Volume 21

THE EFFECTS OF PROJECT LABOR AGREEMENTS IN MASSACHUSETTS by Jonathan Haughton, Ph.D., Darlene C. Chisholm, Ph.D. and Paul Bachman, MSIE* Beacon Hill Institute

Executive Summary

The Beacon Hill Institute has completed a groundbreaking study of the effects of Project Labor Agreements (PLAs) on the costs of school construction projects. In our analysis of 54 school construction projects undertaken in the Greater Boston area since 1995, we find that costs are substantially higher when a school construction project is executed under a PLA. After adjusting the data for inflation, using an index that includes the trend in both construction wages and in materials costs, and after controlling both for the size of projects and for whether they involve new construction or renovations, we find that the presence of a PLA increases project costs by $37.88 per square foot (in 2001 prices) relative to non-PLA projects.

This price differential represents 22.1% of the cost ($171 per square foot) of the average PLA project and amounts to an average of more than $5.0 million out of the $22.7 million cost per school. To illustrate: Malden could have saved $5.3 million on the Beebe School, Wilmington could have saved over $5.7 million on its new middle school, and Milton could have saved almost $6.6 million on its new high school had those projects not been bid under PLAs. Our findings show that the potential savings from not entering a PLA on a school construction project range from $1.9 million for a 50,000-square-foot structure to $9.5 million for a 250,000-square-foot structure.

Massachusetts policymakers and taxpayers need to consider this substantial additional cost in determining whether a PLA agreement is best for school construction in their towns or school districts.

I. Introduction

Project Labor Agreements (PLAs) discourage non-union contractors from bidding on state construction projects by requiring them to conform to union rules and hire through union halls. It is widely believed that construction projects are more expensive when a PLA is in effect. Until now, however, the evidence for this has been largely anecdotal. No one has, to our knowledge, attempted carefully to estimate the degree to which PLAs might increase project costs.

The current study breaks new ground in that it presents clear evidence on the differences in cost per square foot between PLA and non-PLA projects. This measure is based on a thorough study of the cost of school construction projects in the greater Boston area since 1995. We use our measure to estimate the cost savings that would have accrued to three Massachusetts communities had their recent school construction projects not involved PLAs.

II. Historical Background of PLAs

Project Labor Agreements are a form of “pre-hire” collective bargaining agreement between the construction clients (such as towns or school districts) and labor unions pertaining to a specific project, contract or work location, and are unique to the construction industry. The terms of PLAs generally recognize the participating unions as the sole bargaining representatives for the workers covered by the agreements, regardless of current union membership status of these workers. A PLA requires all workers to be hired through the union hall referral system. Non-union workers must join the signatory union of their respective craft and pay dues for the length of the project. The workers’ wages, pension contributions and working hours and the dispute resolution process and other work rules are also prescribed in the agreement. PLAs supersede all other collective bargaining agreements and prohibit strikes, slowdowns and lockouts for the duration of the project.1

Project Labor Agreements in the United States originated in the public works projects of the Great Depression, which included the Grand Coulee Dam in Washington State in 1938 and the Shasta Dam in California in 1940. PLAs have continued to be used for large construction projects since World War II, including the construction of Cape Canaveral in Florida, the current central artery project (the “Big Dig”) in Boston, and even private projects, such as the Alaskan pipeline and Disney World in Florida.

PLAs in the Balance

As PLAs have become more common in publicly financed construction projects, and as the number of non-union construction firms has grown, PLAs have become controversial. Opponents of PLAs argue:

  1. that the agreements raise the cost of undertaking projects, and
  2. that non-union or open-shop contractors are discouraged from bidding on jobs that have PLAs.

Opponents cite the PLA requirements that all employees must be hired in union halls, pay union dues, contribute to union-sponsored retirement plans, and follow union work rules. They argue that the use of a union hiring hall can force the contractors to hire union workers over their own work force. The contractors and their employees are required to pay union wages, dues and contributions into union benefit plans even if covered by their own plans. The work rules restrict the contractors from using their own more flexible operating rules and procedures. These restrictive conditions cause costs to rise for a project that requires a PLA. In passing, it is worth noting that whether or not a PLA is in effect, all contractors must adhere to any “prevailing wage” rules that may be in effect.

Furthermore, open-shop contractors contend that their competitive advantages are nullified by the PLA. The result is that in practice, if not in principle, they are unable to bid competitively on jobs that have a PLA requirement. In turn, the absence of open-shop bidders for PLA projects results in fewer bidders for the project, and with fewer bidders, the lowest bids come in higher than if open-shop contractors had participated. Therefore, the cost of the project will be higher, with fewer bidders attempting to under-bid each other for the contract. Some opponents also argue that requiring a PLA violates state competitive bidding laws that require a free and open bidding process. A number of critics even see PLAs as a form of extortion, with an implicit threat that if a town does not agree to a PLA, then there is more likely to be disruption at the workplace.

Proponents of PLAs claim that the agreements provide for work conditions that are harmonious, and that they guarantee wage costs for the life of the contract. They contend that the provisions that prohibit strikes, slowdowns and lockouts keep the project on time and prevent cost overruns due to delays. Furthermore, the wage stipulations allow firms accurately to estimate labor costs for the life of the project and thus have more accurate bids. Also, the union rules allow for a safer work environment, thereby reducing accidents and thus lowering the number of workman’s compensation claims. Workers’ union certifications ensure the quality of the work and save money by avoiding costly mistakes. Or so it is argued.

The controversy over the use of PLAs in public construction projects has become more intense since the late 1980’s. Open-shop (non-union) construction firms and industry organizations have challenged PLAs in the courts. As discussed below, the executive and legislative branches at the federal, state and local levels of government have at times taken positions in favor of the use of PLAs.

PLAs at the Federal Level

The executive branch of the federal government has been involved in the PLA debate for over a decade. The administration of George H. W. Bush issued an Executive Order in 1992 forbidding the use of PLAs on federally funded projects.2 The Clinton Administration rescinded that order in February 1993 and attempted to go further in 1997, when it planned to issue an executive order requiring all federal agencies to use PLAs on their construction projects. However, due to extensive lobbying, the President instead issued a memorandum encouraging the use of PLAs on contracts over $5 million for construction projects, including renovation and repair work, for federally owned facilities.3 President George W. Bush canceled the Clinton order on February 17, 2001 by issuing an executive order prohibiting PLAs on federally funded and assisted construction projects.4

PLAs in Massachusetts

In Massachusetts, PLAs appeared on the legislative agendas of local and state governmental bodies as efforts were made to require them on local construction projects. The city of Cambridge has enacted a local ordinance that has put in place many of the same requirements that are found in PLAs, for all public projects. The Massachusetts legislature inserted PLA requirements in authorizing construction projects in the cities of Taunton and Brockton, and passed them over a veto by the Governor. The legislature also attempted to require PLAs on a bond authorization for the rebuilding and repair of courthouses throughout the state. Under intense negotiation between the legislature and the Governor’s office, a bill was produced that mandated PLAs for funds allocated to courthouse construction projects in Boston, Worcester, and Fall River only. The legislation created a commission to recommend establishing circumstances in which PLAs should be used. The legislation instructed the commission to consider the “appropriateness and function and the size, complexity and duration of the public construction projects” when deciding whether or not to use PLAs.5

The litigation came to a head in a 1993 Supreme Court case involving the cleanup of the Boston Harbor. In 1988, a federal court directed the Massachusetts Water Resources Authority to clean up the pollution in Boston Harbor. The Authority’s project management firm, IFC Kaiser, negotiated a PLA with the local construction unions for the project. The precedent-setting aspect of this PLA was that its use was mandated in the project’s bid specifications.6 A non-union trade group filed a lawsuit contending that requiring the PLA as a part of the bid specification violated the National Labor Relations Act. The case was appealed to the United States Supreme Court, which, in 1993, upheld the use of the PLA for the project. The Supreme Court ruling opened the door for the use of PLAs in other public Massachusetts projects, including local school construction.

School Construction Financing in Massachusetts

The School Building Assistance Program in Massachusetts has aided public school construction for more than half a century. The program began in 1948 as a three-year effort to provide resources to local communities for the building of schools for the “Baby Boom” generation, with a 25% percent reimbursement rate for the local school districts.7

The program has since grown to represent a hefty burden on state finances. After several extensions, today “the school building assistance program is the largest capital grant program operated by the Commonwealth … and the costs of the school building assistance program are increasing at an unsustainable rate.”8 In 1999, the program offered, on average, a 69% reimbursement rate for the construction and financing costs of school projects. Over the period 1991-1999 the Commonwealth of Massachusetts made total contributions to the program of more than $1.7 billion.9

The financial commitment for the state rose consistently over the 1990s. In fiscal year 1999, the annual payment for school construction projects was $201 million, a 58% increase from the $127 million appropriated in 1991.10By FY2003 school construction appropriations had jumped to $362 million, a remarkable 80% increase over the FY1999 level.11 According to the School Building Assistance Program website, for fiscal year 2003, there were 283 construction projects on the Priority List, with 19 new projects receiving authorization. The rapid growth of the program has prompted increased attention to the issue. A report entitled Reconstructing the School Building Assistance Program Policy Report, published in 2000, predicted that by FY2002 “this program will achieve ‘budget buster’ status.”12 It is within this fiscal environment that school construction costs have become an important concern in the building of public schools in Massachusetts.

III. The Evidence on PLAs

Although there is substantial anecdotal evidence that PLAs raise construction costs, no studies have provided formal statistical evidence of such an effect. To compare PLA with non-PLA costs it would be necessary to compare construction projects of a similar nature – for instance road repairs – where some projects are done with a PLA in place, and others are not. Situations such as this are rare, and even when they occur, the relevant information is difficult to obtain.

We have, however, found one suitable “natural experiment” that allows us formally to compare the costs of PLA and non-PLA projects. Driven by an increase in the student population, and encouraged by financial support from the state, many of the roughly one hundred towns and cities in the greater Boston area have financed school construction over the past several years. Some towns had PLAs in effect during the construction bidding process while others did not. Using data on construction bid costs, adjusted for inflation with an appropriate construction cost index, we were able to measure the difference in cost per square foot of construction between schools where a PLA was in effect and schools where there was no such agreement. Before reporting the results, we first need to discuss the sources of the data that we used, and explain how we adjusted for construction costs over time.

Data Sources

Our primary source of data was F.W. Dodge, McGraw-Hill Construction Information Group, a division of the McGraw-Hill Companies, in Lexington, Massachusetts. Dodge provided us with information on a variety of construction projects in the greater Boston area for the period 1995 through 2001, including the price of the winning bid, and the size of the project (in square feet). We supplemented these data with information on more recent projects by contacting school officials and construction companies, and by visiting official school web sites containing current construction-project information. Surprisingly, the Commonwealth of Massachusetts does not keep adequate or detailed information on the schools that are built largely at its expense.

We then excluded all projects with a valuation below $1 million, on the grounds that these are typically too small to be of interest to union contractors. We further focused our study on school construction projects between 20,000 and 250,000 square feet in size. Information on whether PLAs were in effect or not was obtained by contacting town and city officials (or in some cases, architects and contractors) in each of the towns for which we had cost information. Our sample comprises the 54 projects for which we had data, 31% of which involved PLAs, the remainder of which did not.13

Adjusting for Inflation

Our sample of schools covers the period 1995 to the present. In order to compare the construction costs of PLA with non-PLA schools, it was first necessary to correct for the fact that construction costs rose during this period, so that all costs could be expressed in 2001 prices. Specifically, we constructed a cost index that included both the trend in construction wages and the trend in materials costs between 1995 and 2001. Using 2001 as the base year, we first constructed a wage index, which was based on total wages and salaries for construction workers in Massachusetts, divided by the total number of workers in that sector.14

In order to account for the changes in materials costs, we constructed a price index based on the producer price index for intermediate materials, supplies, and components, as reported in The Economic Report of the President, February 2002.15 To construct the final cost index used in our analysis, we weighted the wage index and the adjusted producer price index equally to reflect the relative importance of wages and materials costs in a typical construction project. We applied the average annual increase in this index for 1995 through 2001 to estimate the expected price indices for 2002 and 2003.

Comparing PLA to Non-PLA Projects

A comparison of the key characteristics of the school construction projects in towns with a PLA (“PLA projects”) with those where there was no such agreement (“non-PLA projects”) is shown in Table 1. The most interesting finding is that PLA projects, on average, cost $35.24 more per square foot (in 2001 prices) than non-PLA projects. 

The immediate question that comes to mind is whether the cost of PLA projects is statistically significantly higher than the cost of non-PLA projects. Could it be that the difference is due to chance, so that if one were to observe more examples of projects, the difference might disappear?

One way to address the issue is with a formal regression analysis. The dependent variable is the cost per square foot of construction (in 2001 prices). The independent variable of most interest to us is a dummy variable that is set equal to 1 for PLA projects and to 0 otherwise. We control for whether the project involves new construction or a renovation by including a dummy variable set equal to 1 for new projects and to 0 otherwise. We also control for the impact of a project’s scope on the cost per square foot by controlling explicitly for square footage, and for square footage squared. This is desirable because there may be economies of scale (within reason) in school construction, so that larger schools may have lower costs per square foot. The ordinary least squares regression results are presented in Table 2.

 

Our results show that PLA projects add $37.88 per square foot to project costs, controlling for whether or not the project involves new construction, and controlling for the project’s square footage. A formal (one-tailed) test of the statistical significance of this coefficient gives a p-value of 0.00, which means that there is less than a 1% chance that we have accidentally found that PLA projects are more expensive than non-PLA projects. Put another way, there is at least a 99% probability that PLA projects really are more expensive than non-PLA projects. With an R 2 =0.43, the equation “explains” a respectable 43% of the variation in construction costs across towns. The equation also shows that:

 

 

  • projects involving new construction rather than renovations experience significantly lower costs per square foot; and
  • the size of a project (in square feet) has some influence on the cost per square foot. For instance, a typical 110,000 square foot project would cost $4.00 less per square foot than a typical 100,000 square foot project. This effect – lower unit costs for larger projects – applies only to projects up to 147,000 square feet in size.

IV. The Million-Dollar Question

Towns in Massachusetts are increasingly being asked to answer the question: Should Project Labor Agreements govern school construction projects? In the cases that follow, we provide some additional context for the use of PLAs in Malden, Wilmington and Milton. We then use our statistical results to estimate the savings that these towns would have obtained if they had not used PLAs. The savings are potentially large; in many cases it really is a million-dollar question.

Malden, Massachusetts

In 1996, the city of Malden began a five-year $100-million series of projects to replace its schools serving kindergarten through eighth-grade, and to remodel Malden High School. The projects were to be accomplished by closing nine existing schools, replacing five schools, and demolishing three.

On the recommendation of its construction project management firm, O’Brien-Kreitzberg, Inc., the city of Malden negotiated a PLA with the Building and Construction Trades Council of the Metropolitan District, AFL-CIO and the New Council of Carpenters, AFL-CIO. The agreement included many of the PLA provisions discussed in Section II, including: the recognition of unions as the sole and exclusive bargaining representatives of all project employees; hiring through the union referral process; the requirement of contractors to contribute to union employee benefit plans; uniform work rules and dispute resolution; and prohibiting strikes, picketing, work stoppages, slowdowns, and lockouts.16 The PLA was approved by a vote of the City of Malden municipal building committee in May of 1997; union approval followed.

In the initial phase of the project, the city bid the construction of the Beebe and Roosevelt schools as one project, with the stipulation that the project was subject to the PLA requirement. When the bids were reviewed by the city, the lowest exceeded the project budget and all bids were subsequently rejected. The project was modified and the city offered each school for bid separately.

On November 7, 1997, seven open-shop (non-union) contractors with public sector building experience filed for a motion of preliminary injunction against the use of a PLA in the bidding process. The plaintiffs argued that the PLA violated the state’s competitive bidding laws, and that they would have bid for both projects if the PLA were not included. The court denied the request for a preliminary injunction, and when the plaintiffs filed an appeal, the Massachusetts Supreme Judicial Court chose to hear the case.

