Public Sector Unions – Part 4

The origins of public sector unions in America.

The arguments on favor of public sector unions apply almost exclusively to their role in promoting union member interests, not in promoting the interests of the public at large.  As Mark Zupan writes in his book Inside Job: How Government Insiders Subvert the Public Interest:

There are arguments in favor of public unions. [Daniel] DiSalvo [professor at the City University of New York] reviews them, for example, ensuring labor peace; enabling industrial democracy; providing political representation; reducing power inequalities between employers and workers; improving workers’ compensation; protecting collective bargaining rights; and promoting investment in public goods. DiSalvo concludes that only two of the many claims advance the public interest: ensuring labor peace and promoting investment in public goods such as defense and secure property rights that simultaneously benefit multiple citizens. The others focus on how public unions advance their members’ interests but not the public interest. DiSalvo also argues the benefits from the few claims are too minor to support having public employee unions. That is, benefits from greater labor peace are minimal, and the increased spending on public goods largely has been channeled in ways that do not benefit the public (for example, increased pensions and other fringe benefits often are provided at the expense of reduced services). DiSalvo concludes that the result is a government “That spends more but does less … hardly the sort of broad public provision that liberals champion.”

As Philip Howard describes in greater detail later in his book Not Accountable: Rethinking the Constitutionality of Public Employee Unions, the costs of public sector unions far exceed their benefits to society:

[T]eachers unions, and other public sector unions have built a fortress against supervisory decisions. Political observers rue union power but treat it as a state of nature. No matter who is elected, no matter what their party, they hit a brick wall of union resistance … [T]he abuse of power by public employee unions is the main story of public failure in America—worse even, I believe, than polarization or red tape. It is not possible to bring purpose and hope back to political discourse until, as a threshold condition, elected leaders regain the authority to run public operations … Running decent schools should not be the great challenge of our time. Nor should terminating a cop with a hair-trigger temper, or cutting fat from bloated public programs. Every election, American voters elect new leaders who promise to do these things. They all fail, for one main reason: Elected executives—the president, governors, and mayors—no longer have effective authority over the operations of government. Nor do their appointees. Nor do public supervisors, such as school principals, police captains, and crew chiefs on highway repair teams. Over the past five decades, starting with the legalization of public collective bargaining in the 1960s, public employee unions have progressively imposed restrictions on public managers. Collective bargaining agreements effectively bar the most important management tool—accountability. They also preclude basic management choices—including reassigning personnel and allocating responsibilities for projects. They restrict mundane managerial prerogatives, such as dropping in on a classroom or asking people how to improve things … Reading through the catalogs of union restrictions and entitlements, it seems that unions must have extortive power. How else could they secure restrictions and benefits so one-sided and harmful to the public interest? In fact, public employee unions do have extortive power. For starters, government can’t work without public employees. Government is not like a factory that can be moved elsewhere when labor demands are unreasonable. Also, unlike trade union negotiations, public employee unions have little downside risk with excessive collective bargaining demands—no matter how much unions take from taxpayers and the public good, government can’t go out of business … [P]ublic employee unions have become the elephant in the room of American politics—one of the largest campaign contributors, and also the largest source of campaign workers.

How did this come to be?

As James Madison pointed out, it’s human nature for those in power to make decisions that entrench their power.  Prominent examples of government entrenchment go all the way back to ancient Egypt.  As Mark Zupan writes in his book Inside Job: How Government Insiders Subvert the Public Interest:

