Important Differences Between Government and Private-Sector Unions

Chart 2

When the NLRA was being drafted and debated in the 1930s, a central question was whether or not compulsory unionism should apply to government employees. The growing pool of government employees made a tempting target for union organizers, but there was great opposition for a number of reasons.

First, opponents of mandatory collective bargaining for government employees argued that compulsory unionism would threaten public safety. Forcing military leaders to bargain collectively with armed forces personnel unions, for example, would pose a serious threat to the effectiveness of the national defense. A union contract that specified how military personnel should perform would take the discretion and flexibility away from commanders who were required to act creatively and decisively at a moment's notice. And what would happen, they asked, if Air Force pilots threatened to strike during war time, or local police or firefighters staged a walkout, threatening the safety of their community?

Competition among businesses forces private-sector unions to be reasonable in their demands or face losing employment for their members by causing a business bankruptcy. With government, however, there is no such competition.

Second, critics argued that there is a major difference between government and the private economy in the areas of competition and consumer choice. For example, private-sector businesses that negotiate union contracts with extravagant wages and inefficient work rules are soon forced to drive up their prices and sacrifice customer service to meet the demands of their labor agreement. But consumers have choices, and they will avoid high prices and poor service by patronizing other businesses. This competition forces the labor unions to be reasonable in their demands or face losing employment for their members by precipitating a business bankruptcy.

With government, however, there is no such competition. If a state government negotiates costly and inefficient union contracts with state employees, citizens and taxpayers have no alternative. Without packing up and moving to another state, citizens have no direct way to drive on lower cost roads, support a less expensive prison system, or otherwise seek options in the functions of state government.

Citizens who do not or cannot move are forced to either continue to pay higher taxes or else spend their time, energy, and money lobbying their elected officials for change, which most just cannot afford to do. Unlike in the private sector, citizens cannot easily choose a better provider of government activities.

Government employee unions therefore experience little external pressure to moderate their demands. This is one reason why salaries and benefits for government employees are routinely higher than salaries and benefits for private-sector employees (see Chart 2).

It is certainly debatable whether collective bargaining as an institution is appropriate to government.36

Another concern over compulsory unionism for government employees focuses on the incentives it creates for agencies to become politicized. For example, private citizens have little financial incentive to get involved in politics because they could work long hours to bring about change and end up reaping only a few dollars, if any, off of their tax bills. Government employees, on the other hand, have significant financial incentives to get involved in politics because they can help elect their "boss." By electing public officials who are friendly to union interests, government employees can expect favorable treatment, which may come at the expense of the citizens and taxpayers.

Compulsory union laws force government employees to financially support labor unions. The unions contribute heavily to candidates seeking positions on political bodies such as the local school board, county commission, state legislature, or even Congress. If the union-backed candidates are successful, they may support policies that benefit government employees at the expense of citizens and taxpayers (see Chart 3, next page).

Few Michigan citizens fully understand the pervasive influence that government unions have on Michigan politics. For example, the Michigan Education Association (MEA), the state's largest government school employee union, is frequently the largest single contributor to Michigan political campaigns. In 1998, the MEA's political action committee (PAC) topped the list of contributors to the Democratic party, giving $1,075,050 to various political campaigns. Government employee unions have extensive networks of supporters to rally their members and make partisan politics an institutional priority.

One example of how citizens and taxpayers can be harmed by compulsory unionism in government is the unions' categorical opposition to privatization, whereby government services such as trash collection are contracted out to a private firm. Many communities have found that privatization saves significant amounts of tax dollars and improves services. Flint Mayor Woodrow Stanley, for example, once saved $1.4 million out of a $6.2 million waste collection budget simply by threatening to privatize unless the union workers performed more efficiently.37 Most unions strongly oppose privatization because they believe that it always means unionized government employees will be replaced with private, non-union workers.

Union-backed public officials may also oppose any efforts to repeal compulsory union laws, work to strengthen those laws, or support forcing all workers covered by collective bargaining agreements, including non-union members, to financially support unions.

Such public officials may also keep more government employees on the payroll just to increase their political support. They may also support "prevailing wage" laws which require contractors working on government projects to pay union-scale wages, benefits, and employ restrictive work rules, effectively eliminating more efficient, non-union competitors and driving up costs to taxpayers.

Recognizing these and other potential problems with public-sector compulsory unionism, Congress exempted government employees from mandatory collective bargaining. Some states, however, ignored these concerns and enacted their own mandatory collective bargaining laws for government employees. With PERA's passage in 1947, Michigan became one of them.

Currently there are 36 states that have mandatory collective bargaining for all or some government employees.38 In addition, federal legislation was enacted in 1978 that implemented mandatory collective bargaining for many federal employees.