I am assuming that most readers of this blog have a commitment to freedom of association and, as a result, are quite willing to accept voluntary self-organization of labor via trade unions in the private sector. Management and labor can negotiate over the terms of the labor contract and, if it appears that higher levels of compensation are compatible with corporate profitability, mutually beneficial exchange may occur. If the two bargaining partners miscalculate, they bear the costs (e.g., through declining market share reducing profitability and the demand for labor). They are free to renegotiate the terms of their agreement in subsequent rounds.
But what of unions in the public sector? There seems to be a clear public choice problem: public unions and elected officials engage in mutually beneficial exchanges—generous compensation packages for political support and campaign finance—while shifting the costs on to the unorganized taxpayers. On the face of things, this seems no different than the dynamics intrinsic to Stigler’s economic theory of regulation.
In the case of Wisconsin, it is clear (at least to me) that the effort to eliminate collective bargaining for public sector unions is as much about politics as it is about long-term budget imbalances. The Wisconsin Education Association Council (WEAC), which represents some 98,000 workers, charges membership dues that run some $1,000 per year. Some of these funds, in turn, are spent to support candidates and incumbents (largely Democratic) who will prove overly sympathetic to union demands for higher rates of compensation.
As an AP story by Ryan Foley explains:
WEAC is typically among the largest-spending special interests in Wisconsin politics, helping former Democratic Gov. Jim Doyle win two terms in office and often trying to sway key legislative races with television ads and mailers. It also contributes to other groups that run political ads in favor of Democrats and against Republicans.
WEAC’s political arm has spent more than $11 million in donations to campaigns and spending to support and oppose other candidates since 1998, nearly all of it helping Democrats, according to McCabe [Mike McCabe, director of the Wisconsin Democracy Campaign]. The group endorsed Milwaukee Mayor Tom Barrett, a Democrat, in his race against Walker for governor last year.
McCabe said WEAC’s campaign spending dwarfs that by other unions — including American Federation of State, County and Municipal Employees, which represents tens of thousands of state and local workers in Wisconsin. But he said they were all a key part of the Democratic party’s coalition in a state that has generally leaned to the left.
By eliminating collective bargaining, forcing annual union certification, and ending the automatic deduction of union dues, Walker would eliminate a potent source of Democratic campaign finance while changing the dynamic that is driving the long-term growth of health care liabilities. Whether Walker’s campaign is driven primarily by budgetary concerns or the desire to solidify Republican control in the state government is anyone’s guess. Both will result if the bill is passed.
There could be institutional changes that would alter the dynamics and allow for the continuation of collective bargaining for public sector unions (e.g., public financing of political campaigns, bans on union contributions to political campaigns). But they seem unlikely. Absent such changes, the public choice problem remains.
It seems difficult to escape the conclusion that public sector unions are different.
Update (h/t Naben)
This morning’s Milwaukee Journal-Sentinel reports:
The 14 Wisconsin Democratic senators who fled to Illinois share more than just political sympathy with the public employees and unions targeted by Gov. Scott Walker’s budget-repair bill.
The Senate Democrats count on those in the public sector as a key funding source for their campaigns.
In fact, nearly one out of every five dollars raised by those Democratic senators in the past two election cycles came from public employees, such as teachers and firefighters, and their unions, a Journal Sentinel analysis of campaign records shows.
The 14 senators raised $1.9 million since the start of 2007, with $344,000 from public employee unions and government workers. As the story notes, this does not count donations of under $100 and independent spending (e.g., “the Wisconsin Education Association Council, the state teachers union, dropped nearly $1.6 million in independent spending in four Senate races last fall”). No surprises here, of course. Transfer-seeking is ubiquitous and is not reserved for businesses, even if they tend to be the most adept at the game.
One thought on “Are Public Sector Unions Different?”
Prior to 2008, I would have agreed to the opening paragraph, but private unions, like Wall Street, have used their power and influence in government to extract money from me. At this point, I am very anti-union.