BUS 372 wk 3 Disc.1 (DO NOT CHANGE THE PRICE) IF YOU DO I WILL NOT SEND A HANDSHAKE.

123 6 Public Sector Unions Bourdier/Associated Press Learning Objectives After completing this chapter, you should be able to:

• Describe the history of public unions.

• Differentiate public and private unions in terms of market forces, flexibility, political impact, costs and pensions, and efficiency and responsiveness.

• Examine the major laws and agencies that govern federal and state unions.

• Analyze the future of public sector unions. sea81813_06_c06_123-142.indd 123 12/9/14 11:26 AM Section 6.1 A Brief History of Public Unions Introduction From the late 1960s to the early 1980s, air traffic controllers were members of a powerful union called the Professional Air Traffic Controllers Organization (PATCO). As federal work - ers, they were mandated not to go on strike. In 1981 they demanded a pay raise of $10,000 and a reduction in their workweek from 5 days to 4. The government gave them a $40 million counteroffer, which was $770 million short of the package they demanded. As a result, the air traffic controllers went on strike, crippling the air industry and bringing commerce to a halt.

President Ronald Reagan ordered the controllers back on the job within 48 hours—or else.

When they refused, he fired everyone who did not return to work—all 11,000 controllers.

They thought the strike would force the government to agree to their demands, but instead, supervisors, nonstriking controllers, and military personnel staffed the towers and the air - ports. Soon the nation’s airports returned to about 80% efficiency. In the aftermath, Reagan refused to rehire the controllers that he fired, banning them forever from work as air traffic controllers. The 11,000 who walked off their jobs lost them forever (Glass, 2008).

The air traffic controller strike is considered one of the watershed moments in public union labor history. Reagan took a considerable risk with maintaining airline safety while new con - trollers were trained and the system was understaffed. However, no accidents occurred dur - ing the transition. When the dust settled and both commerce and safety were restored, the fact remained that more than 11,000 workers were successfully replaced in a relatively short period of time. The signal this sent to both the public and private sector was clear: Strikes no longer worked; employees could be replaced (Cowie, 2012).

How has Reagan’s decision impacted unions today? In 2010 Wisconsin governor Scott Walker successfully ran on a campaign to restrict the power of public employee unions to bargain col - lectively. With that right lost, many of the union members decided that membership was giv - ing them few, if any, benefits. Since then, membership has fallen 60% and the union’s annual budget dropped from $6 million to $2 million (Greenhouse, 2014). Walker has been the sub - ject of an intense effort by the country’s largest public union, the American Federation of State, County and Municipal Employees (AFSCME) to unseat him as governor. Whether the AFSCME will succeed remains to be seen, but for now, Walker seems firmly and confidently in power (Gold, 2014).

What will happen to public sector unions in the future is uncertain, but like their private counterparts, many challenges await. This chapter begins with an overview of the history of public unions, showing how they have had a relatively short existence, and then proceeds to compare public and private unions.

6.1 A Brief History of Public Unions The first five chapters of this textbook were concerned with private sector unions. This chap - ter introduces the concept of public sector unions and how they differ from the private sector . The phrase public sector refers to an entity that is government related; that is, public sector unions are formed by employees who work for a local, state, or federal government. sea81813_06_c06_123-142.indd 124 12/9/14 11:26 AM Section 6.1 A Brief History of Public Unions Private sector unions, on the other hand, are composed of workers who are employed by non - governmental owners.

Legally, the most notable distinction between public and private unions is that generally nei - ther the National Labor Relations Act (NLRA) nor the National Labor Relations Board (NLRB) applies to public sector unions. Recall that the NLRA specifically excludes government work - ers from coverage. When state workers do unionize and collectively bargain or strike, those rights derive from state statutes, court decisions, or local rules, not the federal laws. Public sector unions were not widely formed until the mid-1950s. The earli - est public union was composed of post office workers in the 1800s, called the Railway Mail Mutual Benefit Associa - tion, which ultimately morphed into the current American Postal Workers Union, AFL-CIO.

In the early 20th century, another pub - lic union consisting of Boston police staged a walkout in a bid to seek recog - nition. The strike resulted in riots and vandalism, culminating in 1,100 firings.

Then Massachusetts governor “Calvin Coolidge became a national hero by breaking the strike, issuing the dictum:

‘There is no right to strike against the public safety by anybody, anywhere, any time’” (as cited in Moreno, 2012, para. 2). President Woodrow Wilson called the strike “an intolerable crime against civilization” (as cited in Moreno, 2012, para. 2). The union fizzled out shortly thereafter. The bitter experience of the strike, how - ever, remained in the American consciousness, fueling the collective belief that public workers should not be given the right to unionize.

This changed over time, however. In the 1950s Wisconsin and New York City made it legal for government workers to unionize, and other municipalities followed soon thereafter. In 1962 President John F. Kennedy passed legislation allowing federal government workers to collec - tively bargain, and many states followed suit.

Unlike private sector unions, public sector organizations appear to be growing in member - ship and wielding important economic and political power as a result. Their growth has far outpaced private sector unions in the past 50 years. According to the Bureau of Labor Statis - tics, in 2013, 35.3% of all workers in the public sector belonged to a union, versus 7.3% in the private sector (Bureau of Labor Statistics, 2014a). In local governments alone, more than 40% of all workers were unionized in occupations such as teachers, police officers, and fire - fighters. In comparison, in the private sector, industries with high unionization rates included utilities (25.6%), transportation and warehousing (19.6%), telecommunications (14.4%), and construction (14.1%). Low unionization rates occurred in agriculture and related indus - tries (1%), finance (1%), and in food services and drinking places (1.3%) (Bureau of Labor Statistics, 2014a). Moodboard/Thinkstock Compared to the private sector, union membership is higher among public sector workers, such as firefighters. sea81813_06_c06_123-142.indd 125 12/9/14 11:26 AM Section 6.2 Public Sector Unions Versus Private Sector Unions Table 6.1 shows how many government workers belong to unions. For example, in 2012, 41.7% of all workers at the local level belonged to a union, 31.3% of state workers belonged to a union, 26.9% of federal workers belonged to a union, and an average of 35.9% of all government workers belonged to a union. In 2013 the percentages were 40.8% local, 30.9% state, and 26.5% federal. The “percentage of employed” columns show workers who were not union members but were represented by a union nevertheless.

