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The Wisconsin Debate – The Basics and Implications of Public Sector Collective Bargaining Legislation

By Amanda Huffman

Wisconsin’s recently passed legislation to limit public workers’ collective bargaining rights has ignited a fiery debate over public sector union power in the United States.

Despite the complexity of unions in this country, the discussion is often boiled down to a political faceoff between anti-union conservatives and pro-union liberals. Regrettably, such simplification polarizes the debate and dulls a potentially robust conversation of policy alternatives.

In order to provide a more informed view, this article seeks to examine the dispute over public sector unions by defining the basic debate vocabulary, identifying differences between private and public sector unions, summarizing the arguments for and against limiting collective bargaining rights and previewing the political implications of limiting public sector union strength.

The consequential challenge to policy makers is to create reasonable options more nuanced than either the utter demise or complete domination of unions in America; options in which public sector unions can realistically continue to play their intended role of protecting public sector workers without the incentive or ability to abuse the responsibility.

Basic Terminology and Political Issues

The terms “union”, “collective bargaining” and “collective agreement” are frequently used and rarely clarified. Given that misinterpretations can seriously muddle any analysis, basic explanations are provided below:

  • A “labor union” is an organization that acts on behalf of workers, generally to collectively bargain with employers to provide a variety of worker protections and benefits.
  • “Collective bargaining” refers to a process whereby employees (represented by a union) and employers negotiate to reach a collective agreement. ([1])
  • A “collective agreement” is the labor contract between an employer and a union.

A key detail is that the “right to collective bargaining”, much like the “right to free speech” or the “right to bear arms” is not black or white. The specific rules that define the process, i.e. the rights afforded to employers and employees in contract negotiations,assume many different shades of grey across various jurisdictions.

Federal collective bargaining rights differ from those provided at the state level, bargaining rights vary across states, private sector bargaining rights diverge from those in the public sector, and distinctions in the negotiation process exist across industries. For instance, some states authorize broader public sector collective bargaining rights than are afforded by federal legislation, which has historically been the case in Wisconsin, while others do not.

Collective bargaining rights can also favor either negotiating party to varying degrees. As a result, much of the political debate over unions is about the particulars and extent of collective bargaining rights. Weak collective bargaining rights diminish union strength, both in contract negotiations and broader union activities, while strong collective bargaining rights increase union strength. Labor unions’ overwhelming support for Democratic candidates has led some to view extending or limiting collective bargaining as a political mechanism for strengthening or weakening the Democratic Party.

Consequently, the debate over public sector collective bargaining rights in Wisconsin is not just about public workers sharing the financial burden of solving the state budget deficit; it’s about weakening union power. ([2]) Previously, Wisconsin law stated that municipal and state employees had the right to collectively bargain over wages, hours, and conditions of employment. The new law enacted on March 10 removes public sector collective bargaining rights on work rules and non-wage benefits for non-public safety employees. ([3]) While public sector employees can still collectively bargain for wage increases, these increases are capped in that they can increase no faster than the Consumer Price Index in percentage terms each year. ([4])

Noteworthy is that the Wisconsin legislation removes many, but not all, of the rights to collectively bargain for some, but not all, public workers. And while the rights are not completely stripped, limiting the extent of those rights has the potential to significantly reduce union strength.

Moreover, the legislation limits the power of public, not private, sector unions. Understanding how private and public sector unions differ, and how they are inextricably linked, provides the foundation for arguments to either limit or preserve public sector collective bargaining rights.

