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Air Traffic Control Reform Opponents Still Miss the Big Picture, Repeat Errors

Air traffic control is in dire need of reform and modernization, and there is a great plan in the House FAA bill to do just that. But a handful of conservative activists have launched a campaign to roil reform. Last week, I published two posts debunking false claims made by critics. While the vast majority of free market advocates familiar with the issue support the air traffic control corporatization plan contained in the House’s AIRR Act, a small group of anti-union conservative advocates opposes these reforms, citing concerns over labor unions.

The reform plan would transfer the responsibilities of the FAA’s Air Traffic Organization—currently nearly two-thirds of the FAA’s budget—to a newly created independent nonprofit corporation. As the Cato Institute’s Chris Edwards notes, “I would take a private-sector unionized company any day over a unionized federal bureaucracy. [These anti-union advocates] would apparently prefer the latter, which I find perplexing.”

One reform opponent is James Sherk of the conservative Heritage Foundation, who specializes in labor economics in the foundation’s data analysis department. Last Monday, the Heritage Foundation’s 501(c)(4) affiliate Heritage Action was one of the four signatories of a letter to Congress containing numerous false and misleading claims on the proposed air traffic control reforms. On Friday, Sherk published an article on The Daily Signal making numerous errors.

I have repeatedly noted how strange it is for Heritage to oppose the present reforms, which were first formulated by the Heritage Foundation in 1982. This study, authored by the libertarian Reason Foundation’s cofounder Bob Poole, came at the request of the Reagan White House following the illegal 1981 PATCO strike. President Reagan’s Secretary of Transportation Jim Burnley is a leading supporter of the proposed reforms. To echo Cato’s Edwards, this apparent reversal of 35 years of Heritage policy is perplexing.

Below is a point-by-point rebuttal to Sherk’s post. His quotes are bolded and my corrections follow.

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However, the Aviation Innovation Reform and Reauthorization Act (AIRR) does not address one of the problems impeding reform: the National Association of Air Traffic Controllers, the union representing air-traffic controllers. The union has used its leverage to negotiate gold-plated and diamond-studded compensation packages for its members.

The Bureau of Labor Statistics reports the median air traffic controller makes $123,000 a year in cash wages. Including noncash benefits brings the average total compensation package to approximately $200,000 a year—vastly more than most private-sector workers in jobs requiring an associate’s degree.

The public pays for these inflated compensation packages through higher taxes on airline passengers. The National Association of Air Traffic Controllers redistributes wealth from taxpayers and the flying public—most of whom make much less than $200,000 a year – to the union’s members.

The reason many U.S. air traffic controllers make so much money at the moment is precisely because of the lack of reform. As workplace conditions have become so bad and with morale so low, the FAA has found it difficult to attract new talent to the Air Traffic Organization. As a result, the workforce has been greying and controllers are maxing out on overtime in order to keep the nation’s civil airspace system operating. Controller fatigue has become a growing safety hazard.

Of the approximately 10,500 certified professional controllers, around 3,000 of them are already eligible for retirement. The entire certified controller workforce is today smaller than the more than 11,000 controllers President Reagan fired in 1981 even though the airspace is much more crowded than it was 35 years ago—with much of the same technology still in place. Contrary to Sherk’s claims, the main labor problem facing U.S. air traffic control with respect to the controllers is not that they are overpaid, it is that they are overworked using low-productivity 1960s technology.

Sherk then describes a variety of specific “problems” he has with the bill. Like previous anti-union critiques, these are either wrong or deeply misleading. At best, when his claims contain elements of truth, you can say Sherk is making a mountain out of an anthill.

Binding Arbitration. Under current law, the FAA can impose a contract if negotiations with the union hit an impasse. The Bush administration did this in 2006, limiting average air traffic control compensation to “just” $187,000 a year. (The Obama administration reversed that decision when it took office, giving the unions the package worth $200,000 a year). One section (§90707) of the legislation requires the new corporation to go to binding arbitration instead of imposing a contract. Binding arbitration tends to produce union-friendly awards. This provision means the new entity will have even less power than the FAA does now to restrict the growth of air traffic controllers’ compensation.

Sherk undermines his own point with the above parenthetical. In reality, controller binding arbitration changes little during the transition. The primary difference is the one Sherk notes, that the new private ATC Corporation would not be able to impose its final offer if it reached an impasse with the union. But as Sherk notes in the parenthetical, this rarely used provision is not even effective, as the Obama administration reversed the Bush administration’s decision three years later. Apparently, clinging to an ineffective legal tool possessed by the government is reason enough to prevent the private sector from taking over the collapsing state-owned enterprise called the FAA’s Air Traffic Organization.

But to those who fear this inconsequential change, let me explain how the “new” binding arbitration process will work if the ATC Corporation’s management and controllers’ union reach an impasse. First, management and the union each select eight mediators from an accredited pool and set the list aside. Second, management and the union each choose one mediator. Third, those two mediators then select the third meditator from that eight-eight list. So, you’re going to end up with a middle-of-the-road mediation panel because management and the union would be on equal footing. Again, this non-issue is worth fighting to prevent badly needed reforms?

No Federal Salary Cap. The new, nonprofit corporation will not be subject to the federal salary cap (currently $185,100 in cash wages or salaries for most federal employees). This will allow the union to negotiate–or get an arbitrator to impose–even larger pay increases than they can legally ask for now.

