This is nto a counter-arguement to why public sector unions should exist, it is an explanation of why they still do.

The problem is that public sector unions result in unrealistic pay schemes relative to the private sector and bloated pension promises. This post completely ignores those issues.

One difference is that public sector jobs are already covered by the civil service system, which provides a number of protections that are simply duplicated by unions (though this probably varies between states, what I know comes from anecdotal experience not from data).

I'm sure someone has done a comparative study between states to see what the effects of unionization are. Anyone familiar with this issue?

In my experience, while the unions are something of a problem, a bigger problem tends to be unrealistic short term demands from the public. Demands come through to cut government spending, so we axe the easiest to axe people which are generally lowest in seniority because we're under time pressure (and not necessarily the most expendable). This makes the bureaucracy even more top heavy.

Whenver there is a small amount of some kind of abuse, the fear of it going public leads to redundant oversight because of the stink it causes when it hits the news. Private companies don't have this level of oversight, the few people who do cheat cost the organization less than the oversight does. Government doesn't have this luxury. Though admittedly it's easier to terminate people in the public sector, we have to go throgh costly investigations (and I'm familiar with a case of someone being eliminated for a rather small abuse, led to an investigation at a higher level of the bureaucracy in addition to a simple termination which would have been the likely private sector solution given the level of funds involved)

Though unions probably do have something to do with the protections of seniority, but I believe there are other factors driving this as well. Still, we'd probably be better off with a better civil service system than we are with unions. Especially if this were integrated across states and with the Federal government, though I'm probably just a bit bitter about as a result of all this talk about these grand state benefits while I'm living with the reality they do squat for me since I won't be in the same state in 6 months and would have rather had the cash match of my previous employer, where I would have at least seen something, rather than the total loss I get in these huge state pensions.

Incidentally, here in NY our pension is fairly well funded because of people exiting like I am and the relatively high age of our workforce resulting in few people in the civil service actually getting our wonderful pensions. This is different for police, firemen, etc. which get great benefits (admittedly for a hard job, though I have trouble swallowing paying pensions based on overtime) but for us in the bureaucracy the deal looks better on paper than it really is since most of us enter in our 30s.

To sum up, the two big abuses I keep coming across is that the bureaucracy is top heavy and that there is little cost benefit done about oversight because of political ramifications. A third, though lesser, area that probably does have to do with unions is the strong encouragement of careerism which makes it difficult to transfer between states or even move back into the private sector because of the loss of benefits. I'd rather have higher wages and less benefits, which I think is pretty much universal among people in my age bracket. Still, I can't help thinking that if I chose to stick around for a few more years I'd be funded and have something of a pension, now I'll be losing all of it. Since labor mobility is a good thing, it's a bad thing that our system is making workers contemplate this.

I am not so sure that private industry was driven to try to get a non unionised work force solely by profits, but rather more by the ability to maintain profitability, which may be harder in a rigid union contract environment.
In the public sector, from my experience in the Postal Service, the unions there have no interest in flexibility or innovation, merely protecting the members, and getting more money, for no more work, while resisting needed contract changes. With some cooperation, so much more could have been done to restructure in the face of declining volumes/revenues, and stem the losses.
I suspect the same rigidity is true across the public sector since there is no question of profitability, and someone in government somewhere will pick up the tab, or taxes will go up to cover the cost. Now in the current economic climate if there becomes a cost for not working with the employers, ie layoffs, it will be interesting to see if public sector unions become a little more flexible, and a bit less entitled.

The difference is; there is no difference. Unions are an impediment to efficiency and flexibility of organisations everywhere. They may have been important at one time in history in protecting workers against the most egregious of abuses by employers as portrayed in such novels as 'The Jungle' by Upton Sinclair. However, such abuses have been largely legislated, regulated, and litigated out of existence. The modern unions such as the SEIU (or the Purple People Beaters, as I call them) resemble thugs and mob-like figures more remniscent of Jimmy Hoffa and his crew.

As for the "tautological result" that unionised areas have lower rates of investment than non-unionised ones, the author probably should go back and re-learn the meaning of the word "tautological." The result is a predictable outcome of a set of economic circumstances, not a rhetorical trick as the author suggests.