Table 6.1: Union affiliation of employed wage and salary workers by occupation and industry, 2012–2013 annual averages 2012 2013 Members of unions Represented by unions Members of unions Represented by unions Occupation and industry Total employed Total Percent - age of employed Total Percent - age of employed Total employed Total Percent - age of employed Total Percent - age of employed Public sector 20,385 7,328 35.9 8,072 39.6 20,429 7,210 35.3 7,900 38.7 Federal government 3,552 956 26.9 1,114 31.4 3,515 932 26.5 1,096 31.2 State government 6,279 1,968 31.3 2,190 34.9 6,353 1,966 30.9 2,147 33.8 Local government 10,554 4,404 41.7 4,768 45.2 10,561 4,311 40.8 4,658 44.1 Note : Numbers are in thousands. Source: Bureau of Labor Statistics, 2014a.

The size of public sector unions, as indicated in Table 6.1, makes them formidable political entities. Assuming that public unions are here to stay, understanding their complexities and impact on various aspects of American culture cannot be underestimated.

6.2 Public Sector Unions Versus Private Sector Unions This section will explore some of the unique features of public sector unions and, where rel - evant, compare them to the private sector. Specifically, public and private unions will be com - pared and contrasted in terms of market forces, flexibility, political influence, costs to society, pensions, union security clauses, efficiency and responsiveness, and strikes.

Freedom From Market Forces Private industry and some private sector unions are dependent on the concept of supply and demand. Workers in the private sector are acutely aware that the money that pays their wages sea81813_06_c06_123-142.indd 126 12/9/14 11:26 AM Section 6.2 Public Sector Unions Versus Private Sector Unions comes from the profits made by the business. In the event that workers insist on wages that outdistance a business’s profits, they risk their livelihood and job security. Many times, the profit made by a business is a matter of public record. Thus, private sector unions are able to consider and make demands within the confines of the profit model.

Although government workers may be aware that their wages are paid by tax dollars, those tax dollars are tied to numerous outside forces, not necessarily the economy or supply and demand. For instance, politicians may promise to bolster education and teachers’ salaries, or a community may demand better police and fire services. Thus, promises of better terms and conditions of employment may not be related to how much money is actually in a budget, but instead, to a community’s politics. These factors can complicate the process of determining the amount of money that public sector unions request at the bargaining table.

Flexibility Flexibility refers to how many options management has at its disposal when dealing with worker demands. For example, if workers ask for a pay raise, management might reply that it can offer a 1% raise if the workers take a 0.5% cut in their health benefits. Management in the private sector has the flexibility to respond quickly because it has the authority to make decisions at the bargaining table. Those decisions might include cost cuts, downsizing, mov - ing to a less expensive part of the country, seeking tax breaks from the government, laying off workers, and outsourcing work to other countries.

Negotiations with public employees, however, do not enjoy this same flexibility. Managers work within a hierarchy that requires approval at many levels. This delays response time and makes negotiating a lengthy process.

Furthermore, a city undergoing an economic crisis does not have the option to outsource jobs the way a private industry can. The positions of firefighters, police, EMTs, nurses, and correc - tions officers cannot be sent overseas. In terms of removing positions or laying off workers, government employees are tenured into their jobs under a civil service system that has rigid rules. Also, many government personnel provide essential services and cannot be dismissed under any circumstances.

All of these factors influence public sector negotiations. Public pressure to resolve disputes can result in a truncated bargaining process with concessions given to unions so that essen - tial services will be back up and running as soon as possible.

Political Impact As noted, politics plays a significant role in the life of a public union, and public unions play a significant role in American politics. If you were not aware of the financial power of public unions, consider this: Public unions have millions of members and spend millions of dollars a year electing candidates who support their platform. For example, government unions at the national level spent more than $200 million to defeat Republican candidates in the 2012 national election (State Budget Solutions, 2011). The AFSCME alone spent more than $90 mil - lion to win state races (State Budget Solutions, 2011). sea81813_06_c06_123-142.indd 127 12/9/14 11:26 AM Section 6.2 Public Sector Unions Versus Private Sector Unions Candidates for public office are aware of the influence that union support can offer. Those backed by a union, for example, could potentially count on the votes of 7% of employees in the private sector and 35% of all government employees, a sizable voting bloc, or a total of 14.5 million workers in a presidential election (Bureau of Labor Statistics, 2014b). “Such power led Victor Gotbaum, the leader of District Council 37 of the AFSCME in New York City, to brag in 1975: ‘We have the ability, in a sense, to elect our own boss’ ” (as cited in DiSalvo, 2010, para. 26). “Union members’ nod of approval for one candidate can also sig - nificantly influence how the voting public perceives a candidate. In areas of the country with a high union populous, such an endorsement may be the difference between winning and losing an election” (Kapoor, 2003). At the same time, if union members elect candidates who promise them job security and higher wages, this may be at odds with the public’s desire to lower taxes and improve services.

In addition to candidates, public unions can also impact local laws. For example, “New York City Public Schools sought to change the process for awarding teachers tenure by factoring in student data. The local teachers’ union, the United Federation of Teachers (UFT), pro - tested the district’s new policy, not through a local grievance (because the union, by state law, had no say on tenure issues), but by lobbying state legislatures to pass a bill that would effectively make the district’s action illegal. Guided by the state teachers’ union and the UFT, the New York state legislature blocked the tenure changes by embedding a provision in the 2008–2009 budget that made it illegal to consider a teacher’s job performance as a factor in the tenure process” (Cohen, Walsh, & Biddle, 2008).

Economic Impact Public unions are widely blamed for costing taxpayers more money than a government with - out unions. Mixed research exists on whether this is true, however, making it difficult to draw any definitive statements about whether public unions do in fact cost the government more money.

Some empirical studies show that unionization in the public sector significantly increases the wages and benefits of workers, resulting in tax hikes and fiscal setbacks (Anzia & Moe, 2013).

For instance, one study compared the pay rates of employees in municipalities who had col - lective bargaining agreements against the pay rates of employees in municipalities without agreements. It was found that city police and fire departments with collective bargaining agreements spent significantly more money on salaries than those departments without collective bargaining. Likewise, health benefits in those same cities with collective bargaining agreements were 15% to 25% higher compared to non–collective bargaining cities (Anzia & Moe, 2013).

