All Commentary
Monday, May 1, 1995

The New Unionism in the New Society: Public Sector Unions in the Redistributive States

Government Employee Unions Are Spreading and Menacing Freedom

Leo Troy, Distinguished Professor of Economics at Rutgers University, has written much about the American union movement–its history, law, economics, and future prospects. The focus of his work has been the changing nature of unionism here and in other advanced industrial countries, especially Canada. In New Unionism he has brought together the analyses of several papers he wrote in the 1980s and the early 1990s. This is an important book, not just for those of us who specialize in unionism, but for all who are concerned about the future course of American society.

Before I get into the substance of the book, with which I enthusiastically agree, I have some minor quibbles. The book consists of six chapters, a bibliography, three appendices, and three charts. Although the book has a 1994 copyright, it is apparent that the six main chapters were written no later than mid-1992. Two appendices are reprints of articles Troy wrote in 1986 and in 1987. The articles are germane to his theme, but it would have been useful to update them. Finally, the entire book suffers from an abundance of typographical errors that should have been picked up when the manuscript was in proofs. The impression is that the production of the book, not its writing, was a careless, hurry-up job.

Troy’s first sentence in Chapter 1 is, “A New Society began to evolve during the past generation and its leading characteristic is the redistributive state.” Those words were, to me, reminiscent of the opening sentence of the Communist Manifesto: “A specter is haunting Europe–the specter of Communism.” The association is not as strained as it seems, for Troy’s main theme is that government employee unionism (what Troy calls the “New Unionism”) is the principal means by which a “New Socialism” has already taken hold, and is spreading, in the United States.

“Old Unionism” (collective bargaining between private sector employers and their employees) has long been waning. It reached its peak market share of 36 percent in 1956. In 1993 the figure was 11.2 percent. Conventional labor academics and practitioners used to think of this as a uniquely American “disease” which they attributed to the resistance of American private sector employers to unionization. As Troy explains in the present book, this conventional wisdom was wrong on both counts. The decline of Old Unionism is neither unique to the United States, nor caused by employer resistance to unionism. The decline is happening in all advanced industrial countries for two primary reasons.

First, there has been a shift from heavily unionized, blue-collar manufacturing employment to largely union-free, high-tech manufacturing and service employment. Second, national and international markets are becoming more and more competitive. According to Troy, these two forces will reduce the market share of Old Unionism to below 7 percent by the year 2000.

The old conventional wisdom that private sector union decline was a uniquely American disease was debunked by Troy when, in 1990, he demonstrated that the foreign private sector figures were grossly overstated because they included unions that, in the United States, would be considered public sector institutions. When Troy applied the same definitions of public and private unionism that are used in the United States to foreign unionism, he discovered that private sector unionism has been declining in other advanced industrial countries as much as it has been here. Even pro-union academics now acknowledge that Troy is right on this point.

But unionism isn’t dead. Government employee unionism, the New Unionism, is not only well established in America (only seven states have failed to pass laws that promote the unionization of state and local employees), it is spreading and becoming more and more menacing to freedom. In 1993, 37.7 percent of all government employees were unionized. Troy expects that figure to exceed 40 percent by the turn of the century. New Unionism already dominates Old Unionism in Canada, Britain, France, and Italy, and Troy expects the same to happen here.

Most observers think of government sector unionism as merely an extension of private sector unionism. Troy doesn’t agree. He uses the term New Unionism precisely to suggest that government sector unionism is a different, and much more dangerous, breed of unionism. For example, Old Unionism and socialism were antagonists. Old Unionism wanted to preserve the free enterprise system and redistribute income from private sector employers to private sector employees. In contrast, the New Unionism promotes what Troy calls the New Socialism, or the redistributive state. The New Socialism recognizes that government ownership of the means of production creates poverty for nearly everyone, so it advocates private ownership of enterprises, but it seeks the socialization of incomes. New Socialism and its chief instrument, New Unionism, seek to transfer income from the private sector to the public sector. The New Socialism seeks to create as much dependency on government, and as large an army of unionized government employees to carry out government programs and enforce government regulations, as possible. All in the name of “fairness.”

New unionism was virtually nonexistent until President Kennedy signed an executive order in 1962 that authorized the formation of federal employee unions with powers of exclusive representation and mandatory good faith bargaining. After that, state after state adopted similar laws, some of which even forced government employees to join, or at least pay dues to, government employee unions. After all, unionists argued, a worker is a worker whether he works in the private sector or for government. It is unfair for government workers to be denied the same collective bargaining rights that private sector workers have enjoyed since the passage of the National Labor Relations Act (NLRA) in 1935.

Troy convincingly argues that collective bargaining in the government sector is actually an attack on the sovereignty delegated to government by the American electorate. When a government is forced to bargain, exclusively, with a private organization on the determination of public policy, that government is no longer sovereign. It no longer has a monopoly on the legal use of force. Government employee unions become a fourth branch of government whose approval must be obtained before public policy can be fashioned and implemented. With the growth of New Unionism, voters have to share what control over government they have with private organizations called government employee unions. Troy says that a collective bargaining agreement between a government employee union and a government employer is like a treaty between two sovereign powers.

According to Troy the New Unionism doesn’t have to worry about eventually losing market share the way the Old Unionism has. Government employment is largely immune to competitive market pressures. Government monopolizes its activities, and, through regulation, prevents private sector alternatives from developing. Moreover, government employers want the same things that government employee unions want–bigger budgets, more responsibilities, and more income transferred from the private sector to the public sector. That is why government employers are so much more “cooperative” than private sector employers. It is in their direct self-interest to cave in to union demands.

Troy is pessimistic about the future of New Unionism and New Socialism. He considers such innovations as term limits, balanced budget amendments, tax caps, and privatization as possible countervailing forces, but he doesn’t seem to have much confidence that such measures will be adopted, or, if adopted, that they will be very effective. The only cause for hope, it seems, is the phenomenon of municipal bankruptcy, such as New York City in the 1970s and again today. Such crises make the perils of New Unionism obvious to anyone who looks.

I am more optimistic than he is. Government failure and voter cynicism are now widespread and growing. The failures of the Old Socialism brought it down, I don’t see why the failures of the New Socialism will not, eventually, do the same. In the meantime, books like this one are indispensable in the ongoing battle against socialism in all its forms.

  • 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.