The Supreme Judicial Court reaffirmed the lower court’s denial of the preliminary injunction. The court majority argued that the objectives of the state’s competitive bidding laws were to “obtain the lowest price for its work that the competition among responsible contractors [could] secure” and to create an “honest and open procedure for competition for public contracts.”17 The Court accepted the plaintiffs’ assertion that “they were inhibited from bidding, and that this inhibition could have anti-competitive effects.”18 However, the Court concluded, “that PLAs on public projects are not absolutely prohibited.”19 In echoing the decision of the Lynn case, and that of a New York case involving the restoration of the Tappan Zee Bridge, the Court stated that “the project is of such size, duration, timing, and complexity that the goals of the competitive bidding statute can not otherwise be achieved and the record demonstrates that the awarding authority undertook a careful, reasoned process to conclude that the adoption of a PLA furthered the statutory goals.”20

Interestingly, the Court did state “it may be that in certain cases, sheer size of a project warrants the adoption of a PLA. In most circumstances, the building of a school will not, in and of itself, justify the use of a PLA.” This first phase of the construction project came in on budget and on time, with no labor interruptions, according to city officials.21

According to our analysis, the new schools built in Malden could have been built more cheaply had the project not used a PLA. For example, the town would have saved $5.3 million, measured in 2001 dollars, had a PLA not been used in building the Beebe School.

Wilmington, Massachusetts

Wilmington is a suburban industrial town that sits on the watershed of the Ipswich River some eighteen miles north-northwest of Boston. Faced with an increasing birth rate between 1986 and 1995, and a subsequent school enrollment surge in the 1990s, the Wilmington School District began to suffer from overcrowding. School enrollment increased 32% (900 students) in the decade from 1989, and another 9% (300 students) from 1998 to 2000.22 Under the pressure of this increase, and with an eye towards future growth, in the spring of 1997 the town voters approved a Proposition 2 1/2 override to fund a new $23 million middle school. Proposition 2 1/2 was a Massachusetts ballot initiative in 1980 that capped the rate of taxation on real and personal property and also limited the annual increase in the property tax levy. Wilmington’s residents decided to accept higher taxes in return for less-crowded schools.

The town selected Architectural Resources of Cambridge to design the new middle school. The town bid the project with a PLA requirement for the construction project. Construction began in December of 1998 and the project was completed as scheduled in time for the start of the 2000 school year. The citizens of Wilmington also spent more than necessary for their new Middle School. Our statistical analysis indicates that, in the absence of a PLA, Wilmington would have saved $5.7 million, measured in 2001 dollars, on constructing their new Middle School.

Milton, Massachusetts

Milton has recently embarked on an ambitious $100 million program of school construction. The project includes creating a new high school ($50.3 million) out of the existing middle school, a new middle school ($28.6 million), the Glover school ($12.5 million) and the Collicot and Cunningham school ($27.3 million). The town has signed a Project Labor Agreement, so contractors must follow PLA rules. The bids for the new High School and the Glover School portions of the project came in substantial higher than the budget estimates of the town school committee. The lowest bid for the High School was $4 million over the school committee estimate, while the Glover School bids came in $800,000 over the estimates.23 Our calculations show that Milton would save $15.3 million on the construction of these four schools if it did not have a PLA; of this, $6.6 million would be saved on the construction of the high school alone.

V. Conclusion

It is widely believed that Project Labor Agreements add to the cost of construction projects. However, there has until now been no statistically sound study of whether PLAs add to construction costs in practice, and if they do, how large the effect is. By carefully constructing a database with information on the costs of school construction projects undertaken in the greater Boston area since 1995, and comparing the costs in towns with, and without, PLAs, we found that:

  1. PLA projects have higher construction costs. We are more than 99% confident of this assertion, based on the available data.
  2. PLA projects add an estimated $37.88 extra per square foot of construction (in 2001 prices), representing a 22.1% increase in costs for the average PLA project.

Applying our results to the experiences of three Massachusetts communities, we find that each of these towns would have lowered its construction costs by over $5 million in the absence of a PLA. Our study has identified seventeen schools that were put out to bid under PLA agreements in the greater Boston area since 1997; this is as complete a list as we were able to compile. Our estimates show that the cost of building these schools was, in total, $85.5 million (in 2001 prices) higher than it would have been if PLA agreements had not been put in place. About 70% of this additional cost was borne by the Commonwealth, with the remainder paid for by the towns themselves. When Massachusetts communities are asked whether to approve Project Labor Agreements in the future, they will now know that they are facing a multi-million-dollar question. The issue is likely to arise with increasing frequency in the near future, as Boston’s “Big Dig” winds down and the released workers seek other work more aggressively.

* Jonathan Haughton, Ph.D., is an Associate Professor in the Economics Department at Suffolk University and a Senior Economist at the Beacon Hill Institute (BHI) for Public Policy Research at Suffolk University. He holds a Doctorate from Havard University. Darlene C. Chisholm is an Associate Professor in Economics and a Senior Economist at BHI. She holds a Doctorate from the University of Washington. Paul Bachman, MSIE, is a Research Assistant at BHI. He holds a Master of Science in International Economics from Suffolk University. The authors would like to thank Dali Jing, Corina Murg and Hatesh Radia for their contributions to this report.

The Beacon Hill Institute at Suffolk University in Boston focuses on federal, state and local economic policies as they affect citizens and businesses. The institute conducts research and educational programs to provide timely, concise and readable analyses that help voters, policymakers and opinion leaders understand today’s leading public policy issues. This BHI report, originally published in March 2003, is republished herein by permission. 

ENDNOTES

1 "United States General Accounting Office, “Project Labor Agreements: The Extent of Their Use and Related Information,” (May 1998). 

2 Ibid.

3 Ibid. 

4 Worcester Municipal Research Bureau, “Project Labor Agreements on Public Construction Projects: The Case For and Against,” Report No. 01-4, May 21, p. 7, (2001).

5 Herbert R. Northrup and Linda E. Alario, “Government-Mandated Project Labor Agreements in Construction, The Institutional Facts and Issues and Key Litigation: Moving Toward Union Monopoly on Federal and State Financed Projects.” Government Union Review, vol. 19 number 3 p. 91 (2000). 

6 Ibid., pp. 12-13.

7 Massachusetts Executive Office of Administration and Finance, Reconstructing the School Building Assistance Program, Policy Report Series No. 3, January, 2000. 

8 General Laws Of Massachusetts, Chapter 70: “School Funds and State Aid for Public Schools.” 

9 Massachusetts Executive Office of Administration and Finance, Reconstructing the School Building Assistance Program, p. 1.

10 Fiscal year 1999 refers to the period July 1, 1998 through June 30, 1999. 

11 http://finance1.doe.mass.edu/doe_budget/1_doe.html. 

12 Massachusetts Executive Office of Administration and Finance, Reconstructing the School Building Assistance Program, p. 1. 

13 PLA contracts were in effect in the following towns: Boston, Lawrence, Lynn, Malden, Melrose, Milton, Waltham and Wilmington. 

14 The source of wage and salary data is the Bureau of Economic Analysis; the source of the total number of workers is the Bureau of Labor Statistics. 

15 The source of the producer price index is Table B-66, “Producer Price Indexes by Stage of Processing, Special Groups, 1974-2001,” The Economic Report of the President, February 2002. 

16 John T. Callahan &Sons, Inc. &others vs. City of Malden &another. SJC-07959, Lexis-Nexis 493, July 22, p. 2 (1999). 

17 Ibid., p. 2.

18 Ibid., p. 2.

19 Ibid., p. 2.

20 Ibid., p. 6. 

21 Worcester Municipal Research Bureau, p. 9. 

22 Town of Wilmington Master Plan, 2001, pp. 181-183. 

23 Kimberly Atkins, “Milton May Reject School Bids," Boston Globe, May 2, 2002, Globe South,p 2.

 

EMPLOYMENT EFFECTS OF THE DAVIS-BACON ACT by Farrell Bloch, Ph.D.

at $130 per hour is now cheaper than the $140 one plumber-three helper combination. This same reversal results even if the plumber wage is raised to $55: the two plumber-one helper combination now costs $140 per hour, and the one plumber-three helper combination costs $145. In the last example, the relatively greater wage increase for helpers reduced their employment as compared with that of plumbers. Under either minimum wage scenario, the employment of plumbers has increased at the expense of the employment of helpers.

Because minorities are disproportionately represented among the relatively unskilled laborers, this shift to higher skilled labor accompanying increased wage rates should adversely affect the employment of minority construction workers. In 1990, 32.0 percent of the 1.26 million construction laborers (including helpers and apprentices), but only 22.2 percent of all 5.71 million nonsupervisory construction workers, were minorities. Blacks constituted 13.0 percent of laborers and 8.5 percent of all construction workers; Hispanics, 16.7 percent of laborers and 11.7 percent of all construction workers.

Minority employment may also be affected by unionization, apart from union-based higher wages. Minorities were traditionally viewed as less likely than whites to be union members because of: (1) less access to information about vacancies in unions in part because of fewer friends, relatives, and neighbors with union experience; (2) poorer training as youngsters and therefore lower qualifications to enter union apprenticeship programs; and (3) active discrimination on the part of union officials. Recent affirmative action efforts on the part of unions have countered these tendencies.

Indeed, aggregated data for the years 1986-1994 reveal that 23.8 percent of all, 24.0 percent of white, and 21.8 percent of minority nonsupervisory construction workers in the construction industry were union members. Part of this mild racial disparity results from the lower unionization rate for laborers, who, as noted above, have a relatively high representation of minorities. The unionization rate was 20.3 percent for laborers (19.9 percent white; 22.1 percent minority), but 25.0 percent for the remainder of nonsupervisory construction workers (25.3 percent, white; 21.7 percent, minority). In contrast, Ashenfelter (1972, p. 451) notes that, in 1967, more than half of white and about a quarter of black skilled construction workers, plus 28 percent of white and 35 percent of black laborers, were unionized. These data illustrate that the pronounced narrowing of the racial gap in construction unionization rates in the 1970s and 1980s was produced mainly by a sharp reduction in the union membership rate of skilled whites.

If individuals interested in the relatively well-paying construction jobs but not employed in construction—those employed in lower-paying jobs, the unemployed, and nonparticipants in the labor force—are disproportionately minority, then these measured unionization rates understate the racial unionization gaps based on this expanded supply of potential construction labor. Also, given the many allegations of hiring hall discrimination in referred hours of work, construction union members not employed in the building trades may be disproportionately minority (unions typically allow their nonworking members to take jobs in other industries). In any event, because only one of four construction workers is a union member, much of the potential employment effects of higher wage rates are likely to occur in the nonunion sector.

The scale and substitution effects discussed above also apply to the skill mix of construction workers. Thus, higher wages should be negatively correlated with the relative employment of laborers as opposed to skilled workers. Furthermore, increased wage rates likely reduce total employment in the construction industry. Unionization and construction employment are negatively correlated across metropolitan areas, in part because of the very strong positive correlation between unionization and wage rates. Non-wage effects of unions on construction employment may be either positive (if, for example, unions increase construction activity by lobbying successfully to replace publicly-owned structures that could have lasted years more) or negative (if the presence or growth of unions discourages construction activity).

Empirical Results

My primary regression model implies that a $1 increase in construction hourly wage rates would induce a 146,000 nationwide job loss in construction occupations—39,000 laborers and 107,000 skilled workers. This reduction in jobs represents 110,000 lost jobs for minorities (28,500 laborers; 81,500 skilled) and 36,000 lost jobs for whites (10,500 laborers; 25,500 skilled).

These empirical results, in conjunction with a conservative estimate that the impact of Davis-Bacon is equivalent to a 25 cent increase in the overall construction mean hourly wage, imply that elimination of the Davis-Bacon Act would increase the total number of construction jobs nationally by more than 36,000. This increase would reflect a disproportionate gain of 27,000 jobs for minorities (7,000 laborers; 20,000 skilled), plus a gain of 9,000 jobs for whites (3,000 laborers; 6,000 skilled). Economy-wide employment increases are lower than those for the construction trades because some additional construction jobs would represent shifts from other occupations.

Because skilled workers outnumber laborers by more than 3.5:1, laborers would benefit disproportionately from repeal. Thus, in addition to removing the inefficiencies induced by wage floors, repealing Davis-Bacon would increase the relative construction employment of minorities and laborers. The disproportionate gains for minorities and laborers reflect the considerable positive equity impact of Davis-Bacon repeal. A complete equity analysis must also take into account the wage increases enjoyed by minorities and laborers employed on Davis-Bacon projects. Repeal of state prevailing wage laws would be expected to produce similar effects.

These employment estimates somewhat understate the expected increase in construction jobs resulting from Davis-Bacon repeal. First, I have used a conservative estimate of the wage effect. Second, the Davis-Bacon Act affects employment in Census occupational classifications other than construction. Third, repeal of Davis-Bacon could considerably weaken unions and induce a further reduction of construction wage rates.

IV. Conclusions

Higher wage markets are associated with lower construction employment and, most striking, substantial reallocations of employment across race and skill groups, to the detriment of minorities and laborers. These wage effects imply that repealing Davis-Bacon and state prevailing wage laws would have particularly salutary effects on construction employment opportunities for minorities and laborers.

Research on this issue can be continued along at least two avenues: study of the employment effects of state prevailing wage laws, and replication of my study with the soon-to-be-forthcoming Census 2000 data. Differential effects across time and space might be correlated with the extent of discrimination, suggesting a decline in racial redistributive effects as discrimination diminishes over time, and as opportunities increase for both full-time construction employment and secondary occupations for construction workers.

 

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Ashenfelter, Orley. “Racial Discrimination and Trade Unions.” Journal of Political Economy, May-June 1972, 80(3), pp. 435-64.

Bloch, Farrell. “Minority Employment in the Construction Trades.” Journal of Labor Research, Spring 2003, 24(3), pp. 271-91.

Goldfarb, Robert S. and Morrall, John F. III. “The Davis-Bacon Act: An Appraisal of Recent Studies.” Industrial and Labor Relations Review, January 1981, 34(2), pp. 191-206.

Marshall, F. Ray, Cartter, Allan M., and King, Allan G. Labor Economics: Wages, Employment, and Trade Unionism (3rd ed.). Homewood, Ill: Richard D. Irwin, 1976.

Metzger, Michael R. and Goldfarb, Robert S. “Do Davis-Bacon Minimum Wages Raise Product Quality?” Journal of Labor Research, Summer 1983, 4(3), pp. 265-72.

Thieblot, Armand J., Jr. The Davis-Bacon Act. Philadelphia: University of Pennsylvania Press, 1975.

U.S. General Accounting Office. The Davis-Bacon Act Should Be Repealed. Washington: U.S. General Accounting Office, April 27, 1979.

COMPETITION AND GOVERNMENT SERVICES: CAN MASSACHUSETTS STILL AFFORD THE PACHECO LAW?

by Geoffrey F. Segal, Adrian T. Moore, and Adam B. Summers*
Reason Public Policy Institute

 

Executive Summary

When faced with insufficient revenues, state governments typically have four options: increase taxes, scale back expenditures, spend down reserves, or seek ways to provide services more efficiently through contracting with private providers. Massachusetts, however, has only the first three options available; it is the only state in the nation that has virtually outlawed the privatization of public services.

The Pacheco Law was enacted by the Massachusetts legislature in 1993. The law, now M.G.L. ch. 7 sections 52-55, set up a series of tests that a state agency must pass before it can award a contract to a private company to perform services that had been previously performed by state employees. The law presents both statutory and political roadblocks to efficient government operations. Its provisions essentially slam the door on many opportunities that have been shown to improve services and save money in other places, as the law disregards all potential benefits other than lower costs.

