Public-sector unionism is a bad deal for America: state and local lawmakers would best serve the interests of the majority of their constituents by avoiding public-sector collective bargaining. Short of that, they need the ability to drive a harder bargain.

• Author: Bellante, Don
• Position: Economics

RATES OF UNIONIZATION in the U.S. today are at historic lows. According to the Federal Bureau of Labor Statistics, union membership stood at 12.4% of the nation's workforce as of the end of last year and is unlikely to rebound. However, there is one sector in which organized labor is growing in strength: government. This has severe implications for the future of public finances for state and local governments across the nation, and for the nature of organized labor itself.

High rates of unionization in the public sector have led to very high labor costs in the form of generous collective bargaining contracts. Now state and local governments are under increasing financial pressure, as a worsening national economy has led to decreased revenues for states and municipalities--many of which remain locked into the generous contracts negotiated in more flush times. Thus, as businesses retrench, governments find themselves in a financial straitjacket. In addition, as government unions grow stronger relative to private-sector unions, their prevalence erodes the moderating influence of the market on the demands that unions make of employers.

Now, as an economic downturn threatens state and local government revenues, officials who want to keep their fiscal situations under control would do well to look at public-sector bargaining skeptically--especially since the existing political checks on it have proven ineffective. Public officials should eschew public-sector bargaining when possible or, at the very least, seek to limit its scope.

As keepers of the public purse, legislators and local council members have an obligation to protect taxpayers' interests. By granting monopoly power to labor unions over the supply of government labor, elected officials undermine their duty to taxpayers, because this puts unions in a privileged position to extract political goods in the form of high pay and benefits that are much higher than anything comparable in the private sector.

Unionization of government employees creates a powerful, permanent constituency for bigger government--one that is motivated, well-funded, and organized. Unlike businesses, governments face little incentive to hold down labor costs. Politicians and bureaucrats, however, do have an incentive to gain public approval in order to secure their positions. Many public-sector employees are employed as police, firefighters, and paramedics--public services that people genuinely want and need, while many others are administrative bureaucrats whose work is not as visible to the public. Thus, when the workers who provide those services are unionized, government officials have a strong incentive to give unions what they want, rather than risk incurring the public's wrath through the disruption of those services because of strikes. As long as public services continue to function, the public has little incentive to pay attention to the cost. This means that public-sector unions end up getting most of what they ask for, while taxpayers foot the bill. In time, of course, such profligacy catches up to local governments--but by the time they seek to curb costs, it often is too late to avert financial disaster.

Some states and municipalities especially are squeezed by the fact that, during the 1990s boom years, they had even less incentive than usual to control their own labor costs because they collected increased tax revenues. Now that those boom times have come to an end, those years of profligacy threaten to create severe problems for state and local government finances--and for the taxpayers.

In the late 1950s, union membership as a percentage of the private-sector workforce began to decline; the shift from private- to public-sector unionism had begun. In 1959, Wisconsin became the first state to enact compulsory public-sector bargaining legislation. Since then, the Federal government and most states have instituted compulsory public-sector bargaining schemes. In 1958, when the Bureau of Labor Statistics first began keeping track of public-sector union membership as a distinct category, there only were 1,035,000 government-employee union members, or 12% of a workforce of about 8,500,000. Between 1958-2008, public employment grew by almost 250% and government-employee union membership increased by more than 750% to 7,800,000. In 2008, 36.8% of the government workforce was unionized. That nearly is five times the rate of union membership in the private sector (7.6%), down from a high of almost 36% in 1954.

Public-sector unionization is greatest at the local level, where the unionization rate was 42.2% in 2008. 'This group," notes BLS, "includes many workers in several heavily unionized occupations, such as teachers, police officers, and firefighters." Of course, while these 'heroic" public servants are the ones who are most visible in public disputes over collective bargaining, a large number of unionized state and local employees fall into more mundane categories such as secretaries, middle managers, engineers, administrative law judges, school custodians, and cafeteria workers. According to BLS data, there were 17,800,000 state and local government employees, both full time and part time, in the U.S. in 2008-6,200,000 state and 11,600,000 local employees. Federal nonpostal employees can unionize under the supervision of the Federal Labor Relations Authority, set up as part of the Civil Service Reform Act of 1978.

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Union density in the public sector has been fairly constant since 1983, even as private sector union membership has continued to decline steeply. This lowers the total union density despite the high membership numbers in government employment. This transformation is impacting the internal structure of organized labor in America. Despite the fact that only one in six jobs is in government, more...