“[G]overnment negotiators share the goals of unions to increase spending and are able to conceal the full price of bargaining agreements to voters in the form of current or deferred compensation (e.g., enhanced pension formulas and benefits). Governments may resort to debt finance, spending deferrals, or intergovernmental aid, thus enabling the government to increase employment and wages (either current or deferred) for union workers while concealing the true cost to voters.”

Eileen Norcross at Mecatus Center

In 2009, membership in public sector unions surpassed membership in private sector unions for the first time in U.S. history. The growth in public sector unionism is part of a 60-year trend fueled by a decline in private sector union membership and the legalization of public sector unionization. The shift in American labor unionism from a private to a public sector movement has been described as a “structural break” in American labor unionism with implications not for the profitability of firms but for the solvency of governments.²

Public sector unions are able to affect governments‘ fiscal and budgetary policy by exerting influence through the collective bargaining process and through political activity by backing candidates likely to support the union‘s agenda. The effectiveness of these approaches in raising wages, employment, and spending depends on the interaction of collective bargaining laws and the political activity of unions.

In the larger policy debate over the role of public sector unions, there is a tendency to blur the lines between the history and goals of the private sector union movement and those of the public sector union movement, and thereby misunderstand their unique effects. The public sector union movement shares a link to the history and institutional structure of private sector unionism, yet they are also distinct movements, differing in origins, goals, approaches to bargaining, philosophies, and effects.³ These two unionisms operate in different spheres. Private unionism operates as a labor cartel within the market economy and thus affects the profitability of firms, economic growth, the supply of labor, and consumer prices. Public sector unions function as a monopoly provider of labor within a bureaucratic-political realm. Public sector unionism introduces an unelected body into policy-making, thereby undermining the sovereignty of the state.⁴ Public sector employees are able to influence through political lobbying of their “employer-sponsors” or politicians, who may seek to enhance union employment as a means of expanding their constituency.

This study reviews the origins, goals, and fiscal effects of public sector unionism.

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Eileen Norcross is a senior research fellow with the Social Change Project and the lead researcher on the State and Local Policy Project.

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