Of course the federal salary cap would not apply. The ATC Corporation would be a private corporation. Why should Congress be able to dictate its compensation schedule? And how on earth is forcing government wage controls onto a private company controlled by a board of directors with a fiduciary duty to the corporation, even if it is unionized, considered “conservative”?

Government Benefits. Another section of the legislation (§90705) lets the union’s current members keep their federal pensions and health benefits, or get benefits from the new agency. So they will keep their government benefits, unless the union negotiates even better benefits at the new entity. In that case, they can switch to the higher compensation package. Airline passengers whose fees cover these costs get the worst of both worlds.

This is simply absurd, although those unfamiliar with aviation policy generally and air traffic control operations in particular should not be expected to grasp why. Recall that I noted above that nearly 30 percent of the current certified controller workforce is already eligible for retirement. If Sherk got his way and a union-busting provision was slipped into the bill to strip controllers of the pensions many had been expecting for decades, what does he think would happen with those 3,000 controllers currently eligible for retirement? They would retire en masse, crippling the nation’s civil airspace system and causing billions of dollars in economic damage.

As the Reason Foundation’s Bob Poole has noted in response to similar complaints:

Any realistic transition of a large workforce from a government agency to a new kind of organizational structure must preserve existing pay and benefits during the transition period. In a stakeholder-governed co-op structure that seeks to emulate the Nav Canada model, gaining the trust and cooperation of employees on whom service delivery depends makes very good sense. And of course politically, it is also the smart and sensible thing to do.

Conservatives should rejoice that an important labor union agrees that the FAA status quo is unsustainable and that this high-tech, 24/7 service business is more appropriate to a self-funded corporation business model. And that said union is willing to stand up and be counted in favor of this kind of far-reaching reform.

Sherk may be letting his antipathy for unions cloud his judgement. Following his advice here would not advance any of the goals he claims to support while doing severe damage to the American economy.

Reduced Strike Penalties. Some conservative critics of AIRR have claimed it would allow air traffic controllers to strike. This is incorrect. Under the legislation, a strike would remain an illegal unfair labor practice. The new agency could go to court to request an injunction to end one, and the union could get decertified if it calls a strike. However, government unions will engage in illegal strikes when they think they have the leverage to extract concessions (as the recent Detroit public schools “sickouts” demonstrate). The question is what penalties strikers face. Under current law, the president can fire striking federal employees and bring in replacements—as President Ronald Reagan famously did to end the 1981 air traffic controllers strike. Moving the air traffic controllers to a quasi-private corporation would mean the president could no longer intervene to end a strike by firing the strikers.

Here Sherk is dialing back a bit on the demonstrably false claim made by some anti-union critics of air traffic control reform that the AIRR Act would grant controllers the right to strike. If one reads the bill, it obviously does not. However, his claim that the reforms reduce the penalties for striking are still wrong.

The ultimate goal of management, and most likely outcome, in the event of a controllers’ union strike would be court-ordered decertification of the union. However, Sherk says he is concerned that decertification would take too long and the ATC Corporation would be unable to fire striking employees until the court rules, likely months after the initial illegal strike action.

Yet, he cites no provision of federal law that prevents management from firing striking employees. In fact, as I’ve noted repeatedly and as Sherk cited last week, Section 90703 of the AIRR Act extends 5 U.S.C. Chapter 71 to the ATC Corporation. This also includes 5 U.S.C. § 7106(a)(2)(D), which makes clear that federal law does not limit the ATC Corporation’s ability “to take whatever actions may be necessary to carry out the agency mission during emergencies.”

Under Section 7106 of the Civil Service Reform Act, courts have upheld agency management rights to compel employees to return to work regardless of leave status during an emergency (Bangerter v. Dep't of Transp., F.A.A., 16 M.S.P.R. 670 (1983)), discipline employees (Patent Office Prof'l Ass'n v. Fed. Labor Relations Auth., 26 F.3d 1148 (D.C. Cir. 1994)), demote disciplined employees (Patent Office Prof'l Ass'n v. Fed. Labor Relations Auth., 873 F.2d 1485 (D.C. Cir. 1989)), and fire employees (Bross v. Dep't of Commerce, 94 M.S.P.R. 662 (2003), aff'd, 389 F.3d 1212 (Fed. Cir. 2004)) without consulting a labor organization.

Congress could easily fix these problems. Leaving the current dispute reconciliation system in place—instead of shifting to arbitration—would eliminate most of the labor concerns. The rest would be solved by expressly authorizing the new corporation to fire illegally striking workers—as the federal government can do now.

These changes would enable the new agency to keep labor costs in line. But the Aviation Innovation Reform and Reauthorization Act does not take these steps, and instead increases the union’s leverage. Why?

Probably because AIRR supporters want the National Association of Air Traffic Controllers to support the reforms. They appear to have bought this support by offering the union even more power at the quasi-private agency.

Unsurprisingly, the union has endorsed the legislation. But this legislative payoff sets a terrible precedent for future privatization efforts. A non-trivial portion of the financial benefits of privatization come from eliminating the monopoly power of government unions. AIRR instead strengthens that monopoly power. This would set an expectation that future federal privatization efforts would similarly benefit unions.

As should now be clear to all, Sherk’s reading of federal labor law is severely deficient and his concerns are simply not valid. It makes no sense for free-market supporters of air traffic control reform to waste more time addressing nonexistent problems. We hope the small group of anti-union advocates has tired of unnecessarily opposing real reform.