Reducing costs is only one of many reasons agencies in other states choose to contract with private service providers. Well-designed contracts allow agencies to improve quality, accommodate peak demand, speed project delivery and meet deadlines, gain access to expertise, improve efficiency, spur innovation, and manage risk more effectively.

The Pacheco Law essentially prohibits Massachusetts agencies from contracting out to improve service quality, increase the number of people served, or reduce an existing backlog. A proposal to contract out cleaning and maintenance of bus shelters–which would have brought several million dollars annually to the state from new advertising revenues–was rejected because the contractor did not specifically calculate the difference in cleaning costs.

When a Massachusetts agency entertains bids for the right to deliver a service, public employees have the opportunity to submit bids to keep the work in-house. The Pacheco Law gives state workers significant advantages.

 

 

  • The cost and quality of service offered by private contractors must be compared not to existing cost and quality but to the hypothetical situation of public employees working in the most cost-effective manner and providing the highest quality possible. At no time are state employees held to these standards. If public employees win the contract, they are not held to any concessions made as part of the bid.
  • The contractor must add lost tax revenues to the cost of the bid if any work is to be performed outside Massachusetts. No such adjustment is made to the public sector bid for the loss of tax revenues that would be realized if the work were to be performed by a private business subject to state taxes.
  • Private bids must also include estimated costs of monitoring contractor performance, while no such monitoring takes place in the public sector. The likely benefits of monitoring are not considered.

Even if a private contract scales these hurdles, the State Auditor may reject any proposal he deems not to be "in the public interest," without providing a definition or reason. The rulings are final and may not be appealed.

Prior to the passage of the Pacheco Law, the Weld administration issued 36 privatization contracts, saving taxpayers an estimated $273 million. The procedure Massachusetts agencies must follow under the Pacheco Law is so onerous that only eight proposals have been submitted to the Auditor since its adoption in 1993. Only six were approved.

Over the last decade, federal, state, and local government agencies nationwide have contracted with private vendors to provide services from data processing to prison operations to adoption. According to the Government Contracting Institute, the value of federal, state, and local government contracts to private firms is up 65 percent since 1996 and exceeded $400 billion in 2001. Massachusetts law should not continue to prohibit agencies from taking advantage of this tool for reducing the cost and increasing the quality of state services.

Recommendations

Ideally, the Pacheco Law should be repealed. Short of repeal, it should be amended such that privatization can become a useful policy tool for legislators and agency managers.

 

 

  1. Allow for best-value contracting, in which clear value to taxpayers replaces cost savings as the sole criteria. When costs are compared, the cost of the private bid should be compared to the current actual cost of public employees delivering the service rather than to a hypothetical cost.
  2. Require that agencies use a uniform set of thoughtful assumptions in calculating costs that are clearly explained and transparent in their implications.
  3. Require that all contracts, with private firms or state employees, be performance-based, specifying what will be accomplished, how it will be measured, what incentives will be used, and the consequences for performance failure.
  4. Hold public employee groups accountable to their bids. If a union chooses to bid on a contract, public workers should be expected to provide services at the cost and level of quality indicated in the bid. In practice, this also means (1) requiring union bids to include contract monitoring and its associated costs and (2) including in contracts with winning employee groups provisions for re-competition if the performance goals and cost savings are not met, with a specific length of contract and re-bid schedule.
  5. Hold agencies accountable for managing successful privatization projects that meet agency performance goals. Enforce accountability through agency budgets.
  6. Remove the elements of the law that dictate the process agencies must follow to privatize.
  7. Shift the Auditor’s role to reviewing privatization proposals for clear violations of the law, and create an appeals process for disagreements between the Auditor and agencies, paid for out of both budgets to reduce incentives to appeal.

General and service-specific surveys of privatization all reach the same conclusion. The use of contracting by government agencies is growing. Cost savings are always a key motive, if not the sole one; states with privatization experience are achieving their goals and generally plan to expand their use of it.

As January 2003 approaches, Massachusetts faces its worst fiscal crisis in over a decade. Contracting with private providers for services should be an option for agencies as they adapt to tighter budgets. Amending the Pacheco Law would free agency managers to provide public services in keeping with the law’s stated intent, to "ensure that the citizens of the Commonwealth receive high-quality public services at low cost, with due regard for the taxpayers of the commonwealth and the needs of public and private workers."

* Geoffrey F. Segal, Adrian T. Moore, and Adam B. Summers are affiliated with the Los Angeles-based Reason Public Policy Institute as, respectively, director of privatization and government reform policy, executive director, and visiting policy analyst. Each has written extensively on government performance and privatization issues. This analysis is the work of the Pioneer Institute for Public Policy, and is reprinted herein by permission of the Pioneer Institute. The fulll report is available on the Pioneer Institute's web page: www.pioneerinstitute.org. Back to Text

IS CUT STILL A BLUE-COLLAR CONFEDERATION? PUBLIC WORKERS’ PARTICIPATION IN BRAZILIAN UNIONISM1 by Sidney Jard da Silva*

Abstract

The Unified Workers Confederation (CUT) is the biggest and most important union confederation in Brazil. During the 1980’s the private sector workers constituted the main economic category in CUT’s unionism. More recently, public sector workers have outnumbered private sector workers in CUT’s congresses and boards of directors.

This paper seeks to explain these changes in CUT’s unionism by examining the Confederation’s occupational profile at three different institutional levels: its rank and file, its congresses, and its boards of directors. This work demonstrates that the so-called expansion of CUT’s unionism in the service sector could be more precisely defined as expansion of CUT’s unionism among public employees within the service sector.

_______________

Introduction

There is general agreement among Brazilian scholars on the increasing importance of service sector workers in the rank and file of the Unified Workers Confederation (CUT). However, there is little empirical data on the participation of these workers in CUT’s congresses and boards of directors.

The aim of this paper is to contribute to the understanding of CUT’s unionism by providing quantitative data on the Confederation’s social profile at three different institutional levels: its rank and file, its congresses, and its boards of directors (national and state level).

Current thinking on these issues points to an increasing participation of service sector workers in CUT’s unionism (Jácome Rodrigues, 1995; Nogueira, 1999; Cardoso, 2001). Most of these studies are based on aggregated data regarding CUT’s influence in three major economic sectors: rural, industrial, and service.

Our research challenges this conventional wisdom by conducting a desegregated analysis of CUT’s unionism by economic sector, in which public workers are separated from private workers. In doing so, this paper shows that the so-called “expansion” of CUT’s unionism in the service sector does not reveal the real growth trajectory of CUT during the last two decades. As we intend to demonstrate, public workers – not service sector workers – represent the predominant economic sector comprising CUT’s unionism.

The Expansion of Public Unionism at CUT

In 1997, in an article published in the weekly newsletter of the Workers Party (PT), João Felício – former president of the Teachers’ Union of São Paulo (APEOESP) – presented an optimistic view of CUT’s growth during the three years preceding its 6th National Congress:

Initially, it is important to emphasize the growth of CUT between its 5th and 6th National Congresses. We have had an increase of 27.0% in the number of union members, jumping from 2,009 unions in 1994 to 2,558 in 1997. The number of represented workers in our rank and file has grown 31.0%, jumping from 17.5 million to 19.5 million. Finally, the number of unionized workers has also increased from 4,103,824 (23.5% of rank and file) to 6,056,064 (31.0% of the rank and file).2

These numbers are truly significant, especially if one considers that over the last two decades, in most Western economies, union density has tended to stagnate or to decline (Cardoso, 2001; Locke, Kochan, and Piore, 1997; Martins Rodrigues, 1999; Jelle Visser, 1994). It is also worth noticing that this negative trend has been especially strong among private sector workers (Troy, 1994).

Nevertheless, in order to have a precise idea of CUT’s growth at the end of the 20th century, it is necessary to analyze carefully the set of data supplied by CUT’s ex-general secretary. It is particularly important to determine which activity sectors are most responsible for the growth of CUT’s unionism. In order to do so, this work compares data collected by Comin (1994), Jácome Rodrigues (1997), and Jard da Silva (2000).

According to Comin (1994, 384), in June 1993, there were 1,917 labor unions associated with CUT, with 857 (44.7%) from the service sector, 635 (33.1%) from the rural sector, and 420 (21.9%) from the industrial sector. In the same year, the service sector accounted for 55% of CUT’s unionized workers, the industrial sector accounted for 27%, and the rural sector accounted for 18% (Jácome Rodrigues, 1997).

Four years later, analyzing data from 1997, we found important differences related to CUT’s social composition according to sector of activity. Among the 2,453 unions associated with the Confederation, 1,117 (45.5%) were in the service sector, 874 (35.6%) were in the rural sector, and 462 (18.8%) were in the industrial sector.

According to this data, the rural sector and the service sector have been responsible for most of the growth in the number of unions associated with CUT in recent years. The rural sector grew 37.6%, and the service sector grew 30.3%. At the same time, the industrial sector grew by only 10%.3

The growth in the number of service sector affiliated unions has been just enough to maintain the relative weight of this sector at the Confederation. On the other hand, the increase in the number of associated unions from the rural sector has produced a striking imbalance in the relative clout of rural workers and industrial workers at CUT. Apparently, the former increased its relative weight at the expense of the latter:

Between 1993 and 1997, there was no significant change in the proportional weight of the service sector in CUT’s unionism, which continued to comprise about half of CUT’s unionized workers (Figure 1). However, the members of the rural workers' unions increased from 18% of CUT’s members in 1993, to 32% in 1997. At the same time, the industrial sector members decreased their representation from 27% in 1993 to 18% in 1997.

 

Figure 1. CUT’s Membership by Economic Sector

 

 

Source: CUT (1993), CUT (1997b).

The relative weight of unions by economic sector in CUT follows the international tendency of the labor market, with the growth of the service sector and the retrenchment of the industrial sector (Jácome Rodrigues, 1997; Nogueira, 1999; Osterman, Kochan, Locke, and Piore, 2001). However, there is another factor that has contributed to the decrease in the relative weight of the industrial sector in CUT’s activism: the increase in the number of unions and unionized workers from the rural sector.4

Is CUT a blue-collar Confederation?

In a pioneer work on CUT’s social profile, analyzing data on the 3rd National Congress of CUT, Martins Rodrigues (1990) divided CUT’s influence into three major economic sectors:

  1. State sector – telephone; oil; data processing; urban services (gas, electricity, water, and sanitation); public servants (federal, state and municipal employees); health, education, and pension systems.
  2. Private sector – rural; chemical; metal; and textile.
  3. Service sector – transportation (aerial, marine, subway, rail); commercial (hotel, retail and wholesale, tourism, warehouses and private health system); and banking.

One may observe that in some activity sectors it is possible to find both public and private workers. In fact, not just in Brazil, but around the world, it is likely that the same union represents both state workers and private workers. Therefore, it is difficult to draw a clear line between private and public workers. However, the academic literature on this theme observes that public unionized workers outnumber private unionized workers in economic sectors in which both are represented by the same union.5

As we have already observed, it is possible to find both public workers and private workers in practically all activity sectors of CUT’s unionism (Table 1). However, in public administration, health, education, and urban services, almost 90% of CUT’s activists are public employees. Inversely, among the workers in construction, the metal industry, and agriculture, more than 90% of CUT’s congress members are private employees.

 

Table 1. Union Delegates by Economic Sector
5th National Congress of CUT

(percent %)

Source: DESEP/CEBRAP (1996).

In the financial and transportation sectors, the presence of public workers and private workers is balanced. For instance, among the transportation representatives who attended the 5th National Congress of CUT, 52.2% came from the private sector and 47.8% from the public sector. In the financial sector, 64.1% of representatives came from the public sector and 35.4% from the private sector.6

As one can observe (Figure 2), about 39% of CUT’s rank and file comes from the rural sector, 25% from the state sector, 23% from the service sector, and just 12% from the industrial sector. Consequently, about two-thirds of CUT’s rank and file comes from both the rural and state sectors. It is also worth noticing that the public workers constitute the second most important sector in CUT’s rank and file, surpassing the private workers from the industrial and service sectors.

This paper also reveals a significant change in both rural workers’ and public workers’ weight regarding the number of CUT’s unionized activists. While rural workers declined in relative weight among the unionized workers, dropping from 39% to 31%, public workers strengthened their participation among unionized activists, increasing from 25% to 34%. Meanwhile, neither service nor industrial workers from the private sector significantly shift their relative weight among CUT’s unionized members (Figure 2).

 

Figure 2. Rank and File, Unionized Workers,
and Paying Members by Economic Sector

Source: CUT (1997b)

Nevertheless, the most significant data on the relative weight of public workers in CUT’s unionism refer to paying members, that is, affiliated workers who regularly pay their dues and are eligible to participate in CUT’s congresses and directing boards.

Public sector workers nearly doubled their relative weight among paying members, increasing from 25% of CUT’s rank and file to 47% of CUT’s paying members. Accordingly, public workers are the most important economic sector among CUT’s paying members, followed by service sector workers (23.2%), industrial sector workers (16.8%), and rural sector workers (13.5%).

As the paying members are those eligible to participate in CUT’s collective deliberations and to make up CUT’s directing board, one might consider that the public workers are those with the greatest opportunity to influence CUT’s decision making.

The public sector at the 6th National Congress of CUT

The strong presence of public workers among the paying members of the confederation provides these workers with a privileged place in CUT’s meetings and board of directors. Nevertheless, beyond analyzing the public workers’ participation in the 6th National Congress, it would also be interesting to describe the social profile of the union representatives attending this congress.7

Figure 3 shows a decreasing tendency in the participation of young activists over the last three national congresses of CUT. Consequently, we notice an increase in the participation of 40-year-old or older activists in CUT national meetings. From the 4th to the 6th National Congress, the participation of 20-year-old activists decreased from 0.3% to 0.1%; between 21-year-old to 29-year-old activists, participation dropped from 21.9% to 10.4%; and from 30-year-old to 39-year-old activists decreased from 57.9% to 48.9%. On the contrary, in the 40-49 year-old age group the participation increased from 17.8% to 32.3%. In the same period, the participation of the 50-year-old activists increased from 2.1% to 8.3%.

 

Figure 3. Delegates Ages at the 4th (1991), 
5th (1994), and 6th (1997) National Congress of CUT

Source: CUT/UNITRABALHO (1997).

Figure 4 shows the increasing participation of delegates with long union activity in CUT’s congresses. While participation of activists with up to 10 years of activism decreased, the presence of delegates with more than 11 years of activism increased. The participation of union delegates with up to 4 years of activism declined from 16.7% to 11.5%; delegates with 5 to 8 years of activism dropped from 33.9% to 23.1%; and those with 9 to 10 years of activism decreased from 20% to 17.2%. Inversely, union delegates with 11 to 14 years of activism increased from 15.4% to 22.3%; and among those with more than 15 years of activism, the participation increased from 13.9% to 25.9%.

 

Figure 4. Delegates by years of activism at
V CONCUT (5th Congress) and VI CONCUT (6th Congress)

Source: CUT/UNITRABALHO (1997).

Most participants at the 6th National Congress of CUT had a high educational level. From the 4th National Congress to the 6th National Congress the delegates with only a few years of school increased their participation from 7% to 10.3%; while those of medium educational level decreased from 43% to 38.6% (presenting their lowest level of participation during the 5th National Congress: 35.3%). In the same period, the highly educated activists increased their participation from 48% to 51.1% (during the 5th National Congress the highly educated activists constituted 55.6% of CUT’s delegates).

 

Figure 5. Delegates by educational level
at the 4th (1991), 5th (1994), and 6th (1997) 
National Congress of CUT

Source: CUT/UNITRABALHO (1997).

At this point, it is important to note that not more than 3% of the Brazilian population reaches the educational level reached by more than 50% of the activists attending the 6th National Congress of CUT. In this sense, the data related to the 6th National Congress of CUT reinforce Martins Rodrigues’ and Cardoso’s hypothesis that union activism tends to be stronger among highly educated workers (Martins Rodrigues and Cardoso, 1993). However, it is worth noting that the high educational level of the confederation members is closely related to the strong presence of public workers in CUT’s meetings (Table 2).

