Undermining or Promoting Democratic Government? An Economic and Empirical Analysis of the Two Views of Public Sector Collective Bargaining

There are two divergent views on the role of public sector collective bargaining in American law. The first, and generally older, view is that public sector collective bargaining undermines democratic government, allowing organized employees to interfere with the administration of the law for their own personal benefit at the expense of the general population and taxpayer. Under this view, courts have characterized public employee union membership as "disloyal," "inimical to proper discipline," "inefficient," and "detrimental to public welfare" to rationalize the enforcement of public sector yellow-dog contacts and discriminatory discharges. On the question of whether legislatures can either allow or prohibit public sector collective bargaining, judges adhering to this negative view of public sector collective bargaining have found that it is an unconstitutional interference with freedom of contract or an unconstitutional delegation of legislative power. The second view is that public sector collective bargaining is an essential part of our democratic government. Under this view, collective bargaining is a fundamental human right included in our cherished constitutional rights of free speech and association, and an essential counterbalance to corporate interests in a pluralistic society. Supporters would argue that, on the whole, public sector collective bargaining improves democratic outcomes and government administration by giving workers a voice in the outcome. Public sector unions represent important public policy interests in collective bargaining and legislative lobbying and act as a check on government monopsony power in employment. These countervailing views of public sector collective bargaining find representation, not only in legal doctrine and opinions, but also in the public policy and economic arguments surrounding this debate. The detractors argue that unions are merely "labor cartels" that are both inefficient and inequitable, raising wages and benefits at the expense of consumers and taxpayers and imposing inefficient and inflexible work rules. Public employee collective bargaining is doubly bad because it often exploits a government monopoly on services and gives public employee interests an elevated status in public policy debates. These views have found ready representation in the recent debates over legislation to prohibit or restrict public sector collective bargaining in Wisconsin, Ohio, Indiana, and other states. The proponents of public sector collective bargaining argue that public employee voice in the provision of government services is valuable and improves the provision of government services and administration of the law. Public sector unions represent important public policy interests in collective bargaining and legislative lobbying and act as a check on narrow taxpayer interests and government monopsony power in employment. Moreover, unions, in both the private and the public sectors, foster a healthy middle class, promote greater equality in the distribution of income and wealth, and promote the representation of the views of workers in legislative debates. Many of the broader claims of these two views are subject to empirical analysis. One of the points of public sector unions is to raise employee wages and benefits over what they would have been in the absence of a union; but are they raised above comparable levels in the private sector at the expense of taxpayers, or do they promote comparable wages that attract good public servants and long-run administrative interests rather than short-term budget cutting interests? Do public sector unions impose work rules and restrictions that interfere with the provision of government services, or do they provide an employee voice that improves government services and the administration of the law? In this essay, I will present an outline of the economic arguments both for and against public sector unions, and the empirical evidence supporting or refuting those arguments. My intent is to provide an empirical context for the larger debate regarding public policy with respect to public sector collective bargaining and the larger constitutional debate over this institution.