Others argue that public unions have nothing to do with monetary woes. In Wisconsin, Gover - nor Scott Walker ran on a campaign to do away with public unions, which he claimed were the reason for the state’s financial crisis. He oversaw legislation that eliminated collective bar - gaining with public unions over pensions and health care. Yet, subsequent to being elected, Walker increased the state budget by more than $100 million (Madland, 2011), bringing into question whether there was any connection at all between bargaining with public unions and the budget. Furthermore, firefighters and police officers who supported Walker’s candidacy were not stripped of their collective bargaining rights, giving the appearance that decisions sea81813_06_c06_123-142.indd 128 12/9/14 11:26 AM Section 6.2 Public Sector Unions Versus Private Sector Unions about which groups of public employees could retain their collective bargaining rights were being made for political rather than monetary reasons (Madland, 2011).

Whether public unions are to blame for higher expenses to taxpayers is disputed. There are many factors that contribute to each government’s financial struggles, including legal judgments, declining real estate values, high unemployment, bad investments, and poorly thought-out economic development deals. Isolating public unions as the one variable that cause governmental woes seems unwarranted in light of the fact that the average salary of public workers is less than $50,000 and the average pension less than $20,000 a year, accord - ing to some sources (Saunders, 2012).

Because so little research exists in this area, the impact of public unions on the costs of gov - ernment is not possible to determine. The only thing that can be said with certainty is that in the current political and economic climate, public unions are blamed for many municipal problems.

Pensions Another contentious issue concerns the pensions paid to government employees upon their retirement. A pension is a guaranteed monthly income for the life of the employee upon retir - ing and is a staple of public service. One of the reasons that people choose to work for the government is the early retirement age and the guaranteed pension for the rest of their lives.

People who work in the private sector, on the other hand, do not have pension plans. Instead, they must create retirement accounts in which they place savings for the future, which are sometimes matched or contributed to by their employers. The money in this type of account is not guaranteed for the life of the retiree; when it runs out, it is gone.

Pensions, in contrast, do not end until the recipient dies. States are responsible for creat - ing and maintaining a pension fund, which they invest so that the money grows over time and can adequately support the demands of the individual pensioners as they retire. One of the problems with this system, however, is that when the market declines, the worth of the overall pension fund also declines, and there is a shortfall. When this happens, there is not enough money in the pension funds to cover the costs of paying out the pension monies. In such a case, the state borrows from other funds to cover the costs, going further into debt.

This has caused a number of states to have underfunded pensions, or pensions that do not have enough money in them to pay what will be needed in the future.

Added to these problems is the fact that there are a large number of people who are moving toward retirement. This will only exacerbate the problem. While large numbers are readying for retirement, the exact number of how many will retire each year remains unknown. One may be an eligible age for retirement, but that does not mean the person will necessarily retire. This factor adds to the unpredictability of how much money is needed per year.

Some state pensions are especially generous, both in terms of the time required to become eligible and the amount received. “California state workers often retire at age 55 with pen - sions that exceed what they were paid during most of their working years” (DiSalvo, 2010).

“Furthermore, New York City firefighters and police officers may retire after 20 years of ser - vice at half pay—which means that, at a time when life expectancy is nearly 80 years, New sea81813_06_c06_123-142.indd 129 12/9/14 11:26 AM Section 6.2 Public Sector Unions Versus Private Sector Unions York City is paying benefits to 10,000 retired police officers who are less than 50 years old.

In 2006, the annual pension benefit for a new retiree averaged just under $73,000 (the full amount of which is exempt from state and local taxes)” (DiSalvo, 2010). Of course, neither California or New York can predict when workers will retire or how many workers will retire, making the exact numbers impossible to calculate.

The pressure on the pension system has caused 43 states to reduce their pension benefits for new employees (Selway, 2014). Other states have required employees to either make or increase contributions to their pensions, increased the retirement age, and extended how long they must work before they receive a pension in order to reduce the financial burden that paying out pensions poses to the government (Greenblatt, 2013).

Union Security Clauses Union security clauses are implemented when the employer and the union agree that the place of business will be a union shop, a business in which all employees must join the union after they are hired.

At the state level, union security clauses are not allowed in 24 states. These are the so-called right-to-work states. This means that unions that represent state or local workers are not allowed to make union membership a condition of employment. A person could have a job with a unionized local government but refuse to join the union and not be required to pay union dues. In the News: The Future of Public Pensions Is Troubling A pension plan is considered to be underfunded “if it is less than 70 percent funded. Accord - ing to Bloomberg, in 2012 there were 26 states whose pension plans met that standard” (Dorfman, 2014).

One of the reasons that pension funds are underfunded is because “state government politicians are continually tempted to underfund pension plans in favor of using that money for something with an immediate payoff. Those same politicians also tend to grant increased pension benefits to state employees because it is a simple vote-buying scheme with no immediate budgetary cost” (Dorfman, 2014). States underfunding the pension plans are counting on current depos - ited funds to grow in the long term from sound investments made in the stock market, but that is not necessarily happening. If funds are not replaced, then union members may not receive the retirement funds they were expecting. Who will make up the gap in underfunded pension funds remains to be seen. To read more about this topic, view http://www.forbes.com/sites /jeffreydorfman/2014/09/11/public-pensions-are-still-marching-to-their-death . Discussion Questions 1. What are the political reasons why pensions are underfunded? 2. If the pension problem is political, what steps would have to occur to remedy the prob- lem? Do you think such a remedy will ever take place? 3. If you do not see a remedy for the situation, what do you predict will happen to public pensions in the future? sea81813_06_c06_123-142.indd 130 12/9/14 11:26 AM Section 6.2 Public Sector Unions Versus Private Sector Unions The fact that union security clauses are outlawed in 24 states greatly diminishes the power of public unions, because employees can choose whether or not they want to join a union and pay dues. In Wisconsin, where right-to-work laws were enacted, the public teachers’ union saw a decline of 60% in its membership (DeFour, 2014).

Decreased Efficiency and Responsiveness Do public unions decrease efficiency and responsiveness in the delivery of services? Some researchers argue yes, that unionization has led to decreased efficiency, courtesy, responsive - ness, and politeness toward the public, while others maintain the opposite is true.

