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OpenMarket: Government Unions

  • Labor Policy Developments to Watch in the New Year

    January 22, 2016 12:39 PM

    Labor policy reform was a fast-moving issue during in the past year. At the federal level, labor policy became more tilted in favor of union organizing, while state reform was a mixed bag.

    The National Labor Relations Board changed how union elections are conducted, made determining who your employer is a tough question, and made company email systems a union organizing tool.

    Outside the Beltway, Wisconsin became the 25th right-to-work state, giving workers the right to forgo paying union dues to a union they disagree with. Major cities around the country approved $15 minimum wages, including Seattle and Los Angeles.

    The coming year looks to continue rapid pace of labor policy changes. While 2015 was the NLRB’s year, it looks like the DOL is going to take the reins in 2016.

  • Union Subsidy Eliminates So-Called "Free Rider" Problem

    January 6, 2016 1:29 PM

    On January 11, the U.S. Supreme Court will hear oral arguments in Friedrichs v. California Teachers Association, a case that could provide right to work protections to state and municipal employees across the nation—meaning public employees cannot be required to pay dues to a union or risk being fired.

    At issue is whether government employee unions should be to compel non-members to pay “agency fees,” which cover the costs of collective bargaining, as a condition of employment, in lieu of dues. The current forced dues precedent was established under the 1977 Supreme Court case, Abood v. Detroit Board of Education.    

    This case is all about worker freedom. No worker should have to pay money to any organization in order to keep his or her job—especially inherently political organizations like government unions.

    It is also about the rights of voters and taxpayers. Many outcomes of collective bargaining should up to elected officials. Negotiations between unions and state and local government officials should not determine whether public funds go toward contributing to public employee pensions, other municipal needs, or necessitate the raising of additional funds. Those decisions should be left exclusively to elected officials, not private organizations like government unions.

    Further, a large number of public employees who are forced to pay dues never had a chance to vote on whether they desired union representation in the first place. Research finds that most public employees never voted for the union that represents them and collects dues from them. As Heritage Foundation labor policy analyst James Sherk notes, “Fully 99 percent of the teachers in Florida’s largest school districts had no choice about being represented by their union.”

    Labor unions contend that they need to collect agency fees because non-members still benefit from collective bargaining, contract administration, and grievance procedures. Therefore, union officials claim that if they were not allowed to compel non-members to pay agency fees, those workers would be “free riders” who benefit from union representation.

    This is a bogus argument for two reasons.

  • Will SCOTUS Friedrichs Case Lead to Member-Only Unions?

    January 5, 2016 8:25 AM

    Government employee unions have a lot at stake in Supreme Court case, Friedrichs v. California Teachers Association—especially access to millions of dollars in compulsory “agency fees” from non-members. Worried about the Court ruling for the plaintiff, some union leaders and left-leaning pundits are considering their options.

    One possibility is member-only unions, explored in a November 2015 Century Foundation paper, which notes the advantages for individual union members when unions try to attract them, rather than corral them through compulsory agency dues.

    “One benefit to the members-only approach is in order to survive, these unions must be built upon activism, involvement, and democratic governance,” note authors Moshe Z. Marvit and Leigh Anne Schriever. “Further, in order to remain in existence, a members-only union must keep the membership engaged, educated, and active.” (p. 9)

  • In Friedrichs v. CTA, Supreme Court Can Strike a Blow for Free Speech

    January 4, 2016 4:47 PM

    Oral arguments in one of the most important Supreme Court labor cases in years are set for January 11, with potential major implications in the one area where unions remain strong—government work.

    The case, Friedrichs v. California Teachers Association, was brought by a California school teacher who objects to paying for representation she doesn’t want to an organization that pushes a political agenda she doesn’t support. The plaintiff, Rebecca Friedrichs, seeks a remedy to unions’ ability to compel non-members at a unionized workplace to pay for union representation.

