Collective Bargaining or More Regulation: Take Your Pick

Hard-line reformers seeking to rein in the influence of public employee unions by taking away their collective bargaining power might want to recall the old adage: "don’t pray too hard for what you want, because you might get it."

Kenneth G. Dau-Schmidt, a professor of labor and employment law at Indiana University’s Maurer School of Law, said the potential unintended consequences of such reform could be far less palatable to the reformers than the status quo.

Here’s how Dau-Schmidt sees it playing out if politicians succeed in stripping public employee unions of their ability to negotiate wages and benefits through collective bargaining: when the political winds inevitably shift away from austerity measures targeting massive budget deficits, large numbers of union members and their supporters are going to head to the polls to elect people sympathetic to their cause.

And when that happens, Dau-Schmidt sees those politicians enacting regulations on both public and private sector employers designed to offset the powers now under attack as voters and elected officials focus laser-like on austerity.

That hypothetical scenario is surely less preferable than the current system of collective bargaining, said Dau-Schmidt.

“Collective bargaining is less radical than regulation,” he said. “It’s a better solution and it’s more consistent with American capitalism to resolve these issues through collective bargaining rather than regulation.”

Dau-Schmidt said collective bargaining allows both sides to come together to negotiate “a more localized solution to the issue that both parties can agree to and live with.” Regulation amounts to “an outsider” in the form of government “imposing a solution,” he added.

But despite the practice being under fire in several states facing sizable budget gaps, it’s probably premature to start writing the obituary for collective bargaining for public employees.

The problem for those who would wipe collective bargaining off the map is that it’s not under fire in an equal number of states with equally sizable – if not larger – budget gaps.

“It’s a national issue with 50 different solutions,” said Steve Malanga, a senior fellow at the Manhattan Institute, a conservative-leaning research center.

In Wisconsin, scaling back the collective bargaining power of the state’s public employees has emerged as the centerpiece of newly-elected Republican Governor Scott Walker’s efforts to fill a projected $3.6 billion budget shortfall in the next two years.

The effort has drawn thousands of protestors – mostly union supporters -- to Wisconsin’s state capitol building in Madison, and focused national attention on the debate.

A similar challenge is underway in Ohio, where Republican Governor John Kasich has said the state could save $1 billion annually if reforms to the state’s collective bargaining laws are passed. Ohio is reportedly facing a two-year deficit of about $8 billion.

Meanwhile, in New Jersey and New York, two states facing deficits that swamp those in Wisconsin and Ohio, collective bargaining reform isn’t even on the table.

New Jersey Governor Chris Christie, also a Republican and one with a growing national reputation as a tough fiscal conservative, has participated in an often bitter year-long battle with public employee unions over what he has described as overly generous benefits. But the two sides have never debated the pros and cons of collective bargaining.

Across the Hudson River in New York, newly-elected Democratic Governor Andrew Cuomo has also made fiscal responsibility and slashing government spending hallmarks of his early tenure. But Cuomo’s bogeymen are waste and outright corruption, not unions and collective bargaining.

According to Malanga, the only thing that’s “pretty clear” as the call for reform has intensified is that “there won’t be any expansion” of collective bargaining powers in the 12 states where no laws for the negotiating practice exist.

Politicians elected last fall on a wave of growing resentment toward bloated government budgets and increasingly burdensome taxes are increasingly targeting collective bargaining as a way of gaining flexibility in contract negotiations with public employees.

“Collective bargaining in the public sector means that it’s always in the self-interest of public unions to lobby for bigger government and more taxes,” said Malanga. “So any real reform will have to go through the tax payers not through the unions in the form of tax payers voting for candidates who embrace that reform agenda.”

That ostensibly happened in November when a groundswell of Republican support left the GOP in charge of 29 state legislatures.

But those politicians will need to strike while the iron is hot.

As has already been demonstrated in Wisconsin and Ohio, reforming collective bargaining laws at the state level promises to be a “huge political fight,” Malanga said, adding, “If they don’t get it done this year the momentum will probably dissipate.”

A state senator in Ohio named William Seitz has proposed a handful of reforms to the collective bargaining process that he says are “long overdue” but which he believes don’t “overreach.” For instance, the “first and primary factor” to be considered during negotiations between public unions and their employers should be “the employer’s ability to pay,” Seitz wrote in an editorial posted on a Cincinnati news web site.

Critics of collective bargaining have long argued that politicians, in their zeal to court union votes, have made promises they can’t keep in the form of overly-generous benefit guarantees, and that those chickens are now coming home to roost.

Seitz also called for reform that would allow renegotiation of union contracts in the event of a fiscal emergency such as the recent economic crisis. “The taxpayer’s wallet is not infinite, and the state cannot declare bankruptcy,” he wrote.