According to the Cato Institute, unions “protect poorly performing workers, they often push for larger staffing levels than required, and they discourage the use of volunteers in govern - ment activities. Further, they tend to resist the introduction of new technologies and they create a more rule-laden workplace” (Edwards, 2010). Furthermore, unions that go on strike often decrease efficiency by causing a work stoppage.

Others present a contrary view. Joseph Slater, a University of Toledo law professor and expert on labor economics, has found no evidence that unions, whether public or private, decrease efficiency (James, 2011).

Strikes The right to strike guaranteed to workers in the private sector under Section 7 does not apply to public sector workers. As a result, there are not consistent laws about going on strike in the public sector.

Thirty-nine states have laws prohibiting strikes by public sector unions. The remaining 11 states have a hodgepodge of rules that allow strikes under certain circumstances. For example, California allows strikes by nonessential employees except in cases where the strike poses an “imminent threat” to public health and safety; Hawaii allows strikes 60 days after the issuance of a fact-finding report and exhaustion of impasse resolution procedures (Bass, 2014). Many states have laws prohibiting strikes if the workers are essential workers such as police, firefighters, and teachers (Sanes & Schmitt, 2014).

Some data indicate that since public sector unionization began in the 1960s, there has been an increase in the number of strikes by public sector workers (Sanes & Schmitt, 2014), but other researchers find an opposite result, concluding that such strikes are rare (Kerrigan, 2012). Three reasons are cited for this: It is not a good time for public sector workers to go on strike due to animosity toward them by the general public; sensitivity to shutting down essential public services; and the poor economic climate, which may result in no improve - ment in conditions if a strike occurs (Kerrigan, 2012).

Although one can conclude that strikes occur in both the public and private sector for the same reasons (wages, vacation time, health benefits), public sector employees are much more highly regulated in their ability to legally strike, which can decrease their overall bar - gaining power. sea81813_06_c06_123-142.indd 131 12/9/14 11:26 AM Executiv e Or der s Mandat es fr om the president that appl y to wor kers in the executiv e branch of the go vernment onl y. Cour t Decisions Interpretations of the law that instr uct on how t o appl y it t o specif ic situations . Civil ServiceRe form Act A la w that applies t o federal go vernment wo rkers on ly. The P ostal Reor ganization Ac t Law that applies t o U.S. postal wor kers. Section 6.3 Legal Issues of Public Sector Unions 6.3 Legal Issues of Public Sector Unions The law governing private unions is found in the National Labor Relations Act and its subse - quent amendments. The law governing public unions is not found in one place, however, nor is it easy to categorize or organize. Understanding laws governing public sector unions is best done by dividing them into two categories: federal and state.

Federal Law Governing Federal Sector Unions This section will discuss the four major areas of federal law that apply to federal sector unions.

They are represented in Figure 6.1: executive orders, court decisions, the Civil Service Reform Act of 1978, and the Postal Reorganization Act of 1970.

Executive Orders As you may recall from Chapter 1, executive orders are issued by the president (or a state governor), apply to federal or state workers, and are considered authoritative. President John F. Kennedy signed Executive Order 10988 in 1962, which mandated that federal workers can organize unions and gave managers the ability to collectively bargain. Kennedy’s support of federal unions was an attempt to make federal jobs more attractive to workers who saw their counterparts in the private sector bargain for better working conditions (Federal Labor Relations Authority, n.d.a).

Executive Order 10988 was followed in 1969 by Executive Order 11491 , which established a legal system for labor-management relations that was similar to the system that the NLRA pro - vided for private sector employees. Together, both executive orders established the right of fed - eral employees to unionize and collectively bargain (Federal Labor Relations Authority, n.d.b).

Court Decisions A number of significant court cases exist that serve both to expand and contract state and federal workers’ rights to unionize. Of importance is Keyeshian v. Board of Regents (1967) in which the U.S. Supreme Court affirmed the right of public employees to freely associate with one another under the First Amendment. Free association includes the right to associate with other workers and thereby form a union. The right to freely associate and/or form and join a union under the First Amendment does not include the right to collectively bargain, however. This means that one could have the right to unionize but lack the right to force man - agement to bargain with that union.

Figure 6.1: Summary of laws governing federal workers Federal laws are one of the two categories of public sector laws—the other is state laws. Executiv e Or der s Mandat es fr om the president that appl y to wor kers in the executiv e branch of the go vernment onl y. Cour t Decisions Interpretations of the law that instr uct on how t o appl y it t o specif ic situations . Civil ServiceRe form Act A la w that applies t o federal go vernment wo rkers on ly. The P ostal Reor ganization Ac t Law that applies t o U.S. postal wor kers. Wat ch T hi s To watch a video with further information about Harris v. Quinn and to learn of some of the politics surrounding the decision, visit ht tp://w w w.youtube.com /watch?v=r3XFyi4HVc4 sea81813_06_c06_123-142.indd 132 12/9/14 11:26 AM The Of fice of P ersonnel Management oversees federal hi ring, training , and benef its. You can visit their websit e at ww w.opm.go v. This websit e is a good sour ce for go vernment jobs and has on-line applications . The F eder al L abor Relations Author ity oversees the f ederal labor organizations formed t o repr esent f ederal governmental emplo yees . Lik e the NLRB , the FLRA holds and moni tors union elections; det ermines what constitut es a barga ining unit; and implements the la w promul gated b y the FLRA. The Mer it S ystems Protection Boar d is the enf orcement ar m that investig ates and holds hear ings r egarding par tisan political per sonnel practices . In shor t, this agency tr ies t o prevent the appointment of wor kers based on political f avoritism or worse, kickbacks . Section 6.3 Legal Issues of Public Sector Unions One court case that contracted state and federal work - ers’ unionization rights was the June 2014 Supreme Court decision, Harris v. Quinn , 573 U.S. ____ (2014). In this case the court muddied the waters of a 1977 deci - sion ( Abood v. Detroit Board of Education 431 U.S. 209, 1977) in which it ruled that even when employees do not wish to be members of a union, they still had to pay dues, or fair share fees. Harris v. Quinn , however, found that home health care workers could not be forced to pay union fees if they are not in the union. While Harris v. Quinn did not overturn Abood , the court used language to indicate that it might do so in the future, which would be a serious blow to public unions.

