WINGATE — As Wisconsin and other states come to grips with massive budget shortfalls, and protesters seek a voice in the painful process of spending cuts, we find ourselves questioning the role of public sector unions today.
Look at the basic structure of public vs. private unions. At the core of their collective goals, unions are trying to advocate for the rights of their members, but this is where the similarity ends. Public sector unions are bargaining over tax dollars, so there is little discipline or limitation for what they can bargain. Private unions are faced with a very different situation. They are simply trying to attain a share of the corporate profits, and their bargaining power exists only if they produce a product that consumers want. Public unions negotiate with those who they help elect to ensure they receive above average pay compared to the private sector.
Take the current bargaining dispute between the NFL players and owners. Each party walks a fine line because if consumers get fed up with their haggling, and stop purchasing tickets and merchandise, neither side will get a slice of the $9 billion industry. Or consider the United Auto Workers in Ohio and Michigan who are no longer employed because General Motors had to restructure and close over 14 production facilities.
Public sector unions try to explain their plight in terms of basic rights. Yet there is no basic right to negotiate with monopoly power extracting resources from a democratically elected government. For the teacher union in Wisconsin, collective bargaining means that those who supply their labor to the public school system essentially can fix their wages and benefits and force all workers to join the union (or pay not to join). As one commentator put it, it’s equivalent to all airline companies meeting to fix ticket prices and capacity — obviously a practice that would swiftly be stopped under antitrust law.
These unions essentially are claiming they have an unqualified right to bargain for more taxpayer funds. In Wisconsin, the average public school teacher earns approximately one-and-a-half times what the average American worker earns. Should they have the right to bargain for higher wages, improved pension programs, and additional worker benefits without any market discipline? The problem is there is no “fair” way to set up a public sector union to incorporate a mechanism for compensating workers without appealing to political patronage. The recent headlines in Wisconsin are a prime example of this problem.
Public sector employee unions should not have an unchecked ability to extract tax dollars from the state budget for their own well-being. They simply shouldn’t have the right to bargain for more taxpayer dollars without any accountability.
Liberal legislators who are “fighting for working families” clearly don’t see this side of the argument. The transactions costs would be high, but why not put a salary or pension increase to the voters each time a public sector employee asks for more funds? No one is hoping for this outcome, but it does reveal the absurdity of unmitigated bargaining power. How many Americans have the ability to negotiate for the salary they desire, and the ability to bind their employer with unqualified monopoly power on the supply of their labor?
At its core, the debate over public sector union power is a debate over the public vs. private provision of goods and services. The matter doesn’t center on some opposing moral issue of giving workers what they deserve vs. stripping school teachers of a dignifying wage.
Americans must come to grips with an imperfect system of deciding what government workers rightfully earn as they educate children and police our streets, while public sector unions must consider the reality that most of us rely on market forces and the desires of consumers to determine our bargaining power.
Dr. Peter Frank is the Free Enterprise Fellow in the newly created Jesse Helms Center Fellows Program. Frank is also an Associate Professor of Economics and the chair of the BB&T Program on the Moral Foundations of Free Enterprise at Wingate University.