Public Sector Unions — A Problem?

David Brooks makes the argument that public and private sector unions face different constraints and have different tactics. The advantages of public sector unions results in higher wages and more costly benefits.  The argument is “logical”, but is it true?

That’s because public sector unions and private sector unions are very different creatures. Private sector unions push against the interests of shareholders and management; public sector unions push against the interests of taxpayers. Private sector union members know that their employers could go out of business, so they have an incentive to mitigate their demands; public sector union members work for state monopolies and have no such interest.

Private sector unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with. Through gigantic campaign contributions and overall clout, they have enormous influence over who gets elected to bargain with them, especially in state and local races. via Make Everybody Hurt –

On  the other hand, private sector unions have the advantage of negotiating with profit-earning companies.  Public unions have the disadvantage of negotiating with state executives and agencies that must address multiple needs with scarce tax dollars.

Brooks cites studies that purportedly show that collective bargaining increases state worker salaries by about 5 percent or 6 percent. As he states, “That’s not nearly enough to explain current deficits”.

Even if public sector unions are not the “cause” of current state deficits, the assumption is that unions have contributed to the budgetary crisis in one of two ways: (1) The cost of public union worker wages and benefits are excessive, that is, union workers earn more that their private workers doing similar work.  (2) Public sector unions make it difficult for state governments to modernize bureaucracy to achieve efficiencies and improve effectiveness.

Do public union workers earn more than workers in the private sector?

NYT published data that shows public workers on average earn higher wages, though the data shows considerably variation from state to state:

The clearest pattern to emerge is an educational divide: workers without college degrees tend to do better on state payrolls, while workers with college degrees tend to do worse. That divide has grown more pronounced in recent decades. Since 1990, the median wage of state workers without college degrees has come to surpass that of workers in the private sector. During the same period, though, college-educated state workers have seen their median pay lag further behind their peers in the private sector.

In Wisconsin, for example, the state wage is 22% more than in the private sector. However, 60% of state employees have college degrees, a much higher percentage than in the private sector.  A recent paper that examined compared pay in the private and public sectors concluded:

In contrast to several prior studies by economists, we find little evidence that SLG (state and local government) employees are overpaid. Holding constant education, estimated work experience,occupation, location, race, and gender, SLG employees earned 4 to 6% less than comparable private sector workers in 1990, 2000, and 2005-06….

The argument in the court of public opinion is less about wage differences that about the benefits public employees receive. Benefits receive by public workers are unheard of in the private sector, or have been taken away in the private sector.  Public sector job security, shorter work hours, increase vacation and holidays time, early retirement options, and generous health care benefits are the source of both envy and resentment.  More on this in the next installment.

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2 Responses to Public Sector Unions — A Problem?

  1. A Yellow Dog Democrat says:

    If you are sad about the present state of union bashing by white republican men and women who are prostitutes for really rich people, it’s hard to see a silver lining in any of the bad anti-worker behavior going on. And yes, it is anti-worker behavior, and not just anti-union behavior.

    However, there is one piece of good news in this: David Brooks is not a teacher, teacher’s aide, school bus driver, bridge inspector, police officer, claims examiner or in any other position of public employment. If he brought the lack of intelligence in the quote from William Henry’s blog below to his job, he might hurt or kill himself or someone else in the public work place.

    Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with. Through gigantic campaign contributions and overall clout, they have enormous influence over who gets elected to bargain with them, especially in state and local races

    Which public manager has an incentive to give into unions? We who are real public managers as opposed to liberals or conservatives who have never managed anything do not give into the bigotry of low expectations for our co-workers and employees. We push them as much is possible. If Brooks’ managers are employees in New York State, they are violating that State’s Public Officer’s Law and certainly every other state has such laws – – unless Republicans just care about money and not good public management and ethics.

    So what about the money. Unions put people and money into politics. Businesses do, too. In New York, it would be possible to sell wine and liquour for less if it was sold in supermarkets, a good old Republican principle. But surprise, surprise, each year the legislation dies because of a “special interest” called liquour stores.

    I live in a suburban district. Lots of my Glen Beck and Rush Limbaugh friends complain about the taxes and the teacher salaries. I never have seen them at a meeting or never was asked by one of them to vote for them in a school board election. If you just bitch, then the other side wins.

    • I agree that the attack on public unions in the name of combating budget deficits fails to acknowledge the tax and budget effects of business lobbyists. It would be interesting to calculate this cost.

      Although Wisconsin may ultimately prove me wrong, Republicans have very effectively pitted public union workers against nearly everyone else around an issue of “fairness”. If we accept the claim that public sector benefits are “substantially” higher than private sector benefits, is it “fair” to require Wisconsin citizens to provide “extraordinary” benefits to public union workers? Is it fair to provide these benefits during a period of budget cuts?

      I have heard the argument that the unusually high benefits for public union workers is a result of giving up wage increases for future benefits. Ironically, rather than demonstrating the power of labor unions, the tactic shows the weakness of sacrificing real money for future benefits that cannot be easily sustained.

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