I know what you mean by, "The government doesn't have such a clear incentive to seek low-cost non-unionised labour. Moreover, a lot of governing tasks can't be outsourced to cheap non-union locales; you can't move an elementary school to Arkansas because the unionised teachers in New Jersey are too expensive."

However, I would be very surprised if there are not lots of public sector jobs in New Jersey that could be done in Arkansas or indeed Asia. For every teacher or police officer there's probably at least a clerk or two in a back-office.

I recognise that the politics are toxic, especially in the current economic environment, but cutting services or increasing taxes are both pretty toxic as well. Structural deficits are almost always toxic to address. Would the public rather that the state government sacked a teacher or sacked a payroll clerk and moved their job to Manila?

I second rarcher20.

While it might be rhetorically better to say "private industry had an incentive to seek a non-unionised labour force and to break union control wherever possible, in order to increase profitability," an equally valid restatement might be "market forces eliminate heavily unionized industrial companies and replace them with non-unionized ones." In fact, having chosen to specify the auto and steel industries, the latter is more valid under the evidence.

Public sector unions, you might as well say, have grown because governments have a monopoly in their jurisdictions. Just to stir some mess, couldn't suburban and exurban sprawl be partially driven by people seeking lower-cost government services away from highly unionized big cities? Do you care nothing for the environment, M.S? Nothing?

The problem with unions is the same problem that happens with most organizations. They're created for a purpose, they achieve that purpose, and then they're sustained for the benefit of the leadership. Unions suffer from mission creep, leadership must keep justifying itself to keep its power, and the only way to do that is to continuously "fight on" even when the original purpose had long since been obtained and forgotten.

This isn't unique to unions, it happens in government, it happens within corporations, it happens with non-profits, and on and on. It's human nature to a great degree. When given a position that generates wealth and/or power people will seek a means to hold on to the source of that wealth and power.

The dissonance I had with WW's previous post was the impression it gave me that he believed that bureaucratic bloat was something new that occurred only after unionization. I haven't done a study on it, but my readings in history and classics suggest that government bureaucracy has occurred in many cultures throughout history without unionization - unless class stratification can be considered a stand in. What really changes is the public opinion about the bloat.

"Private-sector unionisation began to decline in the 1970s for a reason: private industry had an incentive to seek a non-unionised labour force and to break union control wherever possible, in order to increase profitability."

And this incentive didn't exist prior to the 1970s?

"So the auto and steel industries shifted factories to right-to-work states"

Or... auto and steel industries started making up smaller portions of the workforce.

I find the most convincing explanation to be that the government has taken over the role of the union. We have extensive labor laws and safety nets now.

WW is right. If private sector unions drive up prices (thereby decreasing demand) or decrease investment, the unions bear some of that cost. Not so for public sector unions who can bargain for higher wages without making any tradeoffs.

M.S. wrote: "In this environment, it's quixotic to argue that private-sector unions (which are withering) are legitimate, while public-sector ones aren't."

Huh? I was following your discussion right up until this sentence, which to my eyes is a total non sequitur. I think the rest of us are saying that private-sector unionization serves a legitimate purpose and therefore is conceptually tolerable, not whether private unions must exist or not exist in any given workplace. The fact that private-sector unionization has been steadily shrinking is because 1) employers are doing a better job of defeating unionization efforts, and 2) unions themselves are losing their public appeal (people see the spectacle of GM and other unionized industries committing economic harakiri by demanding exhorbitant pay and benefits, and are rightly turned off). Private-sector unions have the ability to use collective bargaining power constructively, of course, but most don't. This problem tends to be self-curing, however -- if a unionized industry makes bargains it can't afford, they usually end up going bankrupt (see Eastern Airlines, as a good example).

Public-sector unionization, in contrast, serves no value-added purpose to society except to increase costs in a monopoly environment. There is no NEED for these employees to be unionized -- almost all public employees fall under the protection of a myriad of civil service statutes. Most hiring must follow merit protection principles (with very detailed rules on selection processes), and discipline and termination are required to follow specific due process protections. With pay and benefits set by statute, employees don't need unions to collectively bargain for such things. All they need to do is set up a special interest PAC to lobby candidates, and they can get what they want that way.

