Public and Private Sector Collective Bargaining Are Not the Same

Michigan law requires that all public employers, including local school boards, allow their employees to form labor unions. It further requires that public employers bargain in good faith with the unionized employees' representatives. Many view this situation as analogous to the bargaining that takes place between businesses and private sector unions, such as General Motors and the United Auto Workers. But there is a crucial difference between public sector (government) and private sector bargaining.

That difference is consumer choice. In the private sector, if a business such as a grocery store were to negotiate a union contract that specified costly and cumbersome wages and work rules that drove up the price of the store's goods, consumers could and would choose to shop at a different store with lower prices and better service. This competition forces the private sector labor unions to either be reasonable in their demands or risk bankrupting the business and losing employment for their members.

With government, or public sector, bargaining, there are no such competitive forces. If the state of Michigan negotiated a contract with state employees that established excessive wages and inefficient and bureaucratic work rules, Michigan taxpayers would have no alternative provider of state activities. Short of moving to another state, they could not choose to drive on lower cost roads, support a less expensive prison system, or otherwise seek options in other functions of state government. Citizens are, therefore, forced to pay the price through their taxes, or else spend their days lobbying public officials for change-an expensive and time-consuming process that is difficult for most hard-working citizens.

Unlike consumers in the private sector, taxpayers cannot easily "vote with their feet" to choose a better service provider. Public sector unions therefore experience little external pressure to moderate their demands. This is one reason why the salaries and benefits of government employees are often higher than those of employees performing comparable work in the private sector. 1