Moving From Ideology To Evidence In The Debate About Public Sector Unions

Posted by on January 18, 2013

Drawing on a half century of empirical evidence, as well as new data and analysis, a team of scholars has  challenged the substance of many of the attacks on public employees and their unions –urging political leaders and the research community to take this “transformational” moment in the divisive and ideologically driven debate over the role of government and the value of public services to deepen their commitment to evidence-based policy ideas.

These arguments were outlined in “The Great New Debate about Unionism and Collective Bargaining in U.S. State and Local  Governments,” published by Cornell University’s ILR Review.  The authors – David Lewin (UCLA), Jeffrey Keefe (Rutgers), and Thomas Kochan (MIT) – point out that, with half a century of experience, there is now a wealth of data by which to evaluate public sector unionism and its effects.

In that context, the authors spell out the history, arguments and empirical findings on three key issues: 1) Are public employees overpaid?; 2) Do labor-management dispute resolution procedures, which are part of many state and local government collective bargaining laws, enhance or hinder effective governance?; 3) Have unions and managers in the public sector demonstrated the ability to respond constructively to fiscal crises?

The issue of public/private compensation is more complicated than it seems, since there are many public employee occupations – police officers, firefighters, public school teachers – for which there is no private sector equivalent. The accepted solution, called the “human capital” approach, is used by the authors to determine appropriate “public-private total compensation comparisons.” They also dive into the weeds of researcher disagreement, including efforts to “introduce occupational controls” into the mix and identifying the relevant wage-related variables to be included in the human capital equation, such as union membership, education and skills, organizational size, health care, pension benefits, and job stability.

The paper notes that there is a “broad, scholarly consensus” that most public employees are “undercompensated” relative to their private sector counterparts, although the difference is modest and varies by state and occupation. (This issue also has been covered on Shanker Blog on a number of occasions; see here, here and here as well.)  The authors review earlier findings and, in a careful, technical analysis, conclude that most public sector workers earn less in wages plus benefits than do private sector workers who are similar in terms of education, organization size, etc. At the very least, the standard argument that public employees are overpaid is not supported by the evidence.

Less high profile, but crucially important to the public employee wars, is the theory that unionized public employee unions, absent the “discipline” imposed by a strike deadline (public employee strikes are often banned), lack the incentive to come to swift agreement. In this view, mandatory arbitration can produce an inefficient and ultimately costly “narcotic effect” on negotiations.  Lewin, Keefe and Kaufman argue that these fears are overblown. Indeed, according to the authors, the rate of disputes settled through arbitration has declined to less than 10 percent over the years, while mediation has proven to be “remarkably effective” in bringing all parties to voluntary agreement.

Another hot button issue is, of course, arbitration’s effect on wages. The key comparative study on this issue focuses on wage agreements for firefighters and police officers. It found no “significant differences” between wage growth in states where arbitration is frequently employed and where it is not.  Still, the authors stress that arbitration has its drawbacks. Without prior leadership from the parties, they say, arbitrators tend to be conservative and reluctant to break new ground or introduce innovations in consequential matters, such as wage structures. Accordingly, arbitration “is not a tool” that helps to resolve the special challenges of fiscal adversity.

The data also appear to show that, unlike mediation, the length of time to resolution of arbitrated disputes appears to have increased over the years, lending more credence to the view that, in the absence of especially difficult circumstances, arbitration is no substitute for good-faith, face-to-face bargaining or mediation.

Finally, the paper examines the impact of public sector unions on innovation, especially in the context of fiscal adversity and public policy disputes. It cites case after case in which good-faith cooperation and collaboration resulted in cost savings and efficiencies in response to a crisis, especially in the context of coalition bargaining – i.e., different public sector unions coming together to shape and negotiate creative solutions to fiscal challenges.

In the field of education reform, a 2012 study of the work of the American Federation of Teachers (AFT) and its management partners in selected school districts was cited as an example of labor and management working together, in a creative way, to resolve tough education reform issues. (Full disclosure: The Albert Shanker Institute was created and endowed by the AFT.)

The authors go on to conclude that “patterns of innovation” that emerged in private sector labor-management cooperation efforts also apply to the public sector. In other words, the people who actually do the work frequently have the best insights into ways to do it better and more efficiently. Collective bargaining and broader labor-management cooperation help bring out these insights.

I highly recommend that you take a look at this paper yourself. It provides a rich, interesting and illuminating read for all interested parties and policymakers, alike. And I’ve only scratched the surface in this post. But, above all else, it provides a breath of fresh air. In an era where most economic policy debates seem to be dominated by extreme voices, this piece is a scholarly plea for a new focus on careful policy deliberations that are based on evidence, research, and experience.

These are thorny, difficult-to-quantify relationships that are best understood through rigorous study and analysis. This “in the weeds” analysis makes a solid case for research-driven scholarly discourse. We sorely need the insights and knowledge that can result from this.

- Randall Garton


2 Comments posted so far

  • Aren’t private school teachers roughly an equivalent to public school teachers?

    Comment by Stuart Buck
    January 18, 2013 at 1:06 PM
  • Stuart–Yes–and private school teachers tend to earn less. Part of the reason is better working conditions which serve as some compensating mechanism. However, arguing that wages should be lower for public school teachers since private school teachers make less ignores the fact that private school teacher turnover is MUCH greater than in public schools and those that quit private schools cite low wages as the primary cause. Note, also, that teacher turnover has a negative effect on student achievement.

    Comment by Ed Fuller
    January 18, 2013 at 8:07 PM

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