 

Table 2. Educational Level by Activity Sector
(percent %)

 

 

Source: DESEP/CEBRAP (1996)

The activity sectors where the public workers have the largest presence are those in which the educational level of CUT’s activists is highest. Public workers constitute 89.8% of union delegates from the educational sector, 89.3% from the health sector, 95.6% from the urban service sector, and 64.1% from the financial sector (CUT, 1996). Workers of these sectors, along with civil servants, have the highest educational level in CUT Congress. On the other hand, in the transportation, metal, construction, and rural sectors most activists have low and medium educational levels.

 

Figure 6. Delegates by sex at the 4th (1991), 
5th (1994), and 6th (1997) National Congress of CUT

Source: CUT/UNITRABALHO (1997)

The female participation has significantly increased over the last three national congresses of CUT, from 19% at the 4th National Congress to 27% at the 6th National Congress. Considering the delegates' participation in the 6th National Congress by activity sector, we found the largest number of female delegates in the public sector. They represent 49.8% of the education sector, 48.3% of the health sector, and 35% of the public administration sector.

Table 3. Delegates by Activity Sector

Source: DESEP/CEBRAP (1996)

It is also important to note that between the 1st and the 5th National Congress all women who participated in the national executive board of CUT were public sector activists. Only in the 6th National Congress did a woman from the private sector reach the CUT National Executive Board.

Figure 7. Delegates by Type of Company at
the 5th (1994) and 6th (1997) National Congress of CUT

Source: CUT (1997b)

Analyzing the type of company where activists work is particularly important in order to measure the economic sectors’ weight in CUT’s unionism. Combining the percentage of workers employed in state companies (19.3%) with the percentage of workers employed in the public administration (35.7%), we note that more than half of the activists who attended the 6th National Congress belonged to the public sector (55%).

It is also important to register that, from the 5th to the 6th National Congress, only the civil servants and rural workers presented growth in their participation. The civil servants increased their participation from 33.7% to 35.7%, while the rural workers almost doubled their participation, increasing from 7.6% to 13.7%. The other delegates suffered a decline in their participation. Workers from private companies dropped from 32.6% to 29.4%, and workers from state companies decreased from 25.5% to 19.3%.

The public sector participation in CUT’s board of directors

The increasing participation of public workers in CUT’s congresses, especially in its national congresses, has been followed by a significant growth of public union representatives in CUT’s board of directors.

 

Table 4. CUT’s Board of Directors by Economic Sector

Source: Martins Rodrigues (1990), CUT (1997c).

Unions representing public workers doubled their participation in CUT’s National Executive Board over the last 14 years. They constituted 20% of the Executive Board in 1983 and rose to 48% in 1997. At the same time, the participation of the private sector unions in CUT’s Executive Board decreased. The rural workers union decreased from 26.7% to only 8%, and urban workers union decreased from 53.3% to 44%.

It is worth observing that, except in the 4th National Congress when there was an increase in the number of executive directors, every time that the participation of public workers increased in CUT’s directing board, the participation of rural workers decreased. Inversely, in the 6th National Congress, as public sector workers lost one seat on CUT’s board of directors, rural workers gained one.

The public sector worker participation in CUT’s direction is also informative as we considered the professional status of CUT leaders who constitute the National Executive Board of the confederation. Let us take a look at the board of directors elected at the 5th and the 6th National Congresses:

 

Table 5. CUT’s Directing Board (1994/1997)

Source: CUT (1997c).

In spite of being distributed across several activity sectors, most of CUT’s professional leaders are public workers. In the Executive Board elected at the 5th National Congress (1994-1997), public servants and employees of state companies represented 76% of CUT’s board of directors (19 of 25). In the following Congress (1997-2000), they constituted 60% of CUT’s direction (Jard da Silva, 2001).

Public sector workers also have a prominent presence in CUT’s board of directors at the state level. Among 27 presidents elected in CUT’s state congresses in 1997, 17 (67%) were public workers (civil servants and state company employees). It is worth noting that all the bank workers elected to be CUT’s presidents at the state levels were employees of public banks: Orency Francisco da Silva – Caixa Economica Federal; Jorge Pedro Caggiano Peres – Banco do Brasil; Roberto Vans Olsten – Banestado; Jorge Alfredo Streit – Banco do Brasil.

 

Table 6. CUT’s President by State

Source: CUT (1997c).

The public workers’ presence on CUT’s board of directors at the state level is striking, especially in less industrialized states. Since the Brazilian industrial park is concentrated in the southeast region of the country, we conclude that, along with rural workers, public workers have been of fundamental importance in consolidating the national structure of CUT’s unionism.

 

Table 7. State Level Boards of Director
by Occupational Sector

I.W. (industrial worker), R.W. (rural worker), W.C. (white-collar), P.S. (private service worker), T. & CS. (teachers & civil servants), and PE. & PH. (public education and public health worker). Fonte: Nogueira (1998).

The presence of public workers on the state executive board of CUT tends to be larger in states such as Minas Gerais (52.9%), Mato Grosso (43.5%), Amazonas (47.4%), Pernambuco (37.5%) and Bahia (35.3%). In Paraná and in Rio de Janeiro, civil servants constitute more than 25% of state directing positions. On the other hand, in Rio Grande do Sul and São Paulo, the participation of civil servants on CUT’s executive is less than 15%.

Finally, it is important to note that the weight of public unionism in CUT’s congresses and boards of directors already attracts the attention of the Confederation’s main leadership, especially those from the private sector, as we can see in the following speech of CUT’s former president, Vicente Paulo da Silva:

It is necessary to explain that 75.0% of CUT rank and file is from the urban and rural sectors, and 25.0% from the state services and state companies. In CUT’s board, most union leaders belong to state companies and state services. Although they act as representatives of all workers, in the next CUT’s congress we will try to choose a direction more representative of our rank and file. We won't assume a merely corporatist position. If that goes on, we will be led to failure.8

Final Considerations

According to Troy (1994), the public sector unionism constitutes a new labor movement. It differs from the private sector unionism in its origins, make-up, goals, and philosophy. In Brazil, as in other countries around the world, public employees’ organizations constitute a distinct political actor in the labor movement.

In this work we demonstrated that public employees constitute the most important occupational category in CUT’s unionism both in terms of unionized workers and paying members. This strong presence among the Confederation’s activists provides public employees with a privileged place on CUT’s congress and boards of directors. Over the last two decades unions representing public employees doubled their participation in CUT’s National Executive Board.

The public sector participation in CUT’s direction is informative of their political power within the Confederation. Most of CUT’s national directors are public employees. Therefore, among all workers represented by CUT, public workers are those with the greatest opportunity to influence CUT’s decision-making. This finding indicates that, behind partisan and ideological issues, CUT’s political positions should also be understood in terms of how the occupational profile of its leadership influences the Confederation’s decision-making.

Finally, this work’s contribution is particularly important to the understanding of CUT’s resistance to structural reforms implemented in Brazil over the last two decades. According to the data provided by this paper, CUT’s opposition to structural reforms should be explained not only in terms of ideological opposition to neoliberalism, but also in terms of the defense of public employees’ interests.

* Sidney Jard da Silva is a Ph.D. Candidate at the University of São Paulo, Brazil, Political Science Department. Also, he is a Visiting Student at the MIT Political Science Department, currently residing in Cambridge, Massachusetts.Back to Text

1 For fruitful discussions and valuable comments, I am grateful to Maria Hermínia Tavares de Almeida (advisor), Richard Locke, Deise Recoaro, Seth Racusen, Sylvia Gaylord, Marco Marchese, Andrés Salanova and Rachel Crane. I also thank Professor Leo Troy for thoughtful comments and constructive criticisms. An earlier version of this paper was presented at the 2001 Annual Meeting of the Brazilian Sociology Society (SBS), Ceará – Brazil. I have benefited from financial support from the National Council for Scientific and Technological Development (CNPq) and The State of São Paulo Research Foundation (FAPESP).

2 See Linha Direta, September-October, 1997. Translated from Portuguese by the author. 

3 Most Brazilian labor unions are financed by compulsory dues of one day’s salary per year, what is known as “union tax” (imposto sindical). According to Cardoso (2000), “This stimulated the emergence of more than one thousand unions per year from 1992 to 1999, unprecedently fragmenting labor representation, so that Brazil has now more than 27 thousand unions, most of which are powerless. That is to say, corporatist legal structure supported rapid union growth in the 1980s, but accelerated union fragmentation in the 1990s.” Historically, CUT has fought against compulsory union dues; however, many affiliated unions rely on this compulsory contribution from their rank and file in order to balance their financial structure (Almeida, 1996; Boito Jr., 1991). CUT, in turn, depends on voluntary contributions from its individual labor unions.

4 This growth of the rural sector in CUT’s unionism has been related to the affiliation of The National Farm Workers Confederation (CONTAG) to CUT in August of 1995 (Informacut, n.º 257, September, 1995).

5 Regarding international literature on public unionism, see Denholm (1994), Freeman and Ichniowski (1988), Johnston (1994), Nisbet (1978), Stieber (1973), Troy (1994), and Von Otter (1983).

6 Taking into account that most of the rank and file of these sectors work in private companies, the financial and transportation representatives were classified as private sector workers. In addition, over the last two decades a vigorous privatization process transferred many state banks and state transportation companies to the private sector.

7 In total 1,840 delegates were surveyed during the 6th National Congress of CUT. Our data refer to 1,640 delegates. See CUT/UNITRABALHO (1997)

8 See Revista Veja, January 31, 1996. Translated from Portuguese by the author.

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LABOR HISTORY IN PUBLIC SCHOOLS: UNIONS GET 'EM WHILE THEY'RE YOUNG by Kevin Dayton

With an uncertain outlook for labor unions in America, some union leaders plan to reverse their membership decline by influencing young minds and making unions relevant for a new generation. They believe a capitalist conspiracy is excluding their view of labor history from the public school history curriculum, and they believe unions are losing members because schools aren't teaching young people to appreciate unions and union political achievements and goals. In response to this perceived neglect of labor history, union activists have begun a crusade to send a political message about unions to a captive audience of public school students. Led by California unions, this crusade is becoming a national movement. Do advocates of the free market need to respond, or is this union plan to impose labor history in the classroom doomed to failure?

Unions Face a Shaky Future

Labor unions seem destined for cultural and economic irrelevance in the United States as the percentage of workers represented by a union has dramatically declined. In 1953--the year of peak union membership--32.5 percent of all workers and 35.7 percent of the private workforce belonged to a union.1 In 2001, 13.5 percent of all workers belonged to a union, and the number was 9.0 percent without government employees. Harvard professor Robert Putnam creates a melancholy image of the decline of unions when he writes, "The solidarity of union halls is now mostly a fading memory of aging men."

Attitudes about unions among young people do not portend a revival of unionism anytime soon. Although no one has apparently surveyed American young people about unions, the results of such a survey would likely be bad news for union leaders. Most young people readily accept that they will have individual responsibility for determining their financial status in life. Few expect to rely on union leaders to negotiate collective bargaining agreements on their behalf, and few seem interested in career advancement based on confrontational relationships between "labor" and "management."

Union advancement is a low priority on the list of leftist causes supported by students at colleges known for liberal political activism. A poll of Yale University undergraduates during a 1996 labor dispute between employee unions and the administration showed that only 20 percent supported the unions, while 35 percent supported the administration. The other 45 percent didn't know or didn't care. Some undergraduates even organized an anti-union group called "Students for Union Compliance."An October 2002 "teach-in on labor issues" at the Yale campus intended to "educate undergraduates who were curious about labor relations" attracted only 25 undergraduates out of 5000 enrolled.

Unions Tackle a Classroom Conspiracy

The decline in union membership since the early 1950s has several likely causes, including the transformation of the country's primary economic activity from manufacturing to services, the unwillingness of younger generations to join formal organizations, and decades of union leaders who focused on providing services for their members instead of traditional organizing. Liberals sometimes identify President Ronald Reagan as the culprit for the decline of unions. But some union activists see more insidious plots.

These union activists detect a conspiracy among corporate interests, free market advocates, and conservative government officials to marginalize the role of labor unions in American history. As a labor studies professor writes, "The powerful influences of competitive individualism and ideological conservativism discourage many Americans from appreciating labor history."Unwitting teachers therefore teach history with the presumption that capitalism and classical liberal economic policies benefit working Americans. Textbooks also show the same bias, as they are essentially a product of corporate America that must win approval from conservative officials for use in large states such as Texas, Florida, and North Carolina. Even the Internet shows evidence of this conspiracy, according to John Summers at the University of Rochester:

More fundamentally, I also raise concerns about the future of labor history in cyberspace. Will the Web escape, or replicate, the anti-worker political biases frequently associated with public history? A theoretically egalitarian instrument of communication, the Web blurs boundaries between academic and public history, offering university professors opportunities to capture typically elusive publics. Like other mass media, however, it already betrays the corrupting influence of private money. Will the world of labor thus become invisible in cyberspace, or perhaps, will it appear "strange and sinister" (to borrow an apt remark from C. Wright Mills)? Or will scholars and citizens effectively counter the attempts underway at large corporations and among libertarian ideologues to colonize new media in the name of "free" markets?

This ideological colonization is supposedly reflected in the school history curriculum, in which students learn too much about historical figures in government and commercialism and not enough about ordinary workers and the labor organizations that claim to represent them. "Labor History is rarely taught, thereby leaving out an important aspect of what happens and continues to happen for a majority of people, i.e., workers, their families and communities," says the California Federation of Teachers. "This (labor history) curriculum is severely limited in the State of New York and this omission by the State Education Department needs to be corrected," writes the sponsor of a bill to require schools to have courses of instruction about labor unions. "There's a lack of knowledge and understanding of the contributions of organized labor in the public school curriculum," claimed California labor leaders and then-State Senator Barbara Lee when she introduced a labor history bill in 1997. "History studies only focus on the leaders--the chiefs--without mentioning anything about working class people," says a Washington State high school teacher. "Students read the texts and don't see themselves or their families represented." The secretary-treasurer of the New York State AFL-CIO states that "the idea here is that students have a right to know about the contributions of the American labor movement," as if schools were denying a constitutional right to their students by not providing a labor history curriculum.

In these arguments, labor history is portrayed as an attempt to provide a well-rounded education, or as an exercise in self-recognition and self-esteem for working-class students. But union leaders have a vested interest in seeing their organizations depicted as highly relevant in history--and more importantly, highly relevant in the present and future. With the goal of reviving their membership, union activists are devising the actual labor history curriculum to be taught in the classroom, implementing the curriculum in the classroom, and even creating the teaching methodology for the curriculum.

Labor History Becomes a Strategy to Promote Unions

Origins for labor history in the classroom can be traced back at least to 1981, when the City University of New York developed the "American Social History Project," meant to present the history of marginalized and oppressed groups in an interesting way to a "broad popular audience." Among the various non-traditional components of American history emphasized in this project was labor history. Leaders of this project have produced labor history material, including textbooks, videos, collections of primary documents, a CD-ROM, and a website. Workshops, summer institutes, seminars, and other programs sponsored by the American Social History Project train teachers to present ideas largely through "collaborative and active learning strategies" in which students often work in groups.

It seems that in the mid-1990s, unions selected labor history in the classroom as a strategy to reverse the long decline in their membership. If unions could change the depiction of American history to focus more on unions, perhaps a new generation of Americans would aspire to join a union or organize a union. At the request of the AFL-CIO, President Clinton declared May 1995 as the first Labor History Month, using his proclamation to recognize noteworthy accomplishments of unions in American history. When he declared Labor History Month again in May 1996, President Clinton included language in his resolution connecting knowledge about labor history to the future of organized labor:

As we approach the 21st century, our Nation's economy is undergoing a transformation as momentous as the change that spurred the exodus from farms to factories 100 years ago. And in facing the challenges posed by global competition and rapid technological advances, the workers of the Information Age need the same effective leadership that allowed their forbears to succeed. Each new generation of workers must embrace the activism that has characterized labor's rich history, and all Americans should recognize the role that labor has played in the continuing progress of our democracy.

