Political scientists Sarah Anzia (Berkley) and Terry Moe (Stanford) have a new working paper looking at an old question: does the unionization of public employees increase the costs of state and local government? At the risk of being presumptuous, I'd say that most readers of this blog think the answer is yes. And they have economic theory on their side, which predicts that public sector unions will seek to extract rents (salaries, benefits, and work rules) that make government more expensive. Nonetheless, it is always nice to have the best available empirical data treated with the best available statistical methods to provide more confirmation.
Anzia and Moe offer three studies--using different datasets and looking at different time periods--to offer an comprehensive picture. The first...
Anzia and Moe offer three studies--using different datasets and looking at different time periods--to offer an comprehensive picture. The first...
The first looks at the
effect of unionization on costs by looking at municipal governments
overtime. Looking before and after the introduction of collective
bargaining and unionization, the authors found that organizing helped
secure firefighters and police officers better salaries and increased
the amount of fire and police protection the cities offered. After
unionization firefighters earned 3.9% more, police officers 2.3% more,
and cities' spending on fire and police protection increased 11% and
3.7% respectively.
The second study examines the effect of granting collective bargaining rights to public employees by comparing police and firefighters who have such rights and belong to unions to those who don't. The authors find that municipal fire departments with collective bargaining spend about 9% more per employee on salary and 25% more on benefits.
The third study examines state pension commitments. The authors find that not only does unionization of government workers strongly correlate with increased pension and healthcare commitments by state government but that unionization also increases the amount of underfunding of those pensions. Moving from the least to the most unionized state, they argue, means an increase of $9,857 in pension liabilities for every person in the state or 20% of the state's GDP.
To arrive at these findings Anzia and Moe use the latest statistical techniques and build upon prior research by labor economists. As they put it: "These studies go beyond the existing literature in important respects: they are based on better measures of key variables (collective bargaining, employee benefits), they recognize endogeneity issues (which have to do with why some governments have collective bargaining and some do not), and they introduce new and more modern data from the 1990s and 2000s that helps to bring the literature up to date."
Anyone who wants to argue that public sector unions don't make government more expensive will have to grapple with the findings of this paper, which like almost all social science are not airtight but are quite compelling.
Of course, how one evaluates the expense of government is another question entirely. It appears undoubtedly good for public employees themselves. Whether it is good for everyone else is a harder question.
The second study examines the effect of granting collective bargaining rights to public employees by comparing police and firefighters who have such rights and belong to unions to those who don't. The authors find that municipal fire departments with collective bargaining spend about 9% more per employee on salary and 25% more on benefits.
The third study examines state pension commitments. The authors find that not only does unionization of government workers strongly correlate with increased pension and healthcare commitments by state government but that unionization also increases the amount of underfunding of those pensions. Moving from the least to the most unionized state, they argue, means an increase of $9,857 in pension liabilities for every person in the state or 20% of the state's GDP.
To arrive at these findings Anzia and Moe use the latest statistical techniques and build upon prior research by labor economists. As they put it: "These studies go beyond the existing literature in important respects: they are based on better measures of key variables (collective bargaining, employee benefits), they recognize endogeneity issues (which have to do with why some governments have collective bargaining and some do not), and they introduce new and more modern data from the 1990s and 2000s that helps to bring the literature up to date."
Anyone who wants to argue that public sector unions don't make government more expensive will have to grapple with the findings of this paper, which like almost all social science are not airtight but are quite compelling.
Of course, how one evaluates the expense of government is another question entirely. It appears undoubtedly good for public employees themselves. Whether it is good for everyone else is a harder question.
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