The Civil Service Reform Act The next major area of federal law governing federal sector unions is the Civil Service Reform Act of 1978. Before discussing that law, however, it is necessary to understand the civil ser - vice system. In the 1800s federal government jobs were often earned via political cronyism.

This means that friends of politicians were appointed for these jobs, even though they might have little interest in the work—let alone experience or competency. A government overrun with incompetent appointees is bound to be inefficient at best, and a failure at worst.

By the late 1880s there was such an outcry that Congress passed the Civil Service Act , a fed - eral law ensuring that jobs were assigned according to ability. This act created a hierarchy of rules for how to obtain a government position and required applicants to take competitive examinations to qualify for jobs. The act also brought the concepts of civil service together with the labor rights provided by the executive orders into one law, abolished the old U.S. Civil Service Commission, and replaced it with three separate entities: (a) the U.S. Office of Personnel Management ; (b) the Federal Labor Relations Authority (FLRA) ; and (c) the U.S. Merit Systems Protection Board , as illustrated in Figure 6.2. Figure 6.2: Agencies created by the Civil Service Reform Act that govern federal workers These three agencies were established in 1978 to replace the Civil Service Commission. The Of fice of P ersonnel Management oversees federal hi ring, training , and benef its. You can visit their websit e at ww w.opm.go v. This websit e is a good sour ce for go vernment jobs and has on-line applications . The F eder al L abor Relations Author ity oversees the f ederal labor organizations formed t o repr esent f ederal governmental emplo yees . Lik e the NLRB , the FLRA holds and moni tors union elections; det ermines what constitut es a barga ining unit; and implements the la w promul gated b y the FLRA. The Mer it S ystems Protection Boar d is the enf orcement ar m that investig ates and holds hear ings r egarding par tisan political per sonnel practices . In shor t, this agency tr ies t o prevent the appointment of wor kers based on political f avoritism or worse, kickbacks . 6.3 Legal Issues of Public Sector Unions The law governing private unions is found in the National Labor Relations Act and its subse - quent amendments. The law governing public unions is not found in one place, however, nor is it easy to categorize or organize. Understanding laws governing public sector unions is best done by dividing them into two categories: federal and state.

Federal Law Governing Federal Sector Unions This section will discuss the four major areas of federal law that apply to federal sector unions.

They are represented in Figure 6.1: executive orders, court decisions, the Civil Service Reform Act of 1978, and the Postal Reorganization Act of 1970.

The Civil Service Reform Act established a procedure for how workers could deal with labor disputes. This part of the law is commonly referred to as Title VII (not to be confused with the federal statute by the same name that deals with discrimination on the basis of sex) or the Federal Service Labor-Management Statute . Title VII allows federal workers to organize, bargain collectively, and participate in labor organizations but renders certain management rights nonnegotiable. This means that certain issues may not be bargained for, such as inter - nal security practices (5 U.S.C. § 7106[a][1] 1978); the duties to direct and discipline employ - ees ( NTEU v. FLRA , 2012); compensation ( SEIU, AFL-CIO, Local 556 & Dep’t of Army , 1979); the mission of the governmental office; organization of the budget; and the number of employees in an agency.

Title VII allows for the exclusive representative of workers for the purposes of collective bar - gaining. The representative is chosen in an election overseen by the FLRA. Once chosen, that representative negotiates the collective bargaining agreement for all employees in the unit. The Civil Service Reform Act also sets out a list of unfair labor practices, such as interfering with membership in a labor organization, discriminating on the basis of union membership, and refusing to negotiate in good faith. Allegations of unfair labor practices are investi - gated by the general counsel to the FLRA. In the event of an impasse in negotiating, matters are referred to the Federal Mediation & Conciliation Service , which provides assistance to resolve the dispute (Federal Mediation & Conciliation Service, n.d.a.). If no solu - tion can be reached, the matter goes on to the Federal Service Impasses Panel (Federal Labor Relations Authority, n.d.b), a place of last resort if a controversy between a union and a federal administrative agency cannot be resolved. The panel consists of seven mem - bers appointed by the U.S. president, each of whom has considerable experience in dispute resolution.

The panel is authorized to try more traditional meth - ods first, but if those do not resolve the issue, it may employ whatever action it deems necessary to resolve the dispute. Wat ch T hi s To view the opinion issued in the Department of Health and Human Services et al. and Local 1395, American Federation of Government Employees, AFL-CIO dispute, visit ht t p://w w w.google.com/url?sa=t&rct=j &q=&esrc=s&frm=1&source=web&cd=1 &ved=0CB4QFjA A&url=ht tp%3A%2F%2 Fw w w.f lra.gov%2Fsystem%2Ffiles%2Ff sip%2F90%2520FSIP%2520154.pdf&ei= NSA8VMmyNf SasQTwn4KoBA&usg=AFQ jCNEfAiIW6V WoNconvcwsCyf-YxjiQw If you read this opinion, much of which con - cerns the union’s request for parking spaces for its members, you will see that the panel investigated, heard the respective positions of the parties, and essentially made a rul - ing that the employees should have desig - nated parking. Many other examples of the Federal Service Impasses Panel decisions are available online. sea81813_06_c06_123-142.indd 134 12/9/14 11:26 AM Section 6.3 Legal Issues of Public Sector Unions The Postal Reorganization Act Another major piece of legislation governing labor relations in the federal government is the Postal Reorganization Act , which covers workers employed by the U.S. Post Office. This act was passed in 1970 and was the result of a strike by postal workers. The workers struck even though they were not supposed to, and in doing so brought awareness to the fact that they were not well compensated and had no voice in their work environment (U.S. Postal Service, n.d.).

The act authorizes collective bargaining for wages and working conditions. It also provides for binding arbitration if an impasse lasts for more than 180 days after bargaining begins.

The act authorizes the NLRB to determine proper bargaining units, supervise representative elections, and enforce the unfair labor practices provisions. It also protects the rights of all employees to form, join, or assist a labor organization or to refrain from such activity, though the ban on strikes, which is applicable to all federal employees, remains (National Bargain - ing, 2011).