Private vs. Public Sector Unions

Legislative Differences
Legislative differences exist between private and public sector unions. The 1935 National Labor Relations Act (NLRA) established union rights to organize by detailing union membership, collective bargaining representation and the right to strike rules in the private sector across the nation. ([5])

Union legislation in the public sector is more complex. By Executive Order 10988 (1962), President Kennedy established the legal right to collectively bargain for federal employees ([6]); however, the Executive Order does not compare to the NLRA in setting a single standard for the details of union membership, collective bargaining and striking rights. Instead, states have individually established public sector union legislation with varying rules. For example, in one particular state public sector workers may be permitted to strike, while in another state they may be obligated to arbitrate disputes. ([7]) Further, much of state collective bargaining legislation has been enacted in a piecemeal fashion according to the political influence of specific interest groups looking to gain specific rights. Finally, public employees have gained rights and set precedents in certain states by winning cases of employer abuse in the courts. ([8]) The result is a particularly convoluted set of public sector employment relations governed by federal, state and local rules.

Incentives to Negotiate
Aside from their legislative differences, private and public sector employers and employees deviate in their incentives to negotiate. In very simple terms, if a private sector union makes demands that are too high for a company to meet and still remain in business, the employer can go bankrupt and its employees will be out of a job. Private sector employers and unions thus have an incentive to negotiate for the benefit of both parties. ([3])

In the public sector, most government employers do not have the option of bankruptcy and, as a result, public sector unions do not have the same incentive to mitigate their demands to keep their employer afloat. Additionally, public sector union members are also voters who have a say in who runs their government, i.e. they play a role in choosing the employer with whom they negotiate. The lack of incentive for public sector unions to negotiate and the inherent conflict of interest from employers being elected officials is at the core of the argument to limit public sector collective bargaining. ([3])

Arguments For and Against Public Sector Collective Bargaining Power

Public Sector Collective Bargaining Rights Should Be Preserved
The main argument for preserving public sector collective bargaining rights is based on the importance of union strength as a whole to individual worker rights. According to the Bureau of Labor Statistics, 36 percent of public sector workers are unionized compared to less than 7 percent of private sector workers. ([9]) As union power in the United States is largely concentrated in the public sector, a decline in public sector union strength means a decline in overall union strength. As even non-union workers can gain wages and benefits from collective agreements that meet union demands, deterioration in union influence spells weaker protections for workers across the board. ([10])

Public Sector Collective Bargaining Rights Should Be Limited
Often the argument for limiting public sector collective bargaining rights is that public sector worker compensation (including benefits and attempting to account for intangibles, such as job security) is higher than that of private sector workers, and that the disparity is unfair. ([11]) In fact, according to a study based on the Bureau of Economic Analysis (BEA), public sector workers earn more than private sector workers in 41 states. ([12])

However, in a 2010 study comparing public and private sector compensation, authors Bender and Heywood find that public workers at the state and local level receive total compensation including wages and benefits 6.8 and 7.4 percent (respectively) lower than their counterparts with similar levels of education and experience in the private sector. ([13])

Regardless of any compensation inequality, a more solid case for limiting public sector collective bargaining rights points to the unique circumstances of public sector unions, where the incentives for public employees and government employers to negotiate toward an economically efficient outcome are weaker than in the private sector. Taxpayers end up footing the bill for aggressive union demands and weak political concessions. ([3])

Political Implications of Limiting Public Sector Union Strength

Currently, approximately two-thirds of states grant collective bargaining rights for their public employees. ([14]) The map below provides a simple illustration of the variation in public sector collective bargaining according to state laws. ([15])

Approximately two-thirds of states grant collective bargaining rights for their public employees.

However, Wisconsin Governor Scott Walker’s success in limiting the public sector worker collective bargaining rights in Wisconsin could create a domino effect wherein other state legislative bodies will follow suit. ([10]) Weaker unions imply an enormous threat to union campaign contributions, which favor Democratic candidates. The law in Wisconsin prohibits non-union public employees from being required to pay union dues. On the other hand, the controversy in Wisconsin has roused union activists and some speculate that there is potential for a reinvigorated labor movement.