History is replete with stories of the decline of mighty empires, states, and cities. On closer examination, their decline reveals the workings of inside jobs through which they were subverted from within by government insiders …  One autocracy where the subversive role played by government insiders is noteworthy but less often popularly noted is ancient Egypt’s New Kingdom. During the New Kingdom, which lasted from the sixteenth through the eleventh centuries BC, ancient Egypt achieved its greatest territorial reach and prosperity. Ruling over this regional ascendancy, the Kingdom’s pharaohs spanned the 18th through 20th dynasties and included such storied names as Amenhotep IV, Hatshepsut, Nefertiti, Ramses II and III, Tutankhamun, and Thutmose III … [T]he growth of the New Kingdom under the 18th dynasty resulted in a sedentary civilization with a large public sector. The pharaoh, deemed to be of divine lineage, oversaw the tribute to the gods which was facilitated by a sizable priesthood that eventually gained ownership of 30 percent of the Kingdom’s lands. The cost of supporting the priests, in addition to the military, was daunting, and it contributed to the shift by Pharaoh Amenhotep IV from worshipping a pantheon of gods to a single sun god, Aten. To further reduce the influence of the established priests, Amenhotep changed his name to Akhenaten and moved the capital from Thebes to Tell-el-Amarna. Successors reversed the changes, however, and Akhenaten was discredited and nearly lost to history. One could say that lower-level government insiders ultimately succeeded in reversing efforts to reduce the degree to which they had captured the political process to pursue their own fortune.

Over 3,000 years later, American President Franklin D. Roosevelt understood that tendency toward government entrenchment and he opposed the creation of public sector unions for that very reason, stating “meticulous attention should be paid to the special relationships and obligations of public servants to the public itself and to the Government.  All government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.”  Interestingly, the biographer of Francis Perkins, President Franklin Roosevelt’s Secretary of Labor during the enactment of the first major federal labor laws, has written that Perkins herself came to have grave reservations about how the federal government’s involvement was playing out with unions, even in the private sector.  As Kirstin Downey writes:

[Franklin] Roosevelt, according to Frances, also quietly opposed the creation of the National Labor Relations Board. “He never lifted a finger to put the act through the Congress,” she said. “He never did a thing… he hoped it wouldn’t pass.” … The new board was viewed as a questionable creation, and many established scholars and lawyers backed away from participation. Frances contacted more than two hundred people to find three for the well-paying jobs. She rejected some candidates because they seemed too emotional to rule dispassionately on labor-management disputes … More a legal scholar than administrator, Madden [the head of the NLRB] set rigid rules that were hard to enforce and easy to criticize. For example, the NLRB ruled that it was an “unfair labor practice” for employers to tell workers they did not want them to join a union. Practically speaking, it was almost impossible for employers to avoid communicating that feeling. Frances understood why the NLRB made the rule. But forbidding employers from expressing opinions sounded like censorship to many observers, including Roosevelt.

Public sector union collective bargaining agreements today often prevent open discussions among government employees and their supervisors.  As Howard writes:

Managing is often treated as an affront, intruding on employee prerogatives. When former Indianapolis mayor Stephen Goldsmith joined the Bloomberg administration as New York City’s deputy mayor, he tried to walk through different departments to get public employees’ ideas on how better to do things. But he was told that would violate the union prohibition on “direct dealing”; any discussion of managerial ideas had to be negotiated with union officials.

Interestingly, public unions continue to push for laws limiting the rights of employers to express their opinions on the subject, most recently in response to a 2018 Supreme Court decision.  As Max Eden writes:

When the Supreme Court issued its Janus decision in 2018, some experts predicted a mass exodus of union membership. Janus struck down union collection of mandatory “agency fees” for teachers who didn’t join on the grounds that being forced to pay for political speech they didn’t support violated teachers’ First Amendment rights. When teachers could save more money by refusing to join a union, experts predicted that many more would opt out. But this exodus never materialized, in large part, as Daniel DiSalvo and Michael Hartney have documented, because 22 (mostly blue) states quickly passed a raft of laws to bolster union organizing and shield them from the effects of Janus. Laws were passed that assured union access to new employees [and] made it illegal for public employers to discourage union membership …

Here's Downey again, writing about FDR’s Labor Secretary, Francis Perkins:

Frances came to believe the NLRB had been influenced from the start by Communists. One key NLRB official, Nathan Witt, was widely believed to be a Communist. The CIO, meanwhile, also became riddled with Communists as [John] Lewis looked for help staffing the newly formed locals. One of his most important new hires was Lee Pressman as general counsel for the CIO. Pressman later admitted that he had been a Communist. Consequently, the businessmen’s fears of Communist agitation had some basis in fact. With little oversight and a strong Communist contingent working inside the NLRB, the board soon came to be viewed as unfair to business. NLRB officials sometimes did little to disguise their jubilation when workers voted to organize … The NLRB, the agency created by Senator Wagner, fell into disfavor with the press and Congress. Even among liberals, it was increasingly viewed as a case of idealism run amok. Indeed, some Communists had worked themselves into key positions and were more interested in promoting chaos than in relieving labor strife.

But as Howard writes in his book Not Accountable:

The big break came with [President] JFK’s Executive Order 10988 in 1962, authorizing collective bargaining in the federal government. The order stated that its aim was to promote the “efficient administration of the Government” and “effective conduct of public business.” But the actual motivation was political, and historians have concluded that the Executive Order 10988 was payback for union support … The early forays into public sector collective bargaining – notably JFK’s executive order 10988 in 1962 – were not accompanied by meaningful analysis of how public sector bargaining would work in practice … The first large state to authorize collective bargaining, New York, did so after receiving a detailed report from an expert committee chaired by University of Pennsylvania law professor George Taylor.

As Howard describes the Taylor Report:

In the strongest terms, and repeatedly, the Taylor Report rejected proposals for compulsory arbitration as both unlawful and an easy way to avoid responsibility.  The Report stated: “There is serious doubt whether [compulsory arbitration] would be legal because of the obligation of the designated executive heads of government departments or agencies not to delegate certain fiscal and other duties … The temptation in such situations is simply to disagree and let the arbitrator decide.” In 1967 the New York State legislature enacted what became known as the Taylor Law, authorizing collective bargaining while ignoring Taylor’s strongest [and repeated] recommendation—to require that contracts be approved by the legislature … American government changed almost immediately when collective bargaining was enacted … The Taylor Law was amended a few years later to mandate compulsory arbitration for broad categories of public safety employees and to allow voluntary agreements for binding arbitration for all other employee categories. … In a 1974 essay, Professor Sylvester Petro excoriated the intellectual lemmings who rushed over the cliff of public sector bargaining. The idea of co-government, he noted, is a version of no government. Public budgets are not abstractions but reflections of complex public trade-offs. Requiring political leaders to appease each union, seriatim, diverts the focus from public goals to union consent. Daily governing choices are also impractical when an official must first satisfy the parochial interests of the union rep: “Whenever a question arises, the two pass jointly upon all the minutiae of daily employment—hiring, firing, layoffs, changes in modes of production, work allocations, merit increases, subcontracting, and so on. When employer agents and union agents are unable to agree on the disposition of the matter in issue, under the usual collective agreement the issue is submitted to an arbitrator or to a board of arbitrators—again jointly chosen.” … [T]he architects of public collective bargaining failed to perceive how public bargaining would work in practice. What happened is that the interests of public unions and political leaders aligned to create a kind of bureaucratic kleptocracy. Campaign support plus bargaining power opened a wide door for mutual advantage.

Howard continues:

[A]s the Taylor Report in New York concluded, “There is serious doubt whether [compulsory arbitration] would be legal because of the obligation of the designated executive heads … not to delegate certain fiscal and other duties.” A labor law treatise by Derek Bok [former President of Harvard University] and John Dunlop explained why: “Arbitrators are seldom equipped to weigh the interests of government employees against the full array of claims on the public treasury. Legislators are elected in a democratic society to make such evaluations of the public welfare and priorities.”

But as so went New York, so went the nation, and public sector collective bargaining became entrenched in the law.

In the next essay in this series, we’ll begin to examine in detail the many negative consequences of collective bargaining by public sector unions.