The Winter 1997 issue of the Organization of American Historians (OAH) Magazine of History exclusively focused on labor history. An article "Why Teach Labor History?" supports labor history in the schools as a way to revitalize the contemporary union movement at a time of crisis for workers. "With union membership reduced, government standards for worker rights and safety under assault, with job security in jeopardy everywhere, young people entering the labor market are more vulnerable than ever to abuse in the workforce." This was written at a time when work fatalities reached record lows and the nation's economy was in the midst of rapid growth and low unemployment.

At this time, teachers' unions began calling for a national movement to bring labor history to the classroom. At its 1998 national convention, the National Education Association (NEA) adopted a resolution to "collaborate with other labor unions, colleges, and universities to include the study of labor history and collective bargaining and encourage the development of curricular materials as a part of the preparation for future leaders." Not to be outdone, the American Federation of Teachers (AFT) adopted a resolution at its 2002 convention resolving that the AFT and the national AFL-CIO would form a task force to develop a plan to support and coordinate K-12 labor education and convene a national conference to educate teachers and union activists about the best materials and practices in the field. This resolution was blunt about the intent of labor history, noting that "union density in the United States has fallen to levels unseen since early in the last century" and that "students need to learn more about labor history and the role of unions in protection of workers' rights in order to make informed decisions about their lives at work." At this same convention, the AFT also approved a resolution to establish an American Labor Studies Center in Troy, New York, which would "collect, analyze, evaluate, create and disseminate labor history and labor studies curriculum and related materials, aligned to academic standards in place, to K-12 teachers nationwide in cooperation with the National Education Association and other organizations and agencies who express an interest."

As teachers' unions approved these resolutions, unions and union-funded historical societies began pushing legislative proposals in various states to implement labor history as part of the public school history curriculum. In 1997, the California State Senate approved a bill requiring labor history instruction in the state's public schools; it was never considered in the Assembly. In 1999 and in the subsequent legislative session, New York legislators tried to pass a bill requiring elementary and secondary schools to teach courses on the role of unions in American society. A bill introduced in the Wisconsin legislature in 2001 would have required "every school district's instructional program in state, national, and world history to include information on the history of organized labor in America and the collective bargaining process." The bill did not pass.

In contrast to these legislative failures, the Massachusetts AFL-CIO found an innovative way to use state government to advance labor history in that state's schools. As the result of a bill approved in 2002, the state will sell commemorative license plates showing the insignia of the Massachusetts AFL-CIO, and proceeds will be used to promote the study of labor history among high school students and raise scholarship funds for students who score well on a labor history examination. This is a clever combination of promoting unions on the highways, raising money for union promotional materials, and bribing students to learn about labor history by encouraging them to study it with the goal of winning a scholarship. The fund to further labor history education will be supplemented by gifts, grants, and donations from public and private sources.

Labor History Enters the Classroom

Although the national teachers' unions have called for the coordinated development of a national labor history curriculum, there doesn't yet seem to be a centralized national campaign to impose it. A perusal of union publications and websites shows unions in different states are independently developing the tools needed to invade the classroom. Several websites now collect links to labor history archives, industrial relations libraries at colleges, and college labor history programs and centers, but the labor history movement seems disjointed and disorganized.

Unions in several states have initiated strategies to bring labor history into the classroom. The Rhode Island Labor History Society, with 71 local unions as members at the end of 2001, holds a labor history essay contest for high school students, with prize money to the winners. The West Virginia Humanities Council provides a classroom curriculum about labor history developed with support from the West Virginia Department of Education and the West Virginia AFL-CIO. Other labor history programs for public school students are reportedly in effect in the Chicago area, where the Illinois Labor History Society has developed "A Curriculum of United States Labor History for Teachers" with Chicago area teachers and union leaders. Teachers in St. Paul, Minnesota--with support from union officials--have developed a ten-part lesson plan called "Untold Stories: Learning about Our History" to teach local labor history. Lesson plans are posted on the website of Workday Minnesota, a self-described collaborative effort of the Labor Education Service and the Minnesota AFL-CIO.

Other examples of the nascent labor history movement have been reported in Communique, the weekly bulletin of an education think-tank called the Education Intelligence Agency (EIA). The EIA discovered that $12,750 in federal School to Work funds was supporting the Calumet Project's Labor Education in the Schools program in Hammond, Indiana:

The Calumet Project sends union organizers into high school classrooms to lecture on 'labor history, famous labor leaders and the impact unions have had on society.' Neither the union speakers nor the Calumet Project are disinterested academics. In fact, the Calumet Project also offers assistance in organizing, strike or lock-out campaigns, and training union supporters in how to build community-labor relations.

The EIA also reported that in the summer of 1999, the Wisconsin Education Association Council held a conference dedicated to "developing strategies and skills for implementing the Great Schools Initiative," which is the union's blueprint for its vision of education reform. One of the workshops was "Labor Studies in the Schools (Labor History)." It has the following description:

This session is designed for educators at all grade levels who wish to acquire new methods and materials for teaching their students about organized labor and its role in society. Members (Education Support Personnel and Teachers) will receive important information about the history of labor unions, their influence in building support for Great Schools and how they are essential to maintaining a strong public system of education. 

To assist with the Wisconsin labor history movement, the Wisconsin AFL-CIO has a website coordinated by the Wisconsin Labor History Society listing books for elementary and high school students, films, documentaries, and websites about labor history.

One school district cited as using the American Social History Project curriculum is the West Contra Costa Unified School District in Richmond, a struggling industrialized city near San Francisco that has long been a bastion of political strength for organized labor. The local school district requires union agreements for contractors on its school construction, and in 2001 the Richmond City Council implemented the highest living wage ordinance in the country. It's the type of place where unions can push labor history into the schools, and it's also the type of place that most desperately needs to free itself from the economic assumptions of unionism.

California Leads the Labor History Movement

National efforts to develop a labor history curriculum for schools may soon become more organized with the emergence of California as the national leader in the labor history movement. The political climate of California has created a ripe environment for the advancement of labor history in the schools, with the California legislature today as perhaps the most "progressive" state legislative body ever seen in the United States. In the Los Angeles and San Francisco metropolitan areas, union-supported liberals have a firm lock on most local governments, including school boards. In addition, development and distribution of labor history material for schools are assisted by a taxpayer-funded union think-tank called the Center for Labor Research and Education at the University of California campuses in Berkeley and Los Angeles. All of these factors have helped California to become a working model for the advancement of labor history in the schools.

In September 2002, California Governor Gray Davis signed into law Assembly Bill 1900. Sponsored by the California Federation of Teachers, this bill recognized the first week of April as "Labor History Week" and authorized public school districts to "commemorate that week with appropriate educational exercises that make pupils aware of the role that the labor movement has played in shaping California and the United States." The original version of the bill appropriated $150,000 for school districts to purchase educational material about labor history, but this provision was eliminated after consideration of the state's $24 billion budget deficit.

How did California unions manage to get Labor History Week? One reason is that the unions already had the apparatus in place to execute a labor history program in the schools. The California Labor Federation operates a Labor in the Schools Committee meant "to assist teachers in reaching students with information about the history and current place of the labor movement in American democracy." Participants of this committee mainly include teachers from the Los Angeles and San Francisco school districts, along with some outside advisors. This committee has produced a variety of labor history projects for all grades.29

Elementary school students may participate in The Yummy Pizza Company, a role-playing exercise in which students make mini-pizzas while dealing with labor-management conflicts. In the end, the pizzas are ideally enjoyed by a unionized student workforce presumably liberated from the greedy owner's excessive profiteering.

High school students may watch a 10-part video series written and directed by the California Federation of Teachers' communications director, Fred Glass, who is also a union organizer and labor studies professor. Funded by the AFL-CIO, the California Labor Federation and several individual unions,30 the Golden Lands, Working Hands video series explains California labor history from the union point of view. Michelle Vesecky at the U.C. Berkeley Center for Labor Research and Education recognized the unprecedented achievement of this video in her article "Golden Lands, Working Hands: The History of the Future":

Other states, such as Minnesota, Rhode Island, Wisconsin, Illinois, Massachusetts, Ohio, Iowa, Michigan, New Jersey, and Virginia have already developed labor history programs. However, Golden Lands, Working Hands is groundbreaking. No other state has developed a curriculum as comprehensive as the CFT's multi-media project. Golden Lands, Working Hands will be the first of its type to have both its own textbook and an hour long video.

While Glass claims the video series is "politics-proof" because it mentions past episodes of corruption and discrimination in organized labor, he has a political goal: encourage young people to join unions or organize employees at their workplace into a union. "Students who go through the Golden Lands, Working Hands unit will be in the workforce within a year or two ... It will give them the knowledge necessary to be able to say 'Union Yes' if they are working in a place where they have that choice." According to Glass,

(T)he video explores a great deal of the events and issues in the history of California labor and takes us right up to the present, dealing with current issues such as mass corporate 'downsizing,' part-time and temporary employment, inadequate health care coverage, and the battle for a living wage. It shows how today's labor movement is attempting to reinvent its tradition of standing up for working people, and how it continues to make history in the process.

Vesecky at the Center for Labor Research and Education makes the intent clear: "The CFT plans to raise awareness in future workers, future voters, and future policymakers. Through education, hopefully worker empowerment will result."

A theme of the video series is that life was relatively good for American workers when unions were at their zenith, and now life is a struggle for American workers because unions represent a much smaller percentage of the workforce. The classroom guide for teachers to use in conjunction with the video series summarizes the 22-minute long final segment in the series--"Golden Lands, New Demands"--as the story of how "a new corporate regime ruthlessly replaces full-time 'middle class' union jobs with part-time, temporary, 'disposable' employment." But the summary notes that not all is lost: "In response, a new organizing mood emerges among California working people grappling with the effects of the global economy, spurring struggles for full-time work, living wages, health care and dignity."

California working people struggling for dignity in the last segment of the Golden Lands, Working Hands video series include bike messengers, hotel workers, janitors, and college instructors targeted by current organizing campaigns. Departing from history into the realm of contemporary union politics, the segment depicts four examples of union activism: the "Justice for Janitors" organizing movement of the Service Employees International Union; the AFL-CIO "Union Summer" program in which mainly young participants work in internships as part of organizing campaigns; the "Living Wage" campaign for municipalities; and fighting "anti-union" politicians and proposals such as California's Proposition 226, a "paycheck protection" proposal on the June 1998 ballot. Perhaps with the intention of introducing students to the struggles of young workers, the video focuses on efforts of some San Francisco bicycle messengers to organize into a union with the help of the International Longshore and Warehouse Union. Bike messengers complain that they need a union because their work is dangerous, they get low pay, they don't get respect, and rich multi-national corporations are taking advantage of them.

Although the video obviously is biased toward presenting the union view of history, one area in which the Golden Lands, Working Hands video series becomes excessively simplistic in its politics is when it relates the 1992 Los Angeles riots to the decline of unions. According to the video, in the 1950s unions provided good jobs and were a responsible agent to address community frustration about racism. In the 1990s, without strong unions or good jobs, rioting provided the outlet to address racism. For students too young to remember the riots or understand the complicated causes behind them, this explanation is grossly incomplete.

Like the labor history program produced by the American Social History Project, the Golden Lands, Working Hands program emphasizes collective viewing and discussion. "Group screening and interaction can, at least potentially, create the energizing connection of ideas shared among people, on the basis of which they can act," Glass writes. Not only does the content of labor history question the benefit of individualism in the workplace, but the methodology of teaching labor history seems to reject individualism in the classroom as well. Obviously the gentle guidance of the teacher combined with the peer pressure of fellow adolescents will lead students to a preordained positive conclusion about unions.

Now that Labor History Week is in effect, the California Federation of Teachers plans to implement the Golden Lands, Working Hands program as part of the California high school history curriculum, using teachers' union locals and an anticipated recommendation from a future California History-Social Science Curriculum Framework and Criteria Committee to "allow the more rapid dispersion of the curriculum throughout the state's school districts." At the time Governor Gray Davis signed the Labor History Week bill into law, the Napa/Solano County Central Labor Council in the San Francisco Bay Area announced its intention to institute a labor history curriculum in Napa and Solano county school districts.

Also assisting with the labor history movement is the University of California's Center for Labor Research and Education. Its Collective Bargaining Institute for L.A. Students brings Los Angeles high schools students together to participate in mock collective bargaining sessions, while at the same time their teachers spend the day in a "training session designed to make labor education part of the regular public school classroom."This program is supposed to become a model program for school districts across the country known as the Collective Bargaining Education Project. With a total of $17 million in funding received from the state budget since 2000, the Center for Labor Research and Education has the financial resources to advance this program in California and elsewhere.

Are the Capitalists Really Excluding Labor History from History?

The need for a special labor history curriculum in schools is questionable, since most history textbooks appropriately discuss the rise of labor unions and the passage of landmark labor protection laws in the 20th Century. California's History-Social Science Framework and Content Standards for California Public Schools, adopted by the California State Board of Education in 2000, include numerous references to labor history. Elementary school students are supposed to learn about the role of labor in industry and agriculture, the accomplishments of Cesar Chavez, and the past human struggles that are the basis for Labor Day. Junior high school students are supposed to learn about the rise of the labor movement, union leaders such as Samuel Gompers, collective bargaining, and strikes and protests over working conditions. High school students are supposed to learn about the right to join unions and the advances and retreats of organized labor from the creation of the Congress of Industrial Organizations and the American Federation of Labor to current issues of a post-industrial, multi-national economy, including the United Farm Workers in California.

Modern high school history textbooks cover significant aspects of the labor movement. For example, Houghton Mifflin's A People and a Nation: A History of the United States dedicates ten straight pages to the rise of the labor movement during the Industrial Age. Among the labor topics discussed in this textbook are the employment of women; child labor; wage work; industrial accidents; courts restricting labor reform; railroad strikes of 1877; the Knights of Labor; the Haymarket Riot; the American Federation of Labor; the Pullman Strike; the International Workers of the World; women in the labor movement; immigrants, African-Americans, and labor unions; the Congress of Industrial Organizations; rivalry between craft and industrial unions; sit-down strikes; the Memorial Day Massacre; and the Taft-Hartley Act. Cesar Chavez and the United Farm Workers are mentioned in the context of Hispanic interest movements. A People and a Nation also mentions the decline of labor unions as part of its discussion of the 1980s, asserting that President Reagan presided over the government's "busting" of the air traffic controllers' union in 1981 and claiming that "Reagan made the unions' hard times worse."

Prentice Hall's America: Pathways to the Present discusses early labor unions; the Knights of Labor; the American Federation of Labor; the International Workers of the World; the negative reaction of employers to unions; the Great Railroad Strike of 1877; Eugene Debs; the Haymarket Riot; the Pullman Strike; and the labor movement as part of Progressive reform. There is a box about the origins of Labor Day and a suggestion to listen to the IWW song, "The Commonwealth of Toil," and other labor songs. Students are asked to compare arguments of Samuel Gompers and a manufacturing company manager, and they are asked to assess the reliability of sources about the Taft-Hartley Act. Cesar Chavez and the United Farm Workers are mentioned in the context of Hispanic interest movements. Although this textbook does not mention the decline of labor unions, it does state that "Reagan also challenged the powers of labor unions" and refers to the firing of unionized air traffic controllers.

Is Labor History a Union Pipedream?

Just because governments are requiring labor history in the classroom doesn't mean that unions will win special treatment in the American history curriculum. One could argue that schools are now so overwhelmed with curriculum requirements that labor history is unlikely to filter through a school district into a school and then into a classroom. The Golden Lands, Working Hands video series is 171 minutes long, requiring teachers to spend almost three hours viewing it in order to evaluate its usefulness in the classroom. (The classroom guide advises teachers to view the video twice before showing it.Unless a teacher has a strong personal commitment to unionism, labor history will probably not infiltrate most classrooms, especially classrooms in suburban school districts where students are likely to feel uneasy and parents will complain if teachers start shoving union politics into the curriculum.

