March 16, 2011

Should Public Employees Have Collective Bargaining?

The San Francisco Chronicle
written by David G. Crane
Sunday, February 27, 2011

The battle in Wisconsin is not over collective bargaining rights generally but rather the appropriateness of those rights in the public sector. Readers may be surprised to learn about the very different histories and consequences of collective bargaining in the private and public sectors.

In the private sector, collective bargaining is used to equalize the power of employees and employers. When empowered by collective bargaining, private-sector workers needn't fear dismissal just because they seek a higher wage or better conditions. Accordingly, President Franklin D. Roosevelt and Congress enacted the 1935 National Labor Relations Act, which conferred collective bargaining rights on private-sector workers.

However, no such rights were conferred on public-sector workers. In fact, both Roosevelt and later George Meany, the first president of the AFL-CIO, opposed collective bargaining for the public sector. Also, in California public employees already had protection against dismissal as a result of the Civil Service Act of 1913, which endows public employees with property-like rights over their jobs.

Still, in 1962 the federal government gave collective bargaining rights to federal employees, and in 1977 California followed suit. However, because state employees already had civil service protections, collective bargaining wasn't needed to equalize their power with employers' power. As a result, collective bargaining for public employees in California changed the balance of power and - most importantly - gave public employees power over their compensation and benefits.

In the private sector, compensation and benefits are determined through negotiations conducted by unions representing employees and management representing shareholders. Neither side has influence over the other, and there is a healthy tension as each side works to increase its share of the pie. If unions don't deliver enough compensation and benefits, workers can make changes to union leadership. If management delivers too much compensation and benefits, shareholders can make management changes.

But in the public sector, no such healthy tension exists because unions can use campaign contributions to gain control of "management," which in California's state government means the 120 legislators and the governor who together determine employee compensation and benefits. As a result of the focused power of the unionized public-sector workforce, management (i.e., legislators and governors) can end up being more responsive to public employees than to "shareholders," that is, citizens benefiting from public services (e.g., students paying tuition at state colleges, parents taking kids to state parks, private-sector union workers building bridges, etc.) and taxpayers paying the bills.

According to the Fair Political Practices Commission, by far the largest contributors to state political campaigns are public-employee unions. Just two of the unions - the California Teachers Association and the California State Council of Service Employees - spent more than $300 million on political activities over the last 10 years. And not coincidentally, since collective bargaining went into effect for state employees, state spending on employee retirement benefits has nearly doubled as a percentage of total state spending and now even exceeds state spending on the University of California and California State University by 40 percent.

During the same period, state general fund spending on employee compensation and benefits grew at nearly three times the rate of state revenues, while general fund spending on higher education, parks and environmental protection was flat or lower, and student tuition costs rose.

In short, the more state revenues are directed to employee compensation and benefits for public employees, the less those revenues are available for private-sector union workers building infrastructure, students paying tuition and families using parks and recreation facilities, and the more burden on taxpayers.

Collective bargaining is a good thing when it's needed to equalize power, but when public employees already have that equality because of civil service protections, collective bargaining in the public sector serves to reduce benefits for citizens and to raise costs for taxpayers. Citizens and taxpayers should consider this as they watch events unfold in Madison.

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