    Unions collect those non-member payments, known as “agency fees,” in lieu of full-fledged union dues, supposedly to address what they call the “free rider” problem of the union having to represent non-members.

    In the realm of government employment, the Supreme Court tried to address this by requiring non-members to pay the union only for the expense of representing them, not for politics or other purposes, in its 1977 decision in Abood v. Detroit Board of Education.

    However, collective bargaining between a government entity and a union is inherently political because it involves making public policy decisions through the allocation of government funds. As the Friedrichs cert petition notes, “Such spending necessarily requires either spending less on other public programs or raising additional public revenues—either of which is an important public issue.” (p. 17)

  • Workers Deserve Labor Law Reform

    September 4, 2015 2:30 PM

    Unions use Labor Day as an occasion to remind workers of their past good deeds and deploy their usual rhetoric claiming to have workers’ best interests at heart.  

    In theory, labor unions represent workers in order to secure better working conditions and compensation, but unions don’t always work that way. Unfortunately, unions always negotiate one-size-fits-all contracts that make them the sole representative of those workers. Besides bargaining for contracts that are not responsive to all workers’ needs, labor unions commonly advocate for more coercive power that harms worker rights.

    Unions use their vast political funds to advance legislation and regulation that keep in place an outdated system of exclusive representation where workers lose autonomy in contract negotiations at organized workplaces—ensuring that individual workers have no right to negotiate with management over working conditions, pay, or benefits.

    And if workers take issue with a union’s inept collectively bargained contracts or political activity that does not align with their beliefs, unions commonly resort to using intimidation tactics that keep workers under their control and political clout to advance public policy that does the same.

    Unions have access to employees’ personal information available to them through the new ambush election rule, which compels employers to provide employees’ contact information to union organizers, including personal cell phone numbers, email addresses, and work schedules—without an opt-out provision for those who prefer not to share their personal data.

  • Democrats vs. Government Unions

    December 29, 2014 2:22 PM

    If late House Speaker Tip O’Neill’s famous saying that all politics is local has a corollary, it may be that politics is at its most substantive at the local level. While the people’s elected representatives in Congress—many from safe districts—trade ideological barbs, state and local elected officials often have to deal in the language of dollars and cents, as they weigh policy decisions that directly affect their constituents.

    That in turn creates different conflicts than those found on Capitol Hill. And nowhere is that more visible than in the growing conflict between state and local Democratic elected officials trying to put their governments’ finances in order. As the Manhattan Institute’s Daniel DiSalvo explains:

    Public sector unions create a genuine political conundrum for Democrats. On the one hand, they are genuinely powerful, and Democrats rely on their money and manpower during elections. Teachers unions, AFSCME, and SEIU are among the biggest donors to Democratic candidates and are organizationally braided into the party apparatus. However, public employee unions drive up government costs and depress productivity, weakening the state’s capacity to assist the poor and middle class.

    There’s the rub. Insofar as public unions secure for their members better pay, more generous benefits, and work rules shielding them from management discretion government doesn’t perform as well—and, consequently, neither do Democrats. Therefore, some Democrats are under pressure to take policy actions their union allies oppose. But taking such action puts them at odds with the most powerful and best-organized segment of their coalition.

    How does it happen that citizens of modest means suffer as public sector unions gain? A big part of the problem is that many states and cities have been providing more public services and promising to pay for them later by back-loading public employee compensation into retirement. And as the share of state and local budgets devoted to public employee pension and health benefits increases, the latter “crowds out” government spending on parks, education, public safety, and other services on which the poor and middle class rely. Democrats find themselves in the difficult position of defending governments that spend more but do less.

    This conflict has been brewing for some time, as my colleague Trey Kovacs and I outlined three years ago, and the rift between government unions and pragmatically-minded Democrats only keeps growing wider, as pension underfunding has grown worse.

    For more on pension reform, see “Best Practices for Reforming State Employee Pensions.”