More susceptible to labor history in the classroom are urban school districts, where many school board members, administrators, and teachers are strongly supportive of unions and parents tend to be less involved with the details of their children's education. Labor history in these schools could be used as a primer in union organizing, with guest lecturers suggesting that students organize fellow employees at fast food restaurants and video stores where they have part-time jobs. In fact, the classroom guide for Golden Lands, Working Hands suggests that teachers "contact your local AFL-CIO Central Labor Council for union activists who can speak with students about current issues and union campaigns, and how students can become involved." The classroom could become a recruitment center for AFL-CIO programs such as "Union Summer." It could also become a source of hundreds of "grassroots" letters or organized visits to legislators from students newly concerned about a "new corporate regime" they learned about in school. And what message would teachers send to students if California's "Labor History Week" occurs when a teachers' union is about to go on strike?

Will the Golden Lands, Working Hands video series inspire young people to support unions? Although testimonials, video footage, and even a pro-union rap cartoon video are included in the video series to stimulate student interest in a potentially dry topic, watching and understanding the video requires close attention and a knowledge of American and California history that may be too difficult an obstacle for most students, even with the teacher's use of accompanying lesson plans and classroom guide. The best target for the unions' labor history curriculum may be students in Advanced Placement American history classes. Yale may yet get a student body supportive of its employee unions.

Unions Misidentify the Causes of Their Decline

Another more fundamental problem with the video series--and with the concept of labor history in general--is that union activists may be misidentifying the causes of their decline. In its summary of the Golden Lands, Working Handsvideo series, the AFT Labor in the Schools Committee website rails against "the anti-union attacks of right-wing politicians" starting with President Ronald Reagan's decertification of the air traffic controllers' union after an illegal strike in 1981. In other words, union activists want students to learn that union membership is declining because of the animosity of conservative Republicans and their business allies, not because of the free choice of workers. But the decline in union membership began in 1954, twenty-seven years before Reagan took office.

In addition, Harvard professor Robert Putnam has included the decline in union membership as just one example of a generalized decline in American civic and social organizations. "Perhaps the problem with union membership is not so much skepticism about the idea of 'union' as skepticism about the idea of 'membership,'" Putnam writes. He cites a labor economist who touched on this possibility in 1979, "The young worker thinks primarily of himself. We are experiencing the cult of the individual, and labor is taking a beating preaching the comforts of coalition." Unless history classes are the source of student attitudes about independence and individualism, a week of labor history is unlikely to convert younger generations to unionism.

A Free Market Response to Labor History in the Classroom: Ignore It or Join It?

As labor history becomes part of classroom curriculum, is there need for a perspective that specifically gives competitive individualism and free market capitalism a role in the history of the country? Too often academic advocates of capitalism bluntly tell inquisitive students to read Friedrich Hayek and Milton Friedman to learn about the history of free market economics. High schools aren't going to be responsive to this kind of proposal. To counter the unions with an appealing version of economic history that appeals to students, it may be necessary for business associations, corporations, and free market think-tanks to create their own flashy videos and curriculum guides. Free market think-tanks such as the Smith Center for Private Enterprise Studies, located at California State University at Hayward, already sponsor annual essay contests for San Francisco area high school students about economic issues or starting a small business, and this kind of program can be expanded. Junior Achievement can present positive programs about economics and business to public school students, in contrast to the union-backed labor history curriculum that portrays small business owners and large corporations as exploiters of workers. Maybe local economists can give guest lectures explaining to high school students how union-backed minimum wage increases reduce their after-school employment opportunities.

For fairness and balance, any labor history curriculum needs the perspective of Americans who believe in individualism and merit as well as the perspective of Americans who believe in collective bargaining and economic protectionism. After all, the glory of collective social action for one person may mean the suppression of individual freedom for another. Surely the 47 percent of Californians who voted for Proposition 226 in 1998 weren't all exploiters of labor, and some supporters were even union members. Also, 46.4 percent of all union representation election cases that were overseen and resolved by the National Labor Relations Board in 2001 resulted in rejection of unionization. Surely some of these people voted against unionization for reasons other than employer brainwashing or intimidation commonly alleged by unions.

One example of an organization with a history of competitive individualism and merit is Associated Builders and Contractors (ABC). Founded in 1950, this trade association for construction companies has played a balancing role in many of the political battles concerning labor relations in construction during the second half of the 20th Century. It outlined and popularized the "merit shop philosophy" that the lowest responsible bidder should win a job regardless of the union affiliation of its employees. Millions of construction workers are working outside of a union, and many of them made a decision to leave a union or be independent of a union in order to work for a company belonging to ABC. These workers and ABC company owners can provide stories with a different perspective on labor history for students to consider. Unfortunately, ABC has not recorded its history in a way that would appeal to students or even a general audience.

At the very least, by promoting an alternative theory of labor history in the classroom, free market proponents will highlight the inappropriate union efforts to impose a political ideology on a captive student audience in the classroom. One can only imagine the howling from union lobbyists if a California State legislator introduced a bill establishing "Capitalism is Cool Week" in public schools. Unions have a role in the workplace defined by law, but their propaganda does not belong in the classroom any more than corporate propaganda belongs in the classroom. As Mike Antonucci of the Education Intelligence Agency wrote in his analysis of the National Education Association's labor history plans for 2000, "Public schools and teacher colleges shouldn't teach nutrition courses designed by McDonald's, medical testing courses designed by PETA, or labor history courses designed by NEA."

And for those union leaders and their political allies who argue that all teaching in the public schools is inherently capitalist propaganda, there's always the example of the Laborers union that established its own charter school in Cranston, Rhode Island. The Laborers teach a construction trade to high school students as well as math, science, English, reading, and social studies. Their version of history might be a disservice to students looking for a complete view of history, but at least the students and their parents will know what they're getting.

ENDNOTES

1 “U.S. Union Membership, 1948-2001,” chart, Labor Research Association Online: Stats & Data, Labor Research Association, 30 Oct. 2002, http://www.laborresearch.org/charts.php?id=29.

2 “Union Members Summary,” U.S. Bureau of Labor Statistics: News, 17 Jan. 2002, U.S. Bureau of Labor Statistics, 30 Oct. 2002, http://stats.bls.gov/news.release/union2.nr0.htm.

3 Robert Putnam, “Bowling Alone: America’s Declining Social Capital,” Journal of Democracy, 6.1 (1995), in History—Social Science Framework for California Public Schools Kindergarten Through Grade Twelve, California Department of Education, 11 Oct. 2002, http://www.cde.ca.gov/cdepress/hist-social-sci-frame.pdf.

4 Stephane Clare, “Students Undecided about Union Conflict,” Yale Daily News,7 Mar. 1996, 1 Nov. 2002, http://www.yaledailynews.com/article.asp?AID=7351. 

5 Shinzong Lee, “Labor Teach-in Targets Undergrads,” Yale Daily News, 18 Oct. 2002, 1 Nov. 2002, http://www.yaledailynews.com/article.asp?AID=20229.

6 James Green, “Why Teach Labor History?” OAH Magazine of History, 11.2 (1997): 5, 7 Oct. 2002, http://www.oah.org/pubs/magazine/labor/.

7 John Summers, “The Future of Labor’s Past: American Labor History on the World Wide Web,” Labor History, 40. 2 (1999), in Center for History and New Media, 29 Oct. 2002, http://chnm.gmu.edu/assets/historyessays/e2/thefutureoflaboa.html.

8 Michelle Vesecky, “Golden Hands, Working Hands: The History of the Future,” Labor Center Reporter, 292, Center for Labor Research and Education, 29 Oct. 2002, http://laborcenter.berkeley.edu/reporter/292.html.

9 Paul A. Tokasz, New York State Assembly Memorandum in Support of A268, 2001-2002 Regular Sessions, New York State Resources on the Legislature, Assembly and Senate, 29 Oct. 2002, http://public.leginfo.state.ny.us/menuf.cgi.

10 Scott P. Plokin, Senate Committee on Education Analysis of SB 898, 1997-98 California Regular Session, California State Senate, 29 Oct. 2002, http://info.sen.ca.gov/pub/97-98/bill/sen/sb_0851-0900/sb_898_cfa_19970513_114713_sen_comm.html.

11 Stephanie Tate, quoting Ingraham High School teacher Fred Yudin, “Teachers Work to Revive Labor Education,” Washington Free Press, Oct.-Nov. 1995, 29 Oct. 2002, http://www.speakeasy.org/wfp//18/Labor5.html.

12 “A Guide to Labor Studies,” New York Teacher, 2 June 1999, 14 Nov. 2002, http://www.nysut.org/newyorkteacher/backissues/1998-1999/990602laborstudy.html.

13 Bret Eynon and William Friedheim, “It’s About People: Social and Labor History in the Classroom,” OAH Magazine of History, 11.2 (1997): 53-65, 7 Oct. 2002, http://www.oah.org/pubs/magazine/labor/.

14 Green, 6.

15 “Labor History Month, 1996,” Federal Register, 61 (1996): 20419.

16 Green, 7.

17 New Business Adopted by the 1998 Representative Assembly, National Education Association, 7 Oct. 2002, http://www.nea.org/ra/ra98/nbi98.html.

18 Resolutions: K-12 Labor Education, About AFT, 7 Oct. 2002, http://www.aft.org/about/resolutions/2002/labor_ed.html.

19 Communiqué, 18 July 2002, Education Intelligence Agency, 29 Oct. 2002, http://home.earthlink.net/~mantonucci/archives/20020718.htm.

20 Senate Bill 1295, 2001, and Chapter 334 of the Acts of 2002, An Act Establishing a Distinctive Registration Plate Process, The 182nd General Court of the Commonwealth of Massachusetts, 29 Oct. 2002, http://www.state.ma.us/legis/legis.htm.

21 “2001: A Great Year for RI Labor History,” LRC News and Notes, 15 (2002), 29 Oct. 2002, http://www.cba.uri.edu/slrc/newsletters/s02/Labor_History.html.

22 West Virginia Humanities Council, 10 Oct. 2002, http://www.wvhumanities.org/labor.htm. 

23 Illinois Labor History Society, 7 Oct. 2002, http://www.kentlaw.edu/ilhs/curricul.htm.

24 Workday Minnesota, 4 Nov. 2002, http://www.workdayminnesota.org/untold_stories/intro.php.

25 Communiqué, 8 May 2000, Education Intelligence Agency, 29 Oct. 2002, http://home.earthlink.net/~mantonucci/archives/20020508.htm.

26 Communiqué, 2 Aug. 1999, Education Intelligence Agency, 29 Oct. 2002, http://home.earthlink.net/~mantonucci/archives/19990802.htm.

27 Wisconsin AFL-CIO Labor History, 10 Oct. 2002, http://www.wisalfcio.org/labor_history/.

28 Eynon and Friedheim, 58.

29 Labor in the Schools Committee, California Federation of Teachers, 14 Nov. 2002, http://www.cft.org/comm-n/labsch/index.shtml. 

30 “Video Series Shows Workers’ Struggles,” Campus Clips, May/June 2000, California Federation of Teachers, 7 Oct. 2002, http://www.aft.org/publications/on_campus/may_jun00/campusclips.html.

31 Vesecky.

32 Fred Glass, “A Few Thoughts on the Making of Golden Lands, Working Hands,” Workday Minnesota, 29 Oct. 2002, http://www.workdayminnesota.org/permanent/culture/thoughts.php. 

33 Vesecky.

34 Glass.

35 Vesecky.

36 Fred Glass, Patty Litwin, and Linda Tubach, Classroom Guide: Golden Lands, Working Hands (Oakland: California Federation of Teachers, 1999), 50.

37 Golden Lands, Working Hands, dir. Fred Glass, California Federation of Teachers, 1999.

38 Glass.

39 Vesecky.

40 Tim Fields, “State of the Union—Workers’ Groups Continue Long After Historic March,” Fairfield Daily Republic, 1 Sept. 2002, 14 Nov. 2002, http://www.dailyrepublic.com/archives/index.inn?loc=detail&doc=/2002/September/01-362-NEWS1.TXT.

41 Collective Bargaining Education Project, Center for Labor Research and Education, 3 Oct. 2002, http://www.labor.ucla.edu/programs/collective.html. 

42 History—Social Science Framework for California Public Schools Kindergarten Through Grade Twelve, California Department of Education, 11 Oct. 2002, http://www.cde.ca.gov/cdepress/hist-social-sci-frame.pdf.

43 A People and a Nation: A History of the United States (Boston: Houghton Mifflin, 2001).

44 America: Pathways to the Present (Upper Saddle River, NJ: Prentice Hall, 2003).

45 Glass, Litwin, and Tubach, 6.

46 Glass, Litwin, and Tubach, 54.

47 “Video Series.”

48 Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Democracy (New York: Simon & Schuster, 2000), 82.

49 Peter J. Pestillo, “Can the Unions Meet the Needs of a ‘New’ Workforce?,” Monthly Labor Review, 102 (1979): 33, cited in Putnam, 82.

50 “NLRB Election Statistics,” Construction Labor Report, 21 August 2002: 722. 

51 Michael Antonucci, Strange Places: Inside the 1999 National Education Association Representative Assembly: What’s to Come in 2000, Education Intelligence Agency, 29 Oct. 1999, http://home.earthlink.net/~mantonucci/strangeplaces/Whats_to_Comex.html.

52 Sherie Winston, “Laborers Open a Charter School,” Engineering News-Record, 9 Sept. 2002, 14 Nov. 2002, http://enr.construction.com/news/bizlabor/archives/020909.asp.

THE PENNSYLVANIA STATE EDUCATION ASSOCIATION: COMPELLING TEACHERS, LOBBYING POLITICIANS, AND INCREASING TAXES by Matthew J. Brouillette & Ann C. Thomson, J.D.*

Executive Summary

Originally founded as the Pennsylvania State Teachers Association in 1852, the Pennsylvania State Education Association (PSEA) has transformed itself from a professional development organization for educators into one of the wealthiest, largest, and most politically active labor unions in the Commonwealth of Pennsylvania.

With more than 160,000 members, an annual income of more than $66 million through compulsory payments and other sources, and 276 full-time employees, the union’s success depends on its ability to:

1. Organize employees into collective bargaining units and secure compulsory dues agreements from school boards;

2. Influence legislation by financially supporting, electing, and lobbying elected officials at every level of government; and

3. Secure increasingly larger amounts of taxpayer money for the public schools and—ultimately—the union itself.

In the 1980s, Pennsylvania State Education Association membership numbered a mere 80,000. But with the passage of Act 84 in 1988—a law that granted labor unions the power to compel dues or fee payments from employees as a condition of employment—PSEA membership has more than doubled to over 160,000 today. The PSEA’s success in organizing teachers, cooks, janitors, bus drivers, and other school and health care personnel has provided the union the numbers and wealth to influence public policy in a manner that is virtually unrivaled in Harrisburg.

The PSEA has evolved into a powerful political machine with full and part-time political operatives in the state capital and in 11 regionally positioned offices throughout the Commonwealth. The labor union’s extensive network of personnel is able to directly and indirectly influence local, regional, statewide, and national political campaigns through hard and soft dollar contributions totaling hundreds of thousands of dollars. But by completely politicizing public education at every level, the PSEA has effectively marginalized parents, children, and even teachers in communities throughout Pennsylvania.

Ultimately, the PSEA’s health and prosperity is based on its success in getting elected officials to increase taxes on Pennsylvanians. Because salaries and benefits of public school employees—and, indirectly, union employees—are paid for by taxpayers, the union has a strong incentive to push for higher taxes. To this end, the labor union has been highly effective.