Depending on how the scenarios described above unfold, Democrats may stand to either lose or gain politically. But regardless of the political consequences of Gov. Walker’s actions, the role of public sector unions is to protect the rights of public workers, not to fund political campaigns. Further, the incentives that govern public sector employer-employee relationships are misaligned and do not provide an adequate check on union demands. These two facts, however, do not mean that public sector unions do not have a place in America’s labor market.

Workers in the United States have organized themselves throughout our nation’s history to unite their voices against employer abuses—and public sector employers need to be held accountable just like private sector employers. The fact remains that unions cannot protect workers if their negotiating power with employers is toothless. The policy challenge, then, is not to preclude or mandate membership in and collective bargaining by public sector unions, but rather to discover how to maintain a balance and integrity in public sector employment relationships that provides appropriate checks on both employer and union power.

References

([1]) Bureau of Labor Statistics. Glossary. Accessed March 7, 2011. http://www.bls.gov/bls/glossary.htm#C.

([2]) Crook, Clove. 2011. The Battle of Wisconsin. The Atlantic. February 22, 2011. http://www.theatlantic.com/politics/archive/2011/02/the-battle-of-wisconsin/71583/.

([3]) Neul, C. 2011. Why public sector unions are different than private sector unions – part 2. Conservative Insights, March 2, 2011.

([4]) State of Wisconsin Legislature. 2011 Special Session Senate Bill 11. Accessed March 8, 2011. http://legis.wisconsin.gov/JR1SB-11.pdf

([5]) National Labor Relations Board. 2011. National Labor Relations Act. Accessed March 10, 2011. http://www.nlrb.gov/national-labor-relations-act.

([6]) Kennedy, John F. Executive Order 10988. 1962. Employee-Management Cooperation in the Federal Service. January 17, 1962. Accessed March 8, 2011. http://www.presidency.ucsb.edu/ws/index.php?pid=58926#axzz1G3WxGgmr.

([7]) Freeman, Richard B. 1988. Contraction and Expansion: The Divergence of Private Sector and Public Sector Unionism in the United States. The Journal of Economic Perspectives 2: 63-88. Accessed March 10, 2011. http://www.jstor.org/stable/1942850.

([8]) Brown, Ronald C. 1974. Federal Legislation for Public Sector Collective Bargaining: A Minimum Standards Approach. Faculty Publications. Paper 999. http://scholarship.law.wm.edu/facpubs/999.

([9]) Bureau of Labor Statistics. Economic News Release – Union Members Summary. Accessed March 8, 2011. http://www.bls.gov/news.release/union2.nr0.htm.

([10]) Walter, Laura. 2011. Expert: Assault on public sector workers’ collective bargaining rights impacts all workers. EHS Today. March 2, 2011.

([11]) Halliday, Keith, and Special to Yukon News. 2011. Public sector benefits: The new battleground. Yukon News (Yukon), March 2, 2011, sec INSIGHT; Yukonomist.

([12]) Cauchon, Dennis. 2011. Wisconsin one of 41 states where public workers earn more. USA TODAY. March 2, 2011. http://www.usatoday.com/news/nation/2011-03-01-1Apublicworkers01_ST_N.htm

([13]) Bender, Keith A. and John S. Heywood. 2010. Out of Balance? Comparing Public and Private Sector Compensation over 20 Years. Center for State & Local Government Excellence and National Institute on Retirement Security, April, 2010. http://www.slge.org/vertical/Sites/%7BA260E1DF-5AEE-459D-84C4-876EFE1E4032%7D/uploads/%7B03E820E8-F0F9-472F-98E2-F0AE1166D116%7D.PDF

([14]) AFSCME. The Truth About Collective Bargaining for Public Service Workers. Accessed March 8, 2011. http://stopthelies.afscme.org/get-the-facts/document/AFSCME-FactSheet_CollectiveBargaining.pdf

([15]) The Map Room. 2011. Collective Bargaining Rights by State.  http://www.maproomblog.com/2011/02/map_of_state_collective_bargaining_rights.php


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