  • CalPERS: It Came from Sacramento

    October 7, 2014 9:41 AM

    “Heads I win; tails you lose.” That essentially sums up the relationship the California Public Employee Retirement System (CalPERS) has long enjoyed vis-à-vis the Golden State’s elected officials. Now it is finally facing a serious challenge.

    Last week, a federal bankruptcy judge ruled that cities must treat bondholders and pensions in like fashion. Judge Christopher Klein of the Eastern District of California said he would decide by the end of October how to apply the ruling to the bankruptcy of the City of Stockton, but it seems unlikely that pensions will escape cuts altogether, while bondholders are forced to take haircuts. 

    As The New York Times reported on the case:

    Calpers is a powerful arm of the state, with statutory powers that include liens allowing it to foreclose on the assets of a city that fails to pay its pension bills.

    Calpers had argued that if Stockton stopped making payments and dropped out of the state pension system, the lien would let it claim $1.6 billion of its assets. But Judge Klein said those statutory powers were suspended once a California city received federal bankruptcy protection.

    “Why should I take that lien seriously?” he asked a lawyer for Calpers, Michael Gearin. “I may avoid it as a black-letter matter of bankruptcy law,” he said, referring to well-established legal principles.

    He did not dispute that Stockton would be billed $1.6 billion to leave Calpers and said such a termination fee “can be seen as a golden handcuff.” But in bankruptcy, he said, Stockton could legally refuse to pay the bill because it arose from the city’s contract with Calpers, and contracts are broken routinely in bankruptcy.

    “The bankruptcy code provides that the lien can be avoided and be treated as an unsecured claim,” Judge Klein said.

    Judge Klein also said that Stockton had many options other than Calpers for retirement benefits: a private provider, like an insurance company; a multiemployer pension plan affiliated with a union; one of California’s county-run pension plans; or it could even offer no pensions at all.

  • Moody’s $2 Trillion Public Pension Shortfall Estimate Highlights Need for Better Pension Accounting Practices

    October 1, 2014 11:12 AM

    In a new report, Moody’s estimates the nation’s largest pension funds face a $2 trillion taken together. That’s a lot of money. But as significant as the size of the deficit is Moody’s criticism of how many pension funds have been managed, and pension fund’s reporting of their own liabilities. Bloomberg reports:

    “Despite the robust investment returns since 2004, annual growth in unfunded pension liabilities has outstripped these returns,” Moody’s said. “This growth is due to inadequate pension contributions, stemming from a variety of actuarial and funding practices, as well as the sheer growth of pension liabilities as benefit accruals accelerate with the passage of time, salary increases and additional years of service.”

    In other words, for years, many public pension plans have determined their contribution levels using discount rates based on overly optimistic projection on investment returns. That in turn, has led to pension plans using riskier investment strategies in search of higher yields—a strategy the California Public Employee Retirement System recently abandoned in the case of hedge funds.

  • Study Proves Economic Harm of Collective Bargaining

    July 30, 2014 4:12 PM

    A new CEI study by economist Lowell Galloway and public policy expert Jonathan Robe demonstrates the harmful economic effects of unionization on a state-by-state basis.

    Among the states most adversely affected by unionization, Michigan has suffered the most with a 23.1 percent loss in real per capita income because of unionization since 1964. Michigan is the latest state to abandon forced unionism by passing a right to work law, and Michigan workers are probably kicking themselves for not passing one sooner.

  • Obama Claim Spurious; Labor Unions Furious; New Ranking Curious

    July 28, 2014 9:55 AM

    Coauthored with Alex Bolt.

    President Barack Obama spuriously claimed, "These so-called right-to-work [RTW] laws, they don't have anything to do with economics," when he futilely attempted to thwart Michigan’s enactment of a right-to-work law.

    A new study by the Competitive Enterprise Institute demolishes Obama’s spurious claim by showing how RTW laws, which free workers from a mandate to join a union in order to be employed, benefit states.  RTW laws produce better income, population, and job growth than in forced-unionism states.

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