private collective bargaining and its effects on the unionization of employees in the private sector. The unionization of government employees took place after the principles of majority rule, exclusive representation and collective bargaining were entrenched in private labor relations.
After the abolition of the War Labor Board when the war ended, union membership declined from its all-time high of 5 million members in 1920 to 3V2 million members by 1923. During the depths of the Great Depression, union membership hovered around 31/4 million members, and it was not until the passage of protective Federal legislation that union membership substantially increased. Under the Norris-La Guardia Act of 1932, the jurisdiction of the courts to issue injunctions was severely restricted in cases involving labor disputes. Similarly, under the National Recovery Act in 1933, collective bargaining was encouraged. Although this statute was later to be found unconstitutional, its encouragement of collective bargaining was enshrined in the Wagner Act of 1935. The effect of this legislation was substantial. The Department of Labor has stated that:
The 2-year expansion of total union membership brought about a rise from less than 3 million in 1933 to 3¾ million in 1935. In the following 2 years (the first 2 years of the Wagner Act), membership almost doubled, advancing to 7¼ million. The largest gains during the latter period were made in the automobile, rubber, and aluminum industries, in which workers were organized on an industrial basis. Many of the older organizations, including such unions as the International Ladies’ Garment Workers’ Union, the International Association of Machinists, and the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers, also registered substantial membership increases. The extent of these gains is even more impressive when it is realized that the total labor force increased only 2 percent between 1935 and 1937, and that nonagricultural employment, the main source of union membership, increased less than 15 percent.
Union membership continued to increase during World War II and peaked in 1953, when 25.5 percent of the private sector work force was unionized. Membership decreased thereafter to approximately 16.2 percent by 1978. It is not surprising that although recent labor leader pressures have failed to amend the National Labor Relations Act, other efforts aimed at the same goal of increasing unionization of employees have met with startling success.
President Kennedy signed Executive Order 10988 on January 19,1962 whereby collective bargaining was recognized as a right of certain Federal employees. Although the terms of the Executive Order prohibited strikes and mandated that all agreements entered into must meet civil service regulations, the stage was set for further inroads. As one commentator put it: “Kennedy’s Executive Order triggered a series of bargaining laws in states with substantial private sector unionism like Michigan, New York, Washington, and Pennsylvania. Only a dozen state governments, mostly in the South and West, do not have some kind of mandatory bargaining law to promote public employee unions today.”
The situation in the federal government has been substantially altered by the passage of the Civil Service Reform Act of 1978 which enshrined the principle of compulsory collective bargaining for most Federal employees.
Membership in public-employee unions has soared during the twenty-year period between 1960 and 1980. By 1960 eleven percent of government employees were unionized, whereas by 1980 the figure had increased to 50 percent of a total of over 15 million government employees.
The recent surge in the unionization of government employees is in marked contrast to the decline in the unionization of the private sector. With government employment becoming more significant in the economy, it is essential that we understand how this differs from employment in private industry.
Perhaps the most salient distinction between the private sector and the government is the fact that private enterprise is guided in its behavior by the market and especially by the demand for its services. Businesses base their decisions on the market price for goods and services, and the consumer ultimately has the power to decide whether or not to purchase the items offered. There is always the incentive to be efficient in the provision of goods and services since real or potential competitors may offer a better price.
Government, on the other hand, has no such guidelines. Revenues are based on the taxes collected from the population. Efficiency in the provision of goods and services has no effect on revenues. Nor is there danger of losing the market to the private sector because in most instances competition is forbidden. The Postal Service, for example, has a monopoly in the delivery of first class mail. Regardless of the efficiency of the Postal Service, there is no danger that a private entity will offer alternative modes of delivering such mail. Even where competition is not forbidden, it is impractical in many cases because the government has the power to tax and may offer its services at below-cost prices. Public schools, for instance, have the advantage that no direct charges are imposed on the users of their services, whereas those who attend private schools not only have to pay for the private schooling but must sustain the public school system as well.
Since there is no incentive to economize or lower costs, and since there is no possibility of effective competition, government has considerable leeway in the assignment of priorities to provide goods and services. And since there is no market price for government services, its actions are in a sense arbitrary. Ludwig von Mises elaborated this point:
A police department has the job of protecting a defense plant against sabotage. It assigns thirty patrolmen to this duty. The responsible commissioner does not need the advice of an efficiency expert in order to discover that he could save money by reducing the guard to only twenty men. But the question is: Does this economy outweigh the increase in risk? There are serious things at stake: national defense, the morale of the armed forces and of civilians, repercussions in the field of foreign affairs, the lives of many upright workers. All these valuable things cannot be assessed in terms of money.