In the years preceding the passage of Act 84 (1968-1987), public school tax revenue from state and local sources grew respectively at rates 9 and 13 percent faster than inflation. However, in the years following Act 84 (1988-2000), public school tax revenue growth from state and local sources outpaced inflation by 102 and 133 percent, respectively. And during the post-Act 84 time period, property tax increases outpaced inflation by 149 percent, compared to a 12 percent increase in the preceding nineteen years.

Although Pennsylvania teachers receive the highest salaries in the nation (when adjusted for the cost of living), the real beneficiaries of the PSEA’s financial and political power are the PSEA staff and officers. In 2000-01, the average salary for a PSEA employee was more than $73,000. Even more startling, 84 out of 276 employees received more than $100,000 in salary alone.

The success of the PSEA in organizing employees, influencing politicians, and encouraging tax increases should be a concern for every Pennsylvanian. In addition to profiting from the $17.4 billion in taxpayer money that is annually spent on public education, the PSEA heavily influences what is legislated in the statehouse and what occurs in our schools—which are supposed to educate our children and help prepare them for responsible citizenship and productive lives.

Introduction

The Pennsylvania State Education Association (PSEA)—founded in 1852 as the Pennsylvania State Teachers Association to promote professional development for educators—is one of the wealthiest, largest, and most politically active labor unions in the Commonwealth of Pennsylvania. Rivaled by only a handful of other special interest groups, the school employees’ labor union boasts more than 160,000 members, an annual income of more than $66 million through compulsory payments and other sources, and 276 full-time employees.

The PSEA is currently the exclusive bargaining representative for 900-plus local associations. In addition to public school teachers, the union represents school cooks, janitors, bus drivers, school dental hygienists, school nurses, school psychologists, school social workers, librarians, community college and junior college faculties, students and retirees, as well as private sector healthcare workers.1 In approximately 600 of the local associations, the PSEA has negotiated with employers—primarily school board members—the power to compel payments from employees as a condition of employment. It is this “taxing” power that has enabled the PSEA to become a dominant force in Pennsylvania politics.

Today, the PSEA’s strength in numbers and wealth enables it to effectively advance its agenda on a daily basis. The labor union’s success is dependent on its ability to (1) organize employees into collective bargaining units and secure compulsory dues agreements from school boards; (2) influence legislation by financially supporting, electing, and lobbying elected officials at every level of government; and (3) secure increasingly larger amounts of taxpayer money for the public schools and—ultimately—the union itself. To date, the PSEA has earned an “A” for all three subjects.

Organizing Employees

In 2001, the Pennsylvania State Education Association numbered 160,513 members in its ranks. Although PSEA membership was approximately 80,000 members in the 1980s, the passage of Act 84 in 1988 rejuvenated the association by granting the union the power to compel dues or fee payments from employees as a condition of employment.

The labor union bills itself as a “voluntary” membership association, and that “No school employee or health care professional is required to join and pay dues, nor can they be fired or be subjected to any punitive action for choosing not to join.”2 The irony, however, is that the PSEA is one of the few organizations where non-membership costs hundreds of dollars per teacher on an annual basis. In the 2001-02 school year, teachers who chose not to join the union were forced to pay more than $345 each in fees to the PSEA and its national affiliate, the National Education Association.3

These “agency shops”—whereby school board directors agree to a union contract that forces every teacher to pay money to the union in order to enter and remain in a classroom—have increased from zero school districts in 1987 to 333 out of 501 districts statewide today. Although one-third of Pennsylvania’s school districts do not force their employees to make payments to a labor union, the other 333 agency shops account for nearly 3 out of every 4 teachers in the Commonwealth. Only three counties in Pennsylvania—Juniata, Mifflin, and Perry—fully guarantee teachers’ freedom to accept or decline union representation.4

Irrespective of the PSEA’s willingness to compel payments from people as a condition of employment, the labor union’s success in organizing employees is impressive, to be sure. However, an even more significant display of its political power has been the union’s ability to effectively influence the political and legislative process.

Influencing Politicians

In addition to being a government-sector labor union, the PSEA has evolved into a powerful political machine, with full and part-time political operatives in the state capital and in 11 regionally positioned offices throughout the Commonwealth. The ability to influence politics and shape public policy—even beyond education—is key to the union’s survival and prosperity. Therefore, the PSEA has powerful incentives to build an extensive network of personnel to directly and indirectly influence local, regional, statewide, and national political campaigns through hard and soft dollar contributions totaling hundreds of thousands of dollars.

While most employees in the private sector earn a larger paycheck by working harder at their jobs to provide a better product or service, employees in the government sector (including public schools) often receive a larger paycheck simply through electing preferred candidates for office, lobbying the state legislature and local school boards for increased taxes, preventing private competition for the provision of services, and involvement in other politically driven activities. The direct linkage between politics and the pocketbook for government-sector labor unions is why the PSEA has moved away from professional development for teachers and embraced its evolution into a comprehensive political machine.

In addition to direct cash contributions to politicians from its political action committee, PSEA-preferred candidates for office are also provided with substantial support through phone banks, literature distribution, door-to-door canvassing, “get out the vote” efforts, and other incalculable donations to the union’s choices for office. The PSEA’s ability to mobilize union activists across the Commonwealth is virtually unmatched by any other special interest group in Pennsylvania.

Clearly, the PSEA is an influential force in statewide politics; however, the chart on the following page demonstrates how school employees’ labor unions have politicized education at the local level. By creating a cycle that is nearly impossible to penetrate without union permission, the PSEA has effectively marginalized parents, children, and even teachers in communities throughout Pennsylvania.

Increasing Taxes

Finally, the PSEA’s success is dependent in large part on its ability to secure increasingly larger sums of taxpayer money for the public schools and—ultimately—the union itself. The tipping point for the PSEA came in 1988 with the passage of Act 84, which enabled the union to dramatically increase its financial and political power.

Because the PSEA is indirectly funded through taxpayer dollars,5 the incentive to increase taxes for public schools is high. Lower revenues to the public schools equates to lower revenues for the labor union; so it is no surprise that taxes on Pennsylvanians have concomitantly increased with the growth of the PSEA’s political power to influence tax decisions.

Comprehensive data on total Pennsylvania public school tax revenues and expenditures for the years 1968-2000 show how effective the PSEA has been in influencing tax increases in the Commonwealth.6 In the years preceding Act 84 (1968-1987), the growth of public school revenue from state and local sources outpaced inflation by 9 and 13 percent, respectively. (See Chart 1, below.)

However, in the years following Act 84 (1988-2000), public school tax revenue growth from state sources outpaced inflation by 102 percent, and growth from local sources was 133 percent above the inflation rate. (See Chart 2, below.) These dramatic increases of more than double the rate of inflation are attributable in large part to the PSEA’s enhanced influence on the political process at both the state and local levels.

Although the union faces “competition” for taxpayer dollars at the state level, the PSEA has a virtual monopoly of influence over powerful local taxation units of government—school districts. Through contract negotiations with school districts—and the complicity of school board members—union demands at the bargaining table effectively drove up local property taxes by 110.5 percent during the 1988-2000 period (a rate 149 percent higher than the concurrent rate of inflation). Compared to the pre-Act 84 years of 1968-1987, property taxes grew at a rate a mere 12 percent higher than the 67.3 percent rate of inflation. (See Chart 3)

The PSEA’s success in bargaining for increasingly expensive contracts with school boards and effectively lobbying of state legislators have led to higher taxes on citizens. In part, higher taxes have provided Pennsylvania’s public school teachers with the highest salaries in the nation (when adjusted for the cost-of-living). According to a 2002 study from the American Federation of Teachers—the national affiliate of the Pennsylvania Federation of Teachers—“the average teacher in Pennsylvania had the highest purchasing power” in the nation of $52,832 (adjusted by the AFT interstate cost-of-living index).7

Even given the generous average salaries that Pennsylvania teachers receive, it is nevertheless clear that our public schools’ best teachers are underpaid as a result of rigid union salary schedules that prohibit merit-based increases for high-performing educators. But salaries for high-performing teachers would most certainly rise if school board directors refused to accept union-negotiated salary schedules that compensate teachers equally by unfairly taking money from excellent educators and distributing it to union-protected mediocre and poor-performing teachers. Regardless, average teacher salaries of $49,528 for nine months of work remain highly attractive when compared to the average Pennsylvania worker, who earned $33,999 for 12 months of work in 2000.8

But are teachers the real beneficiaries of the PSEA’s wealth?

The PSEA’s website claims that “Membership Doesn’t Cost—It Pays!” An analysis of information gathered by the U.S. Department of Labor reveals that PSEA membership truly does pay—particularly if you are a PSEA employee or official.

Membership Has Its Privileges

Many unions, organizations, companies, and individuals profit from Pennsylvania’s $17.4 billion government school industry, but the employees of the PSEA are clearly some of the greatest beneficiaries of taxpayer money.9 According to the labor union’s 2000-01 LM-2 report, the PSEA collected $66,401,259 from various sources, much of which came from compulsory membership dues ($482 per teacher for PSEA/NEA dues in 2000-01), interest and dividends, rent, the sale of investments and fixed assets, and reimbursement from its national affiliate (the NEA) for services provided.10

More than one-third of the PSEA’s revenue makes its way into the pockets of hundreds of PSEA employees. In 2000-01, the average PSEA employee salary was $73,388, or 48 percent more than the average teacher salary and 116 percent more than the average worker in Pennsylvania. Additional average benefits of $17,771 include membership dues for other organizations, tuition reimbursement, relocation reimbursement, pensions, hospitalization, and auto, health, dental, vision, and life insurance.

Eighty-four PSEA employees received salaries of more than $100,000—almost double the number of union employees receiving more than $100,000 in FY 1999-2000.11 With nearly 1 out of every 3 union employees receiving a six-figure income—a level that few, if any, teachers will ever reach—vacancies on the PSEA staff are likely not difficult to fill.

It also appears that PSEA employee salaries are not constrained by the same types of union-imposed salary structures that prohibit meritorious compensation increases for teachers. One apparently high-performing PSEA employee experienced a more than 80 percent increase in his paycheck in one year, from $115,177 in 1999-2000 to $210,377 in 2000-01. Of course, the individual may very well have deserved the handsome salary increase; however, there is not a single union contract in the state of Pennsylvania that would permit a superintendent or principal to likewise compensate a worthy teacher.

The PSEA’s top ten highest paid employees received average salaries of $146,210, or 195 percent more than the average teacher and 330 percent more than the average Pennsylvania worker. (See Table 1) PSEA President Patsy Tallarico was paid $140,516 in 2000-01, but Mr. Tallarico may be due for a big pay raise in his third year as president if his predecessor’s experience is indicative. Former PSEA President David Gondak jumped from $137,575 in his second year as union leader in 1997-98 to $234,013 in 1998-99. Gondak’s one-year compensation increase of 70 percent certainly gives new meaning to the PSEA’s motto: membership doesn’t cost—it pays!

 

Table 1
Pennsylvania State Education Association's "$100K Club"

Top 10 (out of 84) Union Employee Salaries Over $100,000 in 2000-2001

The Union’s Best Interests

Every Pennsylvanian should be concerned about the financial incentives and political agenda that drive the Pennsylvania State Education Association. It is the only labor union that holds inordinate sway over both Pennsylvanians’ paychecks and children. Not only does the union profit from the taxpayers’ annual expenditure of $17.4 billion on public education, but it heavily influences public policy in Pennsylvania, as well as the system of schools that are supposed to educate our children and help prepare them for responsible citizenship and productive lives.

The Pennsylvania State Education Association works hard to convince citizens that it represents the best interests of teachers, children, and public education. However, the evidence reveals that the labor union’s top priorities are (1) organizing employees into collective bargaining units and securing compulsory dues agreements from school boards; (2) influencing legislation by financially supporting, electing, and lobbying elected officials at every level of government; and (3) securing increasingly larger amounts of taxpayer money for the public schools and—ultimately—the union itself.

One would hope that the education of children would be the number one priority of the Pennsylvania State Education Association. Unfortunately, the organization’s emphasis on its own best interests—at the expense of taxpayers, parents, children, and even teachers—will continue to prevent it from truly serving the very people it purports to represent.

* Matthew J. Brouillette is president and Ann C. Thomson, J.D., is a former policy analyst at The Commonwealth Foundation, a free-market research and educational institute based in Harrisburg, PA. This is Commonwealth Policy Brief, Volume 2002, No. 9 (September 2002), republished herein by permission.Back to Text

Authors’ Note

The Commonwealth Foundation supports and defends workers’ First Amendment rights to voluntarily associate with any legal organization, including labor unions. The Commonwealth Foundation does not object to labor union efforts to organize employees nor does it deny the right of union officials to legitimately lobby policymakers. The Commonwealth Foundation does oppose, however, the current practice of compelling payments from employees as a condition of employment and the use of members’ collective bargaining dues for political activities without their expressed written consent.

ENDNOTES

1 Pennsylvania State Education Association web site, at http://www.psea.org.

2 Testimony of James Weaver, Vice President of the Pennsylvania State Education Association, on HB 2099, Pennsylvania State House of Representatives, Labor Relations Committee, 22 August 2002.

3 Testimony of Randy Hoffman of the Keystone Teachers Association on HB 2099, Pennsylvania State House of Representatives, Labor Relations Committee, 22 August 2002.

4 Pennsylvanians for Right to Work, at http://www.PaRightToWork.org; Pennsylvania State Education Association, at http://www.psea.org; and Pennsylvania School Boards Association, at http://www.psba.org.

5 The PSEA is indirectly funded by taxpayer money because after tax dollars are collected by school districts, union dues and fees are automatically deducted from teachers’ paychecks and sent directly to the labor union by the school district at taxpayers’ expense. 

6 Grant R. Gulibon and Matthew J. Brouillette, “Dispelling the Myth of Pennsylvania’s Under-Funded Public Schools,” Policy Brief 02-03, July 2002, at http://www.CommonwealthFoundation.org.

7 Survey & Analysis of Teacher Salary Trends 2001, The Research & Information Services Department, American Federation of Teachers, AFL-CIO, 2002 , p. 8, at http://www.aft.org/research/salary01/SalarySurvey2001.pdf.

8 Bureau of Labor Statistics, U.S. Dept. of Labor, at http://www.bls.gov.

9 National Education Association, Rankings & Estimates: Rankings of the States 2001 and Estimates of School Statistics 2002, Washington, D.C.: The Association, 2002. Data compiled from Summary Table I, p. 93; Summary Table G, p. 91; and Summary Table D, p. 89, at http://www.nea.org/publiced/edstats/rankings/02rankings.pdf.

10 While many of the NEA’s state affiliates do not have to file LM-2 forms with the U.S. Department of Labor, the PSEA is required to submit an LM-2 form under the federal Labor Management Reporting and Disclosure Act because the organization has organized some private-sector employees. Neither federal nor Pennsylvania state law requires government-sector unions to fully disclose union finances and/or activities. U.S. Department of Labor, Form LM-2, reporting period: September 1, 2000 – August 31, 2001.

11 For a listing of all PSEA employees who received $100,000 or more in salary in 2000-2001, see www.CommonwealthFoundation.org/education/PSEA2001salaries.shtml.

Total public school tax revenue growth from state and local sources increased at a rate a little more than 4 percent faster than inflation between 1974-1987, the thirteen years prior to the passage of Act 84 in 1988. In the following thirteen years (1988-2000), total tax revenue growth increased at a rate more than 123 percent faster than inflation. In other words, the growth rate of tax revenue to the public schools increased 2,975 percent faster in the thirteen years following the passage of Act 84 in 1988, in comparison to the preceding thirteen years.

Act 84 granted the Pennsylvania State Education Association the power to compel dues or fees from employees as a condition of employment. As a result, PSEA “membership” grew from 80,000 in the 1980s to over 160,000 today. The union’s annual income of more than $66 million provides it the financial and political power to organize employees, compel payments from members and non-members as a condition of employment, influence legislation and lobby politicians, and secure larger amounts of taxpayer money for the public schools and the union itself.