Unionization also establishes costs that are not reflected in wages and benefits. Every time you make changes to working conditions, bargaining requirements can be triggered, making the pace of change and adoption of new methods in the government incredibly slow and inefficient. Furthermore, every time an employee is disciplined, or does not get the award they wanted, or does not get the overtime shift they wanted, or any other legion of complaints, they can file grievances which end up in arbitration, adding to the costs to the taxpayer. The worst part is that, unlike the private sector where customers that don't like increased costs or decreased service can take their custom to a competitor, the taxpayer is stuck with a monopoly -- there is no alternative to the government.

In short, private sector unions have a legitimate public purpose (regardless of whether they are successful in perpetuating themselves). In contrast, public sector unions are a gross waste of resources that brings no benefit to the public that government employees are supposed to serve.

I will defend unions in this regard: Management wants collective bargaining. It lowers their costs. Many want to achieve this without granting unions excessive power by legalizing company unions again. It works in Japan, though their corporate culture is very different. It's worth a try in the US.

Do public sector workers get stock option like some in the private sector?

Regards

Private sector union members who demand too much and offer too little flexibility will see their company, or entire industry, destroyed. Public sector union members who demand too much and offer too little flexibility can operate on a much longer time horizon, until the government's finances are in such terrible shape that cuts are absolutely necessary, and other interest groups are able to marshal themselves in opposition to the public sector unions.

Private sector industries in which unions survived even after their more general collapse often receive either direct government financial support, or protection from competition. See, e.g., the auto industry. This lengthens the period of time before their inflexibility will destroy their company or industry, but it will still happen before the public sector unions meet serious opposition from organized interest groups who need to defend their own share of the public teat.

Decades ago, America's economy was dominated by a small number of large industrial cartels with immense "bargaining power" which distorted the relationship between employer and employee. But unions are (labor) cartels too, and were developed as a counterbalance. But since our economy and labor laws have developed, unions have won their war, and are generally no longer necessary.

As others have noted, they persist in government because there is no effective competitive pressure to drive them out. The result is predictable. Unionized government labor cartels now distort the relationship between employer and employee. So you have mediocre high school graduates making six-figure salaries and retiring at 50 with six-figure pensions.

To ground check these assertions, just wait for a municipality to open a few positions in its fire department. You will see not 5 or 10 applicants for each slot, but hundreds. That is the labor market talking, and it is telling you that it sees a distortion. A huge one. And don't kid yourself that being a firefighter is so tough. Those hundred welders, drivers, and contractors know a hard day's work and a fair wage, and they know a gravy train too.

Finally, firefighters don't actually die earlier than scores of other non-unionized tradesmen. Ask a roofer or a fisherman, or an actuary. Better yet, ask me. I was a volunteer firefighter myself.

You have some of your labor history partly wrong - in a way that reflects thinking about models. If you go into factories outside of heavily unionized states, you don't see a difference in how workers are treated, certainly not at car plants and other big manufacturers. The point you left out or missed is that employers changed: they chose to offer workers good working conditions, partly to avoid the cost of dealing with a union, partly for the same reason Henry Ford paid $5 a day. Ford paid $5 a day to reduce turnover, which was so high training and hiring costs became more costly. Modern non-union plants recognize that a stable, motivated workforce is worth having. In blunt terms, union membership started to erode because both sides won: higher living standards and better working conditions equals lower overall labor costs and better productivity.

Remember that unions arose in the US because working conditions were literally hideous and pay was awful. Ford, for example, didn't allow talking on the line. They didn't allow bathroom breaks, gave only a few minutes to eat and the workweek was 6 days. Coal miners had it worse.

Economist-thinking types tend to focus on externality - here, movement to other states - and miss the changes occurring within. Both occurred but the main one was that employers made unions significantly less attractive by improving conditions without the union.

In the short term profitability may be the driver but in the long term productivity is the more important factor. As the economy grows and consumers demand better products for less, companies have to improve productivity, and they have found that much easier to achieve without unions – or they have been pushed aside by firms not held back by unions.

What's striking is the same productivity gains have not been seen in public services. Instead gains in quality have had to be paid for by greater investment, so a greater and greater shares of taxpayers money. Often productivity declines as at best marginal improvements are paid for by massive cost increases, as a lot of the money is spent rewarding union members instead of improving services, which lag ever further behind the private sector.