These facts tend to complicate the employer-employee relationship in the public sector. There are no objective standards by which to judge and reward the productivity of government employees. In a private enterprise, the profit and loss system provides an objective framework upon which to judge the contribution made by each employee. It is true that arbitrary actions on the part of the employer may take place in the private sector. It is conceivable that an employer may act rashly and may in fact discharge his most efficient employees, retaining the least productive. But if he acts in such a fashion, he will do so at his peril.
The public employer, lacking a market method of judging his employees, turns to other non- economic considerations. At one time partisan politics played the most important role in the employment of government employees. The spoils system became so much a part of political reality that it took President James A. Garfield’s assassination in 1881 by a disappointed office seeker to initiate the enactment of the first civil service law. This statute, known as the Pendleton Act of 1883, “created a Civil Service Commission to administer a new set of rules which required appointments to be made as a result of competitive examinations and prohibited assessments on office-holders for political purposes. By law these new rules were applied only to some 14,000 positions, about 12 per cent of the total, but the President was empowered to extend them at his discretion. At the turn of the century there were not far from 100,000 in the classified civil service; at the end of Theodore Roosevelt’s administration the number had more than doubled, and when Wilson left the White House it had increased to almost half a million. At the same time most states were passing civil service laws.”
The situation has changed even more dramatically; the Supreme Court has held that patronage dismissal from government employment violates the U.S. Constitution. The Court stated in Elrod v. Burns, that patronage dismissals could only be justified in policymaking positions so as to guarantee that the policies which the electorate has mandated may be implemented. In yet another case, Branti v. Finkel, the Court indicated that patronage dismissals may only be justified if “the hiring authority can demonstrate that party affiliation is an appropriate requirement for the effective performance of the public office involved.” It may reasonably be said that the spoils system is no longer an important factor in the employment relationship in the government. However, this does not alter the fact that the public employer has no objective measure by which to judge the efficiency and productivity of his employees. Even in those government agencies where there is a provision of services for which there is a market price (like railroads and the provision of electric power), the agency is operated with other than a profit motive and thus lacks an objective standard.
The Power to Abuse
There is no question that government employees have the constitutional right to form and join unions. This is a part of the freedom of association guaranteed by the Constitution, and is as it should be in a free society. However, to extrapolate from that right of association a concomitant right to engage in collective bargaining is a quantum leap.
The theory of collective bargaining, which is embodied in our national labor policy, confers upon unions the exclusive right to engage in bargaining with an employer over the terms and conditions of employment, in behalf of certain employees. This exclusive right is in itself a very broad delegation of power, as each individual employee correspondingly loses his right to deal with his employer over those terms and conditions. The union that enjoys this exclusive right to engage in collective bargaining has the economic self-interest to raise the wages and other conditions of employment of those employees it represents at the expense of the rest of the work force. Such collective bargaining has had various effects. Some companies have not been able to compete as a result of the high wages exacted by the unions they must bargain with. Others have not been able to hire as many employees as they would have preferred. When we take these effects of collective bargaining, not to mention the consequences of prolonged strikes, it becomes obvious that unions in government will tend to exert an inordinate amount of power over the budgetary decisions of the government. As Sylvester Petro pointed out:
So long as taxpayers remain a diffuse, unconcentrated group, while public-sec-tor unions enjoy the compact political power derived from the laws granting them the privileges of exclusive bargaining statutes and of compulsory collective bargaining, the taxpayers must fight a losing battle.
Although it is difficult to estimate the actual income generated by public-employee unions, an expert recently estimated that $750 million a year is a conservative figure. Clearly, public- employee unions have an acute interest in promoting compulsory public sector bargaining.
Among the many other differences between the government and private employers is the economic advantage enjoyed by the government. Taxpayers must subsidize the government’s expenditures regardless of their demand for the services offered. As previously noted, the possibilities of private competition are curtailed. All of these factors enhance the entrenched power of public-employee unions. Besides, since government is usually the only supplier of many services, a strike, however short its duration, can inflict tremendous damage to the population. This in turn causes the politicians to yield to exorbitant union demands so as to lessen the public outcry caused by the strike.
The politicians responsible for maintaining labor peace in the government must reconcile two conflicting demands. On the one hand they must pacify the concerted efforts of public-employee unions to raise labor costs while on the other hand they must stem any outcry that may surface on the part of the population at large to avoid profligate spending. This effort at reconciling these opposing demands is usually resolved in terms favorable to the public-employee unions since these organizations have formidable lobbying power. Public employees have an economic interest in voting for candidates who will be more generous in settlements with public-employee unions. It is not surprising that “public employees participate in elections at substantially higher rates than the general citizenry does, thereby forming a more potent voting bloc than their share of the work force might suggest.”
