Public Pensions and Collective Bargaining Rights: Evidence from State and Local Governments

• Date: 01 September 2018
• Published date: 01 September 2018
• DOI: http://doi.org/10.1111/puar.12936

772 Public Administration Review • Septem ber | Octo ber 20 18

Public Administration Review,

Vol. 78, Iss. 5, pp. 772–784. © 2018 by

The American Society for Public Administration.

DOI: 10.1111/puar.12936.

Abstract: An aging workforce and increasing retirement benefits are ongoing problems for states and municipalities.

Unions are often blamed for governments offering too generous pension benefits. This contributes to budgetary pressures

in some state and municipal governments. This article analyzes the impact of collective bargaining on pension benefit

generosity under different economic conditions. The study finds that the impact of collective bargaining on pension

benefits is not consistent over time or across pension plans. Collective bargaining has a positive effect on pension

benefits under worsening economic conditions. Additionally, unions indirectly influence pension benefit generosity

through campaign donations and unionization intensity. The findings suggest mixed impacts of collective bargaining

on different groups of public employees regarding pension contributions. The article concludes with implications for the

role of unions in public financial performance and strategic human resource management during fiscal austerity.

Evidence for Practice

• An aging workforce and increasing retirement benefits are among the most critical issues facing state and

local governments; this article considers the implications of those factors for the role of unions in pension

financing and workforce planning.

• As pension benefits are now codified in state laws and statutes, collective bargaining no longer significantly

influences pension benefits and pension reform decisions. However, state economic growth, the political and

legal environment, and union campaign contribution laws create a difference in the level of pension benefits

between collective bargaining and non-collective-bargaining states.

• The impact of unions on pension generosity varies depending on economic conditions: when the economy

slows down, public employees in states that allow collective bargaining for salaries and benefits generally have

more generous pension packages, and those benefits are better protected.

• Union campaign contribution laws increase pension benefit generosity for all public employees in collective

bargaining states. Unionization intensity raises pension benefits for police in collective bargaining states.

• Collective bargaining does not significantly influence the pension reform decision to change pension

contributions. Legal and political factors, state fiscal health, and unfunded pension liabilities are determinants

of pension reforms.

Public Pensions and Collective Bargaining Rights:

Evidence from State and Local Governments

Trang Hoang

Doug Goodman

University of Texas at Dallas

Althou gh the economy has seen some return

to profitability following the economic

crisis in 2008, many state and local

governments still face budget shortfalls and tax

revenue reductions (Mauro 2012, 637; Schneider

2010, 648). The declines in fiscal resources and the

increases in retirement benefits are significant issues

for organizational financial performance and strategic

public human resource management (Becker and

Huselid 2006; Goodman, French, and Battaglio 2015;

Hays and Kearney 2001). Many states have responded

to these fiscal challenges by reducing personnel costs

and implementing pension reforms to accommodate

the decrease in asset values and the shortage of

pension funds (Seligman 2013). Some governments

have implemented only minor changes in pension

fund structures, while others have implemented major

reforms involving cuts in pension benefits, increases

in employee contributions, and a switch to defined

contribution plans (Snell 2012; Chen et al. 2013).

Calls for public pension reform have been met with

significant resistance from unions that represent

public employees in some states where collective

bargaining is allowed for salaries and benefits

negotiation (Peng 2009, 192). As local and state

governments struggle to balance already tight budgets,

unions are often blamed for overly generous benefit

packages in the public sector (DiSalvo 2010; Freeman

and Valletta 1988; Lewis 1988). However, other

research has shown that unions have no significant

impact on public pension generosity because public

Doug Goodman is professor and

program head of the Public and Nonprofit

Management Program at the University

of Texas at Dallas. He specializes in public

human resource management, public

administration, state and local government,

sustainability, and organizational behavior.

He holds a PhD in political science from the

University of Utah, 2002.

E-mail: doug.goodman@utdallas.edu

Trang Hoang is a PhD candidate in the

Public and Nonprofit Management Program

at the University of Texas at Dallas. Her

research interests include retirement savings

and taxation, public pension, public and

nonprofit financial management, and the

role of unions and diversity management in

public personnel administration.

E-mail: trang.hoang2@utdallas.edu

Research Article