Will nobody defend MS? g cross, where are you?

There is a difference:

While it is true that unions force higher costs onto products and pass those prices on to consumers, consumers still have a choice to buy other products. One can imagine that auto unions, say, might want to keep pushing up their wages to a point that an entry level sedan would cost half a million dollars. But they understand that there is a certain tipping point at which pushing their prices up any higher would cause sales to drop and their companies to go into bankruptcy, so they self-regulate a bit.

With government unions, there is no such incentive to moderate. Clearly. As we look around today, the public sector employee unions in many states seem perfectly willing to let their states go bankrupt, and their special status as "indispensables" (cops, firefighters, teachers) mean that taxpayers have to bend over backwards to fund them whether they want to or not.

This is the difference: With public unions, the "customers" or taxpayers have nowhere else to go, thus their hand is forced by the unions to accommodate no matter what. Even the greediest private sector unions do not have this arrow in their quiver and will eventually self-moderate. Of course, when we start mixing government bailouts of US-started auto companies into the mix, (especially disturbing in light of the recent revelations about the Toyota hoax) the sickness spreads to the private sector as well, and the whole system starts to go balls up.

But in general, the government's monopolistic powers and its freedom from competition create market distortions in their providing of services. And this is even truer at the federal level, where bankruptcy can be further forestalled by simply raising the debt ceiling.

For many, there would be some agreement with your thesis: that unions, public or private, are bad for the economy all the way around. But I don't think that's what you're driving at. In any case, your argument falls quite a bit short.

Pretty good and then the conclusion undoes the post:

"In this environment, it's quixotic to argue that private-sector unions (which are withering) are legitimate, while public-sector ones aren't. It might be interesting to consider the merits of an economy with 50% private-sector unionisation and no public-sector unionisation at all, but that's not an economy we could conceivably get at this point."

This seems to imply that overall average rate of unionization is the correct goal/end. I'm open to pro-union arguments but this seems totally weak to me. WW's points about public sector unions have been elaborated-upon but not answered.

A separate point - I think you can fairly say that there are some public sector unions that are viruses on society at large. They are (perverse) textbook cases for Why Incentives Matter. I give you the California Prison Guard's Union:

http://www.npr.org/templates/story/story.php?storyId=111843426

"In three decades, the California Correctional Peace Officers Association has become one of the most powerful political forces in California. The union has contributed millions of dollars to support "three strikes" and other laws that lengthen sentences and increase parole sanctions. It donated $1 million to Wilson after he backed the three strikes law.

And the result for the union has been dramatic. Since the laws went into effect and the inmate population boomed, the union grew from 2,600 officers to 45,000 officers. Salaries jumped: In 1980, the average officer earned $15,000 a year; today, one in every 10 officers makes more than $100,000 a year.

Lance Corcoran, spokesman for the union, says it does what is best for its members.

"We have advocated successfully for our members," he said."

I used to work at a company where the employees got together and presented a list of demands to management. Management gave in to the employee's demands exactly one week before the unionization election was scheduled. The election result was a resounding "NO", and the company remains non-union.

I asked a lot of people why they voted the way they did, and the reaction was interesting. They were glad that the option to unionize existed - it gave them leveraging power with "the owners" - but they weren't very interested in lifetime membership in a union.

The reason for the decline in private sector unions is that both the employees and the management hate unions and would prefer to avoid them. Companies bend over backwards nowadays to avoid being unionized, and they succeed because most employees don't like what they hear from people working in unionized companies. I worked for a unionized company once, and I loathed it.

@ Bogtrotter,

I would be interested in hearing why your experience in a unionized company was loathsome. I have had significant experience dealing with labor-management relations issues, and one critical factor keeps popping up: a union maintains unity via the fiction that all workers are equal and essentially fungible -- no one is special and no one is horrible. As a consequence, the union typically goes to bat defending mediocre (or worse) employees from justifiable discipline, on the grounds that they are no worse than anyone else. Likewise, I have heard complaints that the union actively discourages the "go getters" from going above and beyond the call of duty, on the grounds that it raises the bar for everyone else. As a consequence, the best and brightest feel unfairly restricted from proving their worth, and the rank-and-file employees feel dragged down by lazy, stupid, or unproductive coworkers that the union fights to keep in their jobs.