Public Employee Collective Bargaining: Bad Policy for North Carolina

Both the House and the Senate are currently considering legislation that would overturn the state’s ban on collective bar- gaining for public employee unions. Extending collective bargaining rights to state employees and teachers will cost the state more money, create inflexible labor contracts, and cede decision-making power for setting employment policy from the General Assembly to unions.

Unions are formed to represent its workforce. Often the demands they make are not in the best interest of the state — or in the case of the teachers’ union, North Carolina’s children.

Public Sector Collective Bargaining is Not the Same as in Private Sector

While labor unions will attempt to draw a parallel between public and private sector collective bargaining, there are dis- tinct differences between the two.

In private sector collective bargaining, a union cannot be overly aggressive in its contract demands or work stoppages be- cause it runs the risk of financially harming or bankrupting the corporation it is bargaining with. Private sector unions must at least moderate their demands of what they claim is best for employees in light of the well being of the employer. No such balance exists in the public sector where unions know that the government can go out and raise as much revenue as needed (through taxes) to meet the demands of union leaders. Likewise, unions don’t have to submit their demands to voters and so are not as vulnerable to public opinion as are state officials.

As The Mackinac Center for Public Policy puts it: “Unlike consumers in the private sector, taxpayers cannot easily ‘vote with their feet’ to choose a better service provider. Public sector unions, therefore, experience little external pressure to moderate their demands. This is one reason why the salaries and benefits of government employees are often higher than those of employees performing comparable work in the private sector.”1

In the private sector, consumers have a choice of where to purchase a product. If a unionized company has higher prices, consumers can choose to take their business elsewhere. In the public sector, no such choice exists. Taxpayers cannot choose to go to lower-cost public schools or drive on lower-cost roads, but consumers can choose to buy a less expensive car — say a Toyota — manufactured in a state – such as Mississippi — that does not allow collective bargaining. But if the state’s ban on collective bargaining is lifted everyone will be forced to use higher-cost unionized government services.

The Factory Model — No Differential Pay

Most unions push for the “factory model” of collective bargaining agreements where all employees are treated equally in terms of salary and benefits. This model places the interests of all employees over the interest of each individual employee. Thus, all employees are paid on a similar salary schedule according to the same guidelines — often, educational attainment and years worked — regardless of competence.

If collective bargaining rights are granted, it is safe to assume that proposals for merit based pay or any type of differential pay for performance will be difficult, if not impossible, to enact. Observes the Hoover Institute: “Unions don’t want decisions about pay, promotions, assignments or transfers to be based on performance. As they see it, performance evaluations create uncertainty for their members, force members to compete with one another, and put discretion in the hands of superiors.”2

Likewise, a report by Harvard’s Kennedy School of Government argues that collective bargaining restricts efforts to use compensation as a tool to recruit, reward and retain the most essential and effective teachers, and impedes attempts to assign or remove teachers on the basis of fitness or performance.3

Higher Costs for Taxpayers

There is little argument that collective bargaining will bring about higher costs for taxpayers. According to research by the State Employees Association of North Carolina, collective bargaining increases salaries for state and local government employees by 5 to 6 percent. With every percentage increase in salary costing taxpayers approximately $107 million, collec- tive bargaining could cost taxpayers over $500 million per year.

Collective bargaining will force pay increases for state employees and teachers to become mandatory expenses, much like entitlement programs. If pay increases are set year-to-year in a contract, they must be paid first, before any other spending is allocated to other projects. This reduces the state’s flexibility to reduce spending in times of an economic downturn and will lead to even more calls to raise taxes to fund the resulting shortfall.

FOOTNOTES

1. La Rae Munk, “Collective Bargaining: Bringing Education to the Table,” (1998); available from http://www.mackinac.org/archives/1998/S1998-04.pdf.
2. Terry Moe, “A Union by Any Other Name,” (2001); available from: http://www.hoover.org/publications/ednext/3384186.html
3. Frederick Hess and Martin West, “A Better Bargain: Overhauling Teacher Collective Bargaining for the 21st Century,” Harvard University, Kennedy School of Government. 2005.