Federal Labor Organizations After considering the underlying federal law regarding federal public sector unions, you might wonder about the viability of these unions. Today federal unions represent hun - dreds of thousands of federal workers. The largest federal union in the United States is the American Federation of Government Employees , which represents more than 670,000 federal employees. Visit its website at ht tp://w w w.afge.org . The National Treasury Employees Union represents more than 150,000 employees in 31 federal agencies and departments, including the Departments of Agriculture, Commerce, Energy, Health and Human Services, and the Environmental Protection Agency. Its website is ht tp://w w w.nteu.org . The National Federation of Federal Employees is a national union representing approxi - mately 110,000 government workers in the Department of the Interior; the U.S. Navy, Air Force, and Army; the Coast Guard; the Department of Veterans Affairs; Indian Health Ser - vice; the Department of Commerce; the Social Security Administration; and the National Park Service, to name a few. Its website is ht tp://w w w.nffe.org . State Public Sector Unions The number and nature of laws governing labor relations at the state and local government level is more complex and less centralized than at the federal level. For purposes of organiz - ing this material, it is helpful to divide state law into four main categories, as represented in Figure 6.3. sea81813_06_c06_123-142.indd 135 12/9/14 11:26 AM 22 Stat es Ha ve compulsor y collectiv e ba rgaining la ws. Allo w unions and emplo yers to negotiat e mandat ory agency f ees f or wor kers who do not join the union. Alask a, Cali fornia, Connecticut, Dela wa re, Ha waii, Illinois, Maine, Mar yland, Massachuset ts, Minnesot a, Mont ana, Ne w Hampshir e, Ne w Jer sey, Ne w Me xico, Ne w York, Ohio, Or egon, Penns ylvania, Rhode Island, Vermont, Washingt on, Wisconsin 24 Sta tes Ha ve “right-t o-wo rk” provisions . Prohibit manda tory agency f ees . Alabama, Ariz ona, Arkansas, Florida, Geor gia, Idaho, Indiana, Iow a, Kansas, Louisiana, Michig an, Mississippi, Nebr ask a, Ne vada, North Car olina, North Da kota, Oklahoma, South Car olina, South Dak ota, Tennessee , Texas, Utah, Virginia, Wyoming 4 Stat es Do not ha ve collectiv e ba rgaining l aw s but do allo w collectiv e ba rgaining . Color ado, Kentucky , Missouri, West Virginia 6 Stat es Prohibit collectiv e ba rga ining with cer tain public sector empl oyees. Nor th C arolina, South C arolina, Virginia Firefigh ters, polic e, and teacher s Tennessee Firefigh ters and police Geor gia Police andteacher s TexasT eache rs Section 6.3 Legal Issues of Public Sector Unions The upper left box represents 22 states with compulsory collective bargaining laws that allow state and local governments to engage in collective bargaining with state workers, and also require all workers in a bargaining unit who do not wish to join a union to nevertheless pay union dues. These are known as mandatory agency fees . The upper right box consists of 24 states that do not allow mandatory agency fees, the so-called right-to-work states.

The bottom left box represents four states that allow their local governments to decide whether they want to bargain with public employees but do not mandate that they must; thus, the decision to bargain is left up to local communities. The bottom right box indicates those states that make it illegal to collectively bargain with firefighters, police, and teachers.

After considering Figure 6.3, there are some conclusions to be made about state labor rules.

First, the United States is divided about whether to recognize and bargain with governmen - tal unions; second, there is strong sentiment against bargaining with state workers in some states, so much so that legislation prohibits it; and third, antiunion sentiment may also include prohibitions against union security clauses (Slater, 2012).

Figure 6.3: Schematic of which states allow collective bargaining by public unions At the state level, the laws that govern labor relations are more complex and less centralized.

Sanes & Schmitt, 2014; Freeman & Han, 2012. 22 Stat es Ha ve compulsor y collectiv e ba rgaining la ws. Allo w unions and emplo yers to negotiat e mandat ory agency f ees f or wor kers who do not join the union. Alask a, Cali fornia, Connecticut, Dela wa re, Ha waii, Illinois, Maine, Mar yland, Massachuset ts, Minnesot a, Mont ana, Ne w Hampshir e, Ne w Jer sey, Ne w Me xico, Ne w York, Ohio, Or egon, Penns ylvania, Rhode Island, Vermont, Washingt on, Wisconsin 24 Sta tes Ha ve “right-t o-wo rk” provisions . Prohibit manda tory agency f ees . Alabama, Ariz ona, Arkansas, Florida, Geor gia, Idaho, Indiana, Iow a, Kansas, Louisiana, Michig an, Mississippi, Nebr ask a, Ne vada, North Car olina, North Da kota, Oklahoma, South Car olina, South Dak ota, Tennessee , Texas, Utah, Virginia, Wyoming 4 Stat es Do not ha ve collectiv e ba rgaining l aw s but do allo w collectiv e ba rgaining . Color ado, Kentucky , Missouri, West Virginia 6 Stat es Prohibit collectiv e ba rga ining with cer tain public sector empl oyees. Nor th C arolina, South C arolina, Virginia Firefigh ters, polic e, and teacher s Tennessee Firefigh ters and police Geor gia Police andteacher s TexasT eache rs sea81813_06_c06_123-142.indd 136 12/9/14 11:26 AM Section 6.3 Legal Issues of Public Sector Unions Even Without Collective Bargaining, Unions Help Workers One might ask why unions would organize at all if collective bargaining is not mandated.

After all, without collective bargaining, there might appear to be little benefit to belonging to a union. However, studies show that there are indeed benefits to the existence of labor orga - nizations even in states that do not recognize collective bargaining. For example, data shows that union membership is correlated to higher pay, regardless of whether states allow collec - tive bargaining (Freeman & Han, 2012). In addition, unions offer employees an opportunity to share information and data for organizational purposes without fear of retaliation. Even without collective bargaining, unions and union activity are still protected under Section 7 (Sachs, 2013).

Problems With Public Union Collective Bargaining Even in states that allow public unions to collectively bargain, this benefit may be of little use at times. This is because in some states, the state employer may declare a financial emergency.

When this occurs, the governmental entity is often empowered to change the terms of the bargaining agreement. Little proof of what constitutes a financial emergency is needed; just testimony. As a result, states have no reason to hesitate to declare a financial crisis.

