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E Pluribus Union: Labor in the Public Sector

While private sector labor unions seem to be losing clout, public sector unions are strong and stable.

May 1, 2001


Douglas Clement Senior Writer
E Pluribus Union: Labor in the Public Sector

Observers of union trends point to the public sector—which employed 16 percent of the national workforce in 2000—as evidence that favorable laws and lack of management opposition can contribute to markedly higher union participation. Union density is over four times higher in the public sector than the private, 37.5 percent vs. 9 percent in 2000, and public sector density has increased by 5 percent since 1985, while private sector density has decreased nearly 40 percent.

"I would say, crudely, that the public sector represents the free choice of workers, because there really is no management opposition," said Harvard University economist Richard Freeman. Without the intense competitive pressures facing private firms, public sector management has less need to oppose unionization.

Indeed, public sector unions can, in effect, shift the demand curve for their labor outward by influencing the political process: Think of teachers lobbying for increased education budgets. So in the public sector, management and unions often become allies in seeking public revenues. Something similar happens in the private sector when unions help in sales campaigns (for example, the Garment Workers' "Look for the Union Label"), but such efforts are relatively rare.

In three Ninth District states, (Michigan, Minnesota and Wisconsin) over half of public employees are union members, while in Montana, one-third are unionized. Wisconsin's 55 percent public sector unionization rate is among the highest in the nation, and Kevin Trass, Wisconsin spokesman for the American Federation of State, County and Municipal Employees (AFSCME), attributes his union's 60,000 members to "hard work" and "a pretty strong collective bargaining law for public employees."

In South Dakota, fewer than one in five public employees belong to a union and in North Dakota, just 16 percent belong. "The problem in the public sector in North Dakota is there's no collective bargaining," said Chris Runge, executive director of the North Dakota Public Employees Association. "So that leaves us with collective begging." Legislators in North Dakota oppose collective bargaining for public employees in order to assert their authority over the budgetary process. "They fear they'll lose control," Runge said, "but that's so far from the truth. It works just fine in 29 states; their governments haven't ground to a halt."

Still, critics can reasonably argue that public unions have too much influence over the political process, and may create inefficiencies in tax expenditures because they're not subject to the same invisible hand that exists in the marketplace. Taxpayer pressure can provide only a moderate degree of check-and-balance.

The argument is impossible to evaluate, however, without clear standards to measure public sector output and obvious means of gauging demand for that output. As Freeman writes, "the problem of evaluating whether the average citizen would be better or worse off in the absence of public sector unions lobbying for public goods is sufficiently complex to leave one agnostic."

Douglas Clement
Senior Writer

Douglas Clement was a managing editor at the Minneapolis Fed, where he wrote about research conducted by economists and other scholars associated with the Minneapolis Fed and interviewed prominent economists.