All Commentary
Tuesday, January 20, 2009

How Bad Can it Get?

Government-Sector Collective Bargaining is a Threat to Democracy

In August the Evergreen Freedom Foundation (EFF) in Washington state released its State of Labor 2008 (the Report), which warns of several perils emanating from the growth of government-sector collective bargaining and offers suggestions for ameliorating them. (The Report is available in PDF here .) I predict these perils will soon be much more severe than the EFF fears.

The dangers discussed in the Report are all threats to democracy. Government payrolls are taxpayer expenditures. Basic principles of democracy call for government expenditures to be determined in the open by duly elected legislators. Moreover, taxpayers must be able to testify in open legislative hearings regarding such expenditures. This is not how government-sector collective bargaining (GSCB) works. For example, in Washington state a legislator’s only role in the GSCB process is to vote yes or no on government-employee compensation bargained by the governor and the government-employee unions. Those bargaining sessions are closed to the public. The unions are a de facto fourth branch of government empowered to ignore both the legislature and the taxpayers. Unions are not ordinary special-interest groups, like the Sierra Club, that try to affect government policy. They actually get to codetermine government policy with the governor.

As described in the Report, GSCB in Washington state is an egregious special-interest game. The governor, who gets in-kind and financial campaign support from the unions, “bargains” with them. This is government of the taxpayers by the unions for the unions. It is taxation without representation.

Because the unions are permitted to force government employees to pay union dues and agency fees as a condition of continued employment, they are able to buy the loyalty of the governor and to bribe enough legislators to vote yes on the bargains. The Report gives details of this pay-to-play game in Washington state from 2004 to July 2008. It reveals the specific amounts paid by unions to various politicians in direct campaign contributions and the resulting union-friendly votes those politicians cast. The unions spent a total of $1,128,425 buying political votes. According to the Wall Street Journal, Colorado government unions assembled over $13 million of forced dues and fees to fight a ballot measure that would have prohibited them from collecting forced dues and fees.

Sign This Card or Else!

Unions are not content with the money they take from ordinary government employees. Some unions are now bribing politicians to vote for laws that will force individual private-sector workers—such as home healthcare workers, daycare providers, and even foster parents—who are paid with any taxpayer funds to submit to union representation and forced fees.

In private-sector collective bargaining the employer and the union sit on opposite sides of the table. The employer is playing with his own money, and he is constrained by the market competition he faces. The union represents the interests of employees under the constraint that if the enterprise loses out to competitors, there will be fewer employees to represent. If the workers of a private enterprise go on strike, its customers can take their business elsewhere. In GSCB both parties sit on the same side of the table. They are playing with other people’s (taxpayers’) money and are unconstrained by competition. Taxpayers cannot legally refuse to pay taxes. If the employees of a government agency go on strike, its customers (taxpayers) have no place to turn.

Notwithstanding this crucial difference, government unions often argue successfully that strikes in the government sector must be legal simply because they are legal in the private sector. Strikes take place even in many jurisdictions where government-sector strikes are illegal. When such strikes are settled, the strikers and their unions usually are granted amnesty.

Some states, such as Iowa, have tried to avoid government-sector strikes by imposing binding arbitration in collective-bargaining impasses. But that is an unacceptable alternative. An arbitrator in government-sector labor disputes is unelected but has power unilaterally to determine the size of government payrolls and thus significantly affect state fiscal priorities. Some states have been forced to raise taxes to pay arbitrators’ awards. In the words of the Report, binding arbitration in the government sector “could place an arbitrator in the position of single-handedly raising government expenses (and thus the taxes to cover the costs.)” If this isn’t taxation without representation, the Founders gave George III a bad rap.

The Report also tells of an attempt by the California legislature to prevent private-sector employers who receive more than $10,000 of state funds from speaking out against unionization during certification election campaigns. Only unions would have free-speech rights. In June 2008, in Chamber of Commerce v. Brown, the U.S. Supreme Court struck down the California law on the grounds that the National Labor Relations Act (NLRA) preempts state law in private-sector collective bargaining. According to the Court, Congress is free to give states the power to restrict employer free speech simply by amending the NLRA.

I expect this issue soon to be moot because the new Congress and the new president are poised to abolish secret-ballot certification elections. Under the Employee “Free Choice” Act employers will be forced to recognize and bargain with unions if a majority of their respective employees have signed union cards. Signatures will be collected in face-to-face encounters between union organizers and individual employees. Free speech and free choice be damned. Sign this card or else!

What Can Be Done?

The Report offers four suggestions to improve the situation. I think the first two make sense, and the others are too weak to make any difference. It proposes that all states subject government-sector collective bargaining to open-meeting laws that guarantee the opportunity for individual citizens to be heard on the subject of government-employee compensation and that force public disclosure of all collective-bargaining agreements. Currently only 11 states have such laws. It further recommends that states adopt legislation to force unions fully to disclose their financial information to workers and the general public. If people knew how much unions spend for political and ideological purposes rather than bargaining and representation, they would be appalled.

It also recommends that all states adopt “paycheck protection” legislation, which would force unions to get permission from each individual union member before any of his dues could be used for political purposes. Paycheck protection already exists in 16 states. While this is better than doing nothing, unions are skilled at obfuscating the difference between what is and what isn’t political spending. A more effective remedy would be for all states to forbid unions to collect any forced dues or fees from any workers. Finally, the Report recommends that all government-employee strikes be prohibited by law. Unfortunately, where that proscription already exists it has proven to be feckless.

I expect all the problems discussed in the Report to get worse during the next four years. In 1985 the U.S. Supreme Court, in Garcia v. San Antonio Metropolitan Transit Authority, gave Congress a free hand in setting the rules for state and local labor relations. Congress can override any measures enacted by the states. It can even force states that do not now allow government-sector bargaining to do so. The only change we can expect here will be dictated by the unions.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.