Consider the advantage this offers to a governmental entity, say, in Florida. In that state, the parties may declare an impasse and proceed directly to arbitration. Arbitration, however, is not binding. It is only a recommendation. The government or municipality is the final deci - sion maker. This means that the very municipality that sits at the bargaining table has no reason to continue bargaining. If it can find a reason for a financial emergency, then it can stop negotiations, declare an impasse, proceed to arbitration, ignore the finding of the arbitrator, and conclude the dispute with terms in its favor (Summers, 2003). This occurred in the case Communications Workers of America v. Indian River , in which the school board declared an impasse and presented the union with a notice that it was skipping mediation, and declared a financial emergency.

Case Study of Individual States In-depth coverage of state statutes in three states demonstrates how the laws in each differ and overlap.

Michigan. The state of Michigan has well-developed laws pertaining to labor relations for public sector employees. The state has the Michigan Employment Relations Commission, which administers Michigan’s Public Employment Relations Act (PERA). PERA grants collec - tive bargaining rights to public employees, defines unfair labor practices by both employers and labor organizations, and outlines when compulsory arbitration of labor management dis - putes is warranted.

For example, in disputes involving the police and firefighters, any party can request compul - sory binding arbitration . This means that the parties must submit to the arbitration pro - cess: A neutral third party (the arbitrator) hears the dispute much like a judge and renders an opinion about whose position should prevail. The statute sets out an expedient and quick resolution of the grievance. Once complete, the binding aspect means that the dispute cannot be heard again. It also means that if the parties appealed the decision to a court, only proce - dural violations would be considered, not the substance of the ruling (Compulsory Arbitra - tion, n.d.). Binding arbitration guarantees that the dispute will end. sea81813_06_c06_123-142.indd 137 12/9/14 11:26 AM Section 6.3 Legal Issues of Public Sector Unions The Michigan law closely parallels the NLRA. For example, to form a union, a majority of workers in the bargaining unit sign cards stating that they would like a particular labor orga - nization to represent them for the purpose of collective bargaining, just as they would if they were under the NLRA.

PERA sets forth various employer and union unfair labor practices. For example, Section 10(1)(a) of PERA declares it unlawful for a public employer to interfere with, restrain, or coerce public employees in the exercise of their right to organize. Section 10(1)(c) declares it unlawful for a public employer to discriminate when hiring employees or in its terms or conditions of employment. Additionally, charges of unfair labor practices under PERA may be filed (a) by a labor organization or public employee against a public employer or (b) by a public employer, public employee, or labor organization against a labor organization.

There are two differences that distinguish Michigan’s law from the NLRA. The first is that the Michigan law requires compulsory binding arbitration for police and fire departments in the event of a contract dispute. Compulsory arbitration means the parties have no choice but to submit to the process of arbitration. After the hearing before an arbitrator, an opinion is ren - dered that cannot be appealed. Second, the Michigan law prohibits strikes or walkouts, whereas the NLRA guarantees the right to strike. To learn more about public sector unions in Michigan, visit ht tp://icma.org/en/icma/knowledge_net work/documents/kn/Document /302978/Public_sector_unions_in_Michigan_their_presence_and_impact_according_to _local_ government _leaders . North Carolina. At the other end of the spectrum is North Carolina, a state that prohibits any contract between the government and a labor union and prohibits collective bargain - ing. This does not mean that govern - ment workers cannot organize or join a union. The cases discussed previ - ously grant the right of all employees in all states to freely associate under the First Amendment. However, North Carolina’s prohibition against collec - tive bargaining means that employ - ees can join a union, but the union will never be allowed to sit down with managers and negotiate an agree - ment; in fact, managers are prohibited from doing so, which greatly dimin - ishes the union’s power. To learn more about the prohibition against collec - tive bargaining in North Carolina, visit ht tp://w w w.southernstudies.org /2009/05/50-years-is-enough-nc -public-workers-lobby-for-collective -bargaining-rights.html . Wisconsin. In 2010 Scott Walker ran for governor of Wisconsin on the plat - form that he would reduce the state’s Morry Gash/Associated Press Governor Scott Walker of Wisconsin enacted a plan to reduce the state’s budget deficit by requiring public employees to contribute to their pensions and pay annual health insurance premiums, among other measures. sea81813_06_c06_123-142.indd 138 12/9/14 11:26 AM Summary & Resources budget. Walker ran his campaign on a budget repair bill that would make public employees contribute to their pensions, cap wage increases, require workers to pay 12% of their monthly health insurance premiums, and limit collective bargaining to wages. All other issues would be off the table. Walker argued that the state was billions in debt and the monies needed to be made up somewhere.

This direct affront on unions was ironic, considering that it occurred in the state that was the first in the country to authorize public unions. Yet Walker succeeded in getting his legislation passed, sustained the law through numerous court challenges, and also survived a vote to recall him as governor. Overall, the state’s budget problems improved because state workers’ salaries decreased between 5% and 14%, and they were also required to make increased contributions to their pensions, which further relieved the state’s financial obligation in this area (Craver, 2014). The city manager of Oshkosh, Wisconsin, reported a 1-year savings of $1.2 million because employees were paying more of their pension and health contributions (Greenhouse, 2014).

The state employees who previously had a strong union saw a drop in membership by 70%.

Teachers in the state also have had pay freezes, the decertification of approximately 80% of their unions, and an inability to bargain for wages as well as increases in the amount they have to contribute to their pensions (Greenhouse, 2014). To learn more about this situation, visit ht tp://w w w.ny times.com/2014/02/23/business/wisconsins-legacy-for-unions.html . 6.4 The Future of Public Sector Unions It remains to be seen whether public sector unions will survive; and if they do, what will they look like? In their 60-year history, much has occurred to erode their strength. Given that the political climate increasingly features the election of candidates who run on campaign plat - forms to eliminate public unions, the public’s opinion of public sector unions is mixed. Only about 53% of all Americans have a favorable opinion of labor unions, though 64% agree that unions are necessary to protect working people (Pew Research Center for the People & the Press, 2013).

Former National Labor Relations Board chair William B. Gould IV said, “The handwriting is indeed on the wall and the public sector unions face a daunting task in fending off future adverse rulings” (as cited in Totenberg, 2014). Whether this is true remains to be seen, but it is clear that public unions have much to challenge them, including a poor image that will need reparation. Only time will tell if these important parts of the overall labor movement will survive, and if so, what form they will take in the future.

