Do Public Sector Unions Drive States Into Bankruptcy?

The Senate's Public Safety Employer-Employee Cooperation Act (S 3194), which I discussed briefly the other day, seeks to prohibit state governments from restricting collective bargaining by public sector unions.

Currently, 21 states restrict, to varying degrees, the power of public employees to unionize. This bill would abridge those states' rights and complete a trend that began in the 1960s, when many states passed laws exempting civil servants from court rulings that generally prohibited public sector unionization. Effectively every state would end up with an organized public sector. In a letter to the editor, Lake Wales, Florida resident Brigitte Fell explains the imposition this would place on state governments:

It would direct local governments to recognize the employees' labor union; require local government to collectively bargain over hours, wages, and the terms and conditions of employment other than pensions; require states and municipal governments to establish an impasse resolution process; require that state courts enforce the rights established by this mandatory collective bargaining bill; and direct every state—even if that state currently recognizes employee-collective-bargaining rights—to conform to federal regulations around mandatory collective bargaining within two years of the bill's effective date, without regard to state or local laws.

The bill is called "reasonable" by one of its six Republican supporters, Nebraska Sen. Mike Johanns, because it would prohibit public sector strikes and require arbitration of deadlocked contract negotiations. But this codicil does not address the more important objection to an organized public sector—not that state workers will strike but that they will amass unique lobbying power. (And unlike private sector lobbyists, they draw all their money and power from the taxpayers—an essential unfairness that puts the whole universe of public sector unions in bad odor.) This in turn makes it exceedingly difficult for a state to say no to budget-busting benefits packages, as we have seen in California, Illinois and New York, to name a few.

The National Review's Reihan Salam condemns the bill, and notes that Fairfax County in Virginia (where collective bargaining by public employees is prohibited) is in better fiscal shape than Montgomery County, Maryland (where it is only partially restricted).

But is the relationship really that simple? In its article on S 3194, the Wall Street Journal maps out the 21 right-to-public-work states:

It would be tempting to say that these states are performing relatively better in budgeting than the other 29. But it would be true only in the case of Arkansas, which according to the liberal Center on Budget and Policy Priorities is one of only four states not facing a deficit in 2011. The other three all allow the kind of public sector unionization the bill would force on all 50 states.

Far from correlating with fiscal thrift, restrictions on public sector collective bargaining may have little effect on deficits. The 21 states above include (again using CBPP's figures) some of the most mismanaged state budgets in the country. Colorado is looking at a shortfall of 21 percent of its fiscal 2011 budget, Georgia 26 percent, South Carolina 26 percent and Arizona a whopping 37 percent.

Is it different for states that completely bar collective public employee bargaining? Apparently not: Virginia, one of two states that prohibits bargaining entirely, has a relatively manageable 9 percent budget gap—but North Carolina, the other one, is looking at a massive 30 percent shortfall.

As I noted the other day and will reiterate in an upcoming print column, S 3194 is still a bad bill. It is on shaky ground in federalist terms. (How is hiring a DMV drone interstate commerce?) And the danger from public sector unions is not only that they lock in impossible benefits packages but that they interfere at all levels of the political process. That political power may not hinge on the presence of collective bargaining rights: While it has no bargaining power, the Virginia Education Association nonetheless includes "advocacy" among its duties.

The results from the 21 states that curtail government-worker unionization indicate the presence of government-worker bargaining is not sufficient cause for a huge deficit. But it's unlikely that forcing states to allow public unionization would have no effect on deficits: Illinois, with more than a 50 percent budget gap (by far the highest percentage gap in the country), also has an exceptionally vigorous public employee movement. That's the worst of both worlds, and all states may get to experience it if PSEECA passes.