A Political Process
The easiest way for politicians to reconcile the conflict between the general taxpayers’ clamor to reduce spending and the strong pressures exerted by public employee unions has been to grant many of the benefits demanded as long as they are to be financed over the long term. There is no short-term need to raise taxes, and both the unions and the taxpayers are satisfied. This development is similar to the so-called “uncontrollable” items in the Federal budget where benefit increases have been mandated over a number of years. Since the legislation took place in the past, no politician needs to suffer the consequences of being singled out as responsible for the increase in spending.
Public-sector bargaining is part and parcel of the political process since its outcome directly influences the budgetary decisions of the government. This becomes even more acute whenever a strike takes place: “A strike designed to get for the strikers more than the legislative appropriation calls for is thus a political act, not an economic one; its purpose is to supplant the budgetary decisions produced by the political processes of representative government with a form of action which can only be called an act of political aggression or extortion.”
Although most public-employee collective bargaining statutes contain prohibitions against strikes, government officials have become reluctant to impose any sanctions on the strikers. In 1980 there were 536 work stoppages involving 224,000 government employees. It seems safe to assume that the reason few sanctions have been taken has been due to the powerful political influence enjoyed by public-employee unions. Yet, one must consider that during the 1981 Professional Air Traffic Controllers Organization strike the government took an unusually strong stand and proceeded to discharge all those strikers who refused to return to work. This severely strong action was politically acceptable and shattered the myth that it is impossible for a government official to deal effectively with the issue of strikes in the public sector. But the issue posed by public-employee unions goes beyond whether or not public employees should have the right to go on strike. The question that should be addressed is whether or not compulsory collective bargaining should be the guiding principle for labor relations in the public sector.
The clear differences that exist between a private and a public employer demonstrate the vulnerability of both the government and the taxpayers to the pressures exerted by public- employer unions. Compulsory public-sector collective bargaining will increase government spending inordinately with the consequent adverse effects on the budgetary and policy-making process. It should be remembered that the costs of collective bargaining include all the disputes that may arise during the term of the collective bargaining agreement. Clearly, collective bar gaining in the public sector is not the most appropriate mechanism to handle labor relations in government.
There are some who share a negative opinion about compulsory public-sector bargaining but feel that the ideal solution is to refer all disputes to compulsory arbitration. In this fashion, it is argued, arbitrators will decide the fairness of the union demands as well as the reasonableness of the employers’ position. Yet, this argument overlooks an important consideration. By empowering independent arbitrators to impose contract settlements mandating new terms and conditions of employment, the people at large will have given up their capacity to hold anyone accountable for the particular settlements. Instead of bringing about a solution to the problems posed by the public sector bargaining, mandatory arbitration will only aggravate them.
If the government were to change its policies and refuse to engage in collective bargaining, would this open the door for arbitrary treatment of government employees? The fact is that government employees have rights protected by the Constitution which are not open to em ployees in the private sector. We have already seen that the spoils system has been effectively curtailed as a result of recent Supreme Court decisions. In addition to this, the Supreme Court in Perry v. Sinderman granted public employees who face dismissal the right to a hearing so that they may establish whether or not they had a “property interest” in their jobs.
The instances in which public employees have been dismissed are minimal. In 1978, for example, “only 300 of 2.8 million federal employees reportedly were dismissed or terminated for incompetence.” In addition, public employees may not be disciplined for their exercise of First Amendment rights. As all of this reveals, government employees enjoy certain rights that guarantee that they will not be subjected to arbitrary actions on the part of their employer. In addition, of course, public employees enjoy economic security since the government does not run the risk of going out of business. All in all, government employees enjoy greater job security than do employees in the private sector.
Government should rededicate itself to the purposes of the original civil service statutes. A pay scale cognizant of the realities of the market, along with the constitutional and statutory protections afforded public employees, assure them fair treatment without subjecting the government to the shackles of public-employee union pressures. If we continue to pursue the policies of compulsory public-sector bargaining, we will lose further control over the behavior of the government and its spending decisions. As Sylvester Petro has said:
Compulsory public sector bargaining dilutes governmental sovereignty by transferring the loyalties of public employees from their government employers to their union. It dilutes popular sovereignty by pitting public employees as a group against taxpayers as a group. Instead of serving taxpayers, government employees and their unions extort from them.
It is in our power to change those policies which have brought forth compulsory public-sector bargaining; if we do not, the events of September 9, 1919 may no longer be incidents of the past.