Summary & Resources Summary of Chapter Concepts • Private sector unions differ from public sector unions in several ways. The private sector is governed by the National Labor Relations Act and the National Labor Rela - tions Board, which give workers the right to unionize and collectively bargain with sea81813_06_c06_123-142.indd 139 12/9/14 11:26 AM Summary & Resources American Federation of Government Employees An American labor union repre - senting more than 670,000 employees of the federal government.

Civil Service Act A federal law passed in the 1880s to ensure that jobs were handed out in accordance with ability. Civil Service Reform Act A federal law that brought the concepts of civil service together with the labor rights provided by the executive orders into one law, abolished the old U.S. Civil Service Commission, and replaced it with three separate entities: (a) the U.S. Office of Personnel Management, (b) the Federal Labor Relations Authority, and (c) the U.S. Merit Systems Protection Board. their employers; the public sector is governed by a variety of federal and state laws, court decisions, and acts. • Public sector workers do not have the right to collectively bargain unless a statute, case law, or local ordinance has specifically granted those rights. • In general, public sector unions are growing while private sector unions are declin - ing in membership, but recent political changes portend that this growth may not continue. • Private sector unions depend on the health of the economy when factoring in wages and conditions of employment; public unions cannot necessarily rely on economic factors to determine wages. • In negotiating collective bargaining agreements, representatives for private sector unions have much more flexibility and authority, whereas public sector union repre - sentatives usually have little flexibility or authority. • Public sector employees vote in state and federal elections and elect the government representatives who may be their supervisors, and thereby influence the rules and regulations that will govern them. • Public sector workers may live in a state that bans union security clauses, which makes compulsory membership in the unit’s union or the compulsory payment of union dues illegal. • Firefighters, police, and teachers are special types of employees who are so neces - sary to public safety and welfare that some states do not allow them to collectively bargain or go on strike. • Although public sector workers are prohibited from striking, the growing number of public sector unions has nevertheless resulted in an increase in strikes. • Federal sector unions are formed based on the First Amendment right to associa - tion, federal executive orders that allow union formation and collective bargaining, and case law. • The Civil Service Reform Act of 1978 updated the civil service system and created three agencies to deal with federal government workers, including the Federal Labor Relations Authority, an agency similar to the National Labor Relations Board. • States are divided into four types in terms of recognizing public sector unions: those that have compulsory collective bargaining and mandate that all workers in a bargain - ing unit pay dues; those that prohibit collective bargaining and prohibit the payment of dues; those that have compulsory collective bargaining but are right-to-work states; and those that allow collective bargaining but do not require it. Key Terms sea81813_06_c06_123-142.indd 140 12/9/14 11:26 AM Summary & Resources compulsory binding arbitration Legally required arbitration between parties in a labor dispute.

compulsory collective bargaining law A law that allows unions and employers to negotiate mandatory agency fees for work - ers who do not join a union; 22 states have compulsory collective bargaining laws.

Executive Order 11491 An expansion of Executive Order 10988, this order estab - lished the Federal Labor Relations Council.

Federal Labor Relations Authority (FLRA) A federal administrative agency that was created by Title VII of the Civil Service Reform Act of 1978 and allows certain fed - eral employees to organize, bargain collec - tively, and participate in labor organizations.

Federal Mediation & Conciliation Service Created by the Taft-Hartley Act in 1947 with the mission to minimize the impact of labor management disputes on the free flow of commerce, this agency provides free media - tion services in contract disputes between employers and unionized employees.

Federal Service Impasses Panel This panel resolves impasses between federal agencies and unions representing federal employees arising from negotiations over conditions of employment under the Fed - eral Service Labor-Management Relations Statute.

Federal Service Labor-Management Statute Also known as Title VII of the Civil Service Reform Act of 1978, this law sets forth the rules regarding labor organizations in the federal government.

Keyeshian v. Board of Regents A U.S. Supreme Court case that established the right to unionize as a First Amendment right having to do with the right of association; therefore, anyone in the public or private sector may form or join a union. mandatory agency fees For all employees in a bargaining unit, the requirement that they pay dues to the union, whether they are members or not.

National Federation of Federal Employees One of the larger federal workers’ unions, representing approximately 110,000 gov - ernment workers.

National Treasury Employees Union One of the larger federal workers’ unions, representing more than 150,000 employees in 31 federal agencies and departments.

Postal Reorganization Act A 1970 federal law that deals with the organization of the post office as well as pensions and terms and conditions of employment of postal workers.

private sector Nongovernmental. public sector Governmental. Title VII Part of the Federal Service Labor-Management Statute of the Civil Ser - vice Reform Act of 1978, this law sets forth the rules regarding labor organizations in the federal government.

union security clause A provision in a col - lective bargaining agreement that requires all employees in a bargaining unit to pay union dues whether they are members of the union or not.

U.S. Merit Systems Protection Board An agency created by the Civil Service Reform Act of 1978 that establishes stan - dards for hiring federal employees.

U.S. Office of Personnel Management One of the three federal agencies created by the Civil Service Reform Act of 1978 that oversees federal job announcements and conducts background checks. sea81813_06_c06_123-142.indd 141 12/9/14 11:26 AM Summary & Resources Critical Thinking Questions 1. State policies are widely divergent with regard to public sector unions. In your opin - ion, why is this? Do you notice a particular political affiliation associated with the states that are right-to-work compared to those that are not? Does right-to-work fall along conservative or liberal lines? If you identify a trend, offer an explanation for why. 2. Governor Scott Walker successfully took on the public unions in Wisconsin. What factors played into his success? Was Wisconsin an anomaly in its ability to limit public sector unions, or are there other states that will or could soon follow suit?

What do you think are among the most important factors that will sway a state on this issue? Research Projects 1. Choose a current topic to research from the AFSCME website ( ht tp://w w w.afscme .org/issues ). In light of what you have learned in this chapter about the state of affairs for public unions, does the topic you chose have any relevance to the survival of the union? If yes, how is it related? If not, how would you gauge the topic you picked next to the survival of the union? What topics would you list on the website if you ran the AFSCME, and why? 2. Study how to organize a public sector union at ht tp://w w w.afscme.org/news /publications/next-wave-toolkit . After reading this article, describe how you would go about starting a union and what steps you would take. Does this article offer realistic advice in terms of being able to organize a union? Or do you feel that it is impossible in the current climate to successfully organize? Why or why not? sea81813_06_c06_123-142.indd 142 12/9/14 11:26 AM