LET TEACHERS' UNIONS PAY FOR UNION BUSINESS by John Gore Independence Institute*

Executive Summary

Why should taxpayers pay for union officers to take time off and attend union functions? Collective bargaining agreements between school districts and teachers throughout the state provide for leave for the president of the teachers’ union and other union officers to conduct union business and attend union-sponsored activities, conferences, and workshops. These forms of leave are largely underwritten by local school districts, creating huge taxpayer subsidies to local teachers’ unions. Furthermore, these provisions remove experienced educators from the classroom and replace them with less-experienced counterparts in the form of replacements and substitutes, compromising the quality of education received by students. Because school boards are so closely linked to teachers’ unions, any attempt to bring these subsidies to an end should be undertaken legislatively. Such legislation would stipulate the following conditions:

Public school districts shall no longer, directly or indirectly:

• Provide release time with pay for any period of time for service as a union representative in any national, state, or local teachers union, education association, or other professional association, or for service with or on behalf of any such labor organization.

• Release employees from regularly contracted duties to serve in, with, or on behalf of any labor organization for more than one school year; and during any such school year the labor organization shall be responsible for the full cost of the salary and benefits of such employees.

Public educators will no longer:

• Receive release time with pay, with the exception of personal leave days, for any period of time to attend union meetings.

Leave for Union Officials

Of the 20 largest school districts in Colorado, 17 operate under collective bargaining agreements with the local teachers’ union. Nearly every one of these agreements grants a full-time, yearlong leave of absence to the president of the local teachers’ union from regular teaching duties to fulfill his or her term as union president. Two of these collective bargaining agreements even provide for additional partial leave for other union officers. Often at the expense of the school district, the union president and other officers lose no salary, seniority rights, or fringe benefits (which can be as high as 20% of a teacher’s salary) during such leave, and the district is required reinstate the union president at the end of his or her tenure to a comparable position in the same school he or she taught in prior to serving as union president. Additionally, most of these collective bargaining agreements mandate a certain amount of leave to the union representatives to attend union-sponsored seminars, meetings and functions. These “Association leave” days are granted with full pay, usually at the district’s expense, and the district routinely bears the additional costs of hiring a substitute to monitor classrooms abandoned by union representatives using these leave days.

This study was conducted with a very simple purpose: to provide information to the taxpayers of the State of Colorado regarding the use of their tax money. It is also intended as a call for accountability to local school boards implicated by these findings. This study is about teachers’ unions, not teachers; its aim is to disclose the actions of the teachers’ unions as an organization, not to demean or degrade any hard-working, competent educational professional.1

Methodology

The formula for totaling the amount of taxpayer subsidies to local teachers’ unions aggregates the separate costs of the two major factors, tax dollars subsidizing the union president’s leave and tax dollars subsidizing teacher leave for union activities. These two costs are analyzed individually and added together to compute the total amount of the taxpayer subsidy to the local teachers’ union.

A) Tax Dollars Subsidizing Union President’s Leave. The local school district generally absorbs the cost of the union president’s salary and benefits partially or fully during his or her tenure. To calculate the net subsidy flowing from the taxpayer to the union, the amount paid by the union (whether to the union president’s salary and benefits directly, to the cost of a replacement teacher, or to a combination of both) is subtracted from the amount paid by the school district in the salary and benefits of the union president. For example, if the union president earns a total of $50,000 in salary and benefits paid by the district, and if the union remits $30,000 to the district to compensate a replacement teacher for the union president, the net taxpayer subsidy to the union equals $20,000.

B) Tax Dollars Subsidizing Teacher Leave for Union Activities. The amount of taxpayer subsidy transferred to the union coffers for one teacher on one day of union leave is equal to that teacher’s per diem pay minus any amount contributed by the union to defray the costs incurred by providing these days, usually in the form of substitute pay. For example, if the union is granted 100 union leave days at the teacher per diem of $200, and the union reimburses the district at the substitute daily rate of $100, then:

100 {number of union leave days} X $200 {average teacher per diem}
– 100 {number of union leave days} X $100 {substitute daily rate}
= Net subsidy to the union

In this example, the net subsidy to the union through union leave equals $10,000.

Combining the two forms of subsidies in this example, the net taxpayer subsidy from the school district to the teachers’ union is $30,000.

C) Potential Number of Computers and Textbooks Per Year. These columns explore the buying power of these union subsidies in terms of vital educational resources. To calculate the potential number of computers purchased, an average new computer cost of $1,000 was divided into the total tax dollar subsidy to the teachers’ union. For textbooks a similar process was followed using an average high school textbook cost of $50. It should be remembered that these figures represent potential resources every year, not over a cumulative period.

D) The Numbers. Each of the collective bargaining agreements examined below has been carefully scrutinized to insure the greatest degree of accuracy in this analysis. In calculating the net subsidies through the union president’s salary, educated, informed estimates were combined with the specific wording of the collective bargaining agreements wherever possible. The average teacher per diem rates used in the calculations of union leave reflect district-wide averages for the 1999-2000 school year and were obtained from the Colorado Department of Education. Because the figures used are averages, they most likely underestimate the actual amount of the subsidies because ranking union officials (those who are elected to leadership positions within the union or who use union leave days) tend to be more experienced educators earning higher salaries than their counterparts.

Interpretation of Data

Union President’s Leave

While many nuances exist in the individual collective bargaining agreements, most of the collective bargaining agreements have similar provisions for financing leave for the union president. Each school district can be grouped in one of three categories according to the amount of the union’s contribution to the cost of the union president’s leave, whether the union bears the cost of hiring a replacement teacher, paying most of the union president’s salary and benefits during his or her tenure, or paying the union president’s salary and benefits entirely.

 

   • School Districts Where Unions Provide for the Cost of a Replacement Teacher. In half of the twenty largest school districts in Colorado, particularly Denver Public Schools, Adams-Arapahoe 28J, Adams County 12, Boulder Valley, Poudre Valley, Mesa Valley No. 51, St. Vrain, Littleton, Weld County 6, and Thompson, the union pays the salary (and sometimes the benefits), usually at a prearranged level on the salary schedule, of a teacher hired to replace the union president on leave. The union president continues to receive compensation as if an employee of the district. Generally the union president is an experienced, tenured teacher and the replacement an inexperienced, less-skilled educator. This difference in experience level translates to a large difference in compensation. Consequently, this arrangement creates the highest taxpayer subsidy flowing into the union, and these districts face the problem of compromised teacher quality when an experienced educator is on leave and an inexperienced one in the classroom.

School Districts Where Unions Pay Most of the Union President’s Salary and Benefits. The collective bargaining agreements in Cherry Creek No. 5, and Colorado Springs District 11 provide leave to the union president at only partial expense to the district; most of the cost of the union president’s leave is absorbed by the union. Structuring the union president’s leave in this way reduces the amount of the subsidy compared to those districts paying the union president’s salary in full; however, these districts also bear the cost of hiring a replacement teacher without compensation from the union. These districts still have the problem of compromised teacher quality in those classrooms monitored by replacements.

School Districts Where Unions Pay the Union President’s Salary and Benefits Entirely. The final category pertains to those school districts providing no pay to union presidents while on leave: Jefferson County, Douglas County, Pueblo 60, Westminster 50, and Pueblo 70. The only benefits guaranteed by the district to the union president are those relating to retirement and seniority. The union president retains accrued benefits without placing extra costs on the district in his or her absence. Taxpayer subsidies to the union through this provision are eliminated entirely without harming the union president’s career as an educator.

Notably, both the Adams School District 12 and Boulder Valley School District RE-J1 collective bargaining agreements provide half-time leave to an additional union officer each year. The Adams School District 12 collective bargaining agreement reads: “The Board shall grant half release time with pay and benefits to the coordinator of the Association.”2 Similarly, the Boulder Valley School District “agrees…that the…vice president of the Association should be relieved of {his or her} duties without loss of salary, seniority, or fringe benefits.”3 Why the union vice president or “association coordinator” should receive leave time to discharge his or her duties is unclear, especially considering that this provision can only be found in these two agreements. Allowing additional leave to be granted to these union officers not only greatly increases the amount of the taxpayer subsidy to the Boulder Valley Education Association and the Adams 12 Educators’ Association respectively, but it further damages the overall quality of education by removing experienced teachers from the classroom and replacing them with less experienced counterparts.

Teacher Leave For Union Activities

As in the case of leave for the union president, each school district can be included in one of three groups based on the union contribution to the cost of providing leave to teachers for union activities, whether the union bears none of that cost, the cost of supplying substitutes on these leave days, or the cost of salary for teachers using these leave days.

School Districts Where Unions Bear None of the Cost of Teacher Leave For Union Activities. Half of the school districts examined, namely Jefferson County, Denver Public Schools, Adams County 12, Boulder Valley, Poudre Valley, Mesa Valley No 51, St. Vrain Valley, Weld County District 6, Thompson, and Pueblo 70 provide union leave days entirely at the expense of the district. Not only are these districts sacrificing teacher quality through the use of substitutes, they are also in effect paying two people to do one job. These districts suffer the adverse consequences of granting teacher leave for union activities at their greatest extent.

School Districts Where Unions Finance the Cost of Substitutes. Seven other school districts, Cherry Creek No. 5, Douglas County, Adams-Arapahoe 28J, Pueblo 60, Littleton, Westminster 50, and Widefield (which maintains no collective bargaining agreement between teachers and the school district) continue to pay the salary of teachers on union leave but require the union to bear the cost of supplying substitutes. These districts avoid paying two individuals to do the same job but still bankroll the cost of substitutes; additionally, the educational experience of students is compromised by the extra use of substitutes.

School Districts Where Unions Finance Any Union Leave Entirely. Two of the remaining school districts, Academy District 20 and Harrison District 2, have no collective bargaining agreements, and they rarely receive requests for union leave. Furthermore, the collective bargaining agreement in Colorado Springs School District 11 stipulates that union leave “days shall be paid by the Association if the teachers are doing work that is not of an educational nature.”4 Requiring unions to pay the salary of teachers on leave for union purposes eliminates the subsidy to teachers unions. Furthermore, this requirement may discourage union representatives from requesting unnecessary leave days, guaranteeing that the most experienced educators remain in the classroom.

The Largest Possible Subsidizer

Mesa County Valley School District No. 51 uses a unique process for distributing its professional leave days. Instead of processing requests for these leave days through the superintendent or some other administrator within the school district, as is common practice in other districts, requests for such leave are approved by the Teacher Professional Leave Panel (TPLP), a committee “consisting of five (5) teachers selected by the Association and one (1) administrator in an ex officio capacity.”5 The TPLP is granted full authority to develop the guidelines for distributing such leave. This means that the Mesa Valley school board has yielded great power to the Association in determining how these leave days may be used. The Association supplies five of the six members of the TPLP, which not only develops the guidelines for distributing such leave but also is the final authority for approving requests for professional leave. This is a major transfer of power from the school district to the local teachers’ union. What is to stop the TPLP from allowing these professional leave days to be used for union business?

Mesa County Valley School District No. 51 potentially funnels the largest subsidy of any of the school districts scrutinized, over $170,000, into the local teachers’ unions. Four hundred fifty (450) possible union leave days are available to the Mesa Valley Education Association.6 Mesa County District No. 51 has also agreed to “appropriate fifty-three thousand dollars ($53,000) each school year” to defray expenses incurred in the use of this leave,7 a concession found in none of the other agreements.

Policy Recommendation

Because school board members are often elected with union endorsement, school boards are incapable and unwilling to delete these provisions from collective bargaining agreements with the union. Any attempt at reform must therefore be undertaken legislatively.

Legislation intended to put an end to these subsidies should include the following stipulations:

Public school districts shall not, directly or indirectly:

• Provide release time with pay for any period of time for service as a union representative in any national, state, or local teachers’ union, education association, or other professional association, or for service with or on behalf of any such labor organization.

• Release employees from regularly contracted duties to serve in, with, or on behalf of any labor organization for more than one school year; and during any such school year the labor organization shall be responsible for the full cost of the salary and benefits of such employees.

Public educators will no longer:

• Receive release time with pay, with the exception of personal leave days, for any period of time to attend union meetings.

This policy would allow for leave to the union president provided the union paid the entire cost of his or her salary and benefits. Under this legislation, taxpayer subsidies to teachers’ unions through union president leave would be ended. Limiting the length of tenure for the union president to one year would keep the most experienced and qualified teachers in the classroom educating children to the greatest extent possible. The third clause of this proposed policy would not abolish union leave days; rather, such leave days would be taken at union expense or for activities directly improving the teaching skills of educators. Restricting union leave days in this way would not only influence the number of union leave days taken but would guarantee that any taxpayer money financing those leave days would be frugally spent on educational purposes.

Conclusion

Teachers’ unions wield a large amount of wealth and influence. It is estimated that the National Education Association and the American Federation of Teachers collect over $1.3 billion annually in the form of state, local, and national dues.8 In the 1990s, the NEA and AFT were respectively the fourth and fifth largest soft money donors to the Democratic Party, donating in excess of $4.6 million during that decade.9 Why should taxpayers subsidize union officers, who represent a wealthy and special interest? Shouldn’t unions bear the cost of paying officials to do the union’s work? Transferring revenues collected from the taxpayer into the pocket of union officials amounts to public welfare for organized labor.

While a simple analysis using conservative figures reveals an alarming sum extracted from the taxpayers of the state and poured into the local unions, the actual cost of these subsidies to the taxpayer is much higher. As previously examined, granting leave to the union president often requires the district to hire a replacement teacher; substitutes must also be enlisted to replace union representatives on union leave in the classroom. In most cases the districts bear the burden of recruiting, hiring, and paying these teachers (including these teachers’ benefits) alone. While these costs may not be considered direct subsidies from the taxpayer to the union, they are economic waste generated by union activity and financed by the local taxpayer. They constitute a portion of the large cost of doing business with the union.

Money collected by the government with the purpose of meeting a pressing societal need—educating the citizenry—is diverted from the needy classroom to fund the activities of a wealthy special interest. If these funds were expended on educational resources such as computers and textbooks instead of on leave for union officers, classrooms would be more adequately equipped to provide a conducive learning environment for students. Every dollar funneled into union activities through these subsidies represents a dollar robbed from the student.

Finally, countless studies have proven that “the effectiveness of the teacher is the major factor of student academic progress,” a factor so important that there is “little evidence that subsequent effective teachers can offset the effects of ineffective ones.”  It follows then that the most necessary element in effective public education is teacher quality. Removing an experienced, effective educator from the classroom to serve as union president and replacing him/her with an inexperienced replacement undermines the goal of public education to provide the best educational experience possible to students. Additionally, the unnecessary use of substitutes on union leave days further hampers the learning process as teacher quality in the classroom is compromised.

This study has been narrow in its scope, examining only the arrangements relating to the union president’s leave and other forms of official union leave. Several other mechanisms within collective bargaining agreements generate funding for unions at taxpayer expense. Undoubtedly the current policies of leave for union presidents and other union officials, codified in the collective bargaining agreements of 17 of the 20 largest school districts in the state of Colorado, compromise the educational process and provide monetary and institutional benefits to unions at the expense of local school boards, students, and the taxpayer.

 

ADDENDUM

 

Format

The school districts are listed below in order of enrollment figures, beginning at the largest and culminating in the 20th largest in the State of Colorado. Under each school district, the heading of Leave for the Union President precedes the heading of Union Leave for Other Teachers, and together these headings are followed by a calculation of the total taxpayer subsidy to the local teachers union.

1) Jefferson County School District R-1

With approximately 88,000 students enrolled, the Jefferson County School District is the largest school district in Colorado. Its jurisdiction covers much of the western metropolitan area. The current collective bargaining agreement in Jefferson County was ratified in 1999 and is valid until 2003.

A) Leave for the Union President. The union president receives a leave of absence from his or her teaching duties during his or her term in office; “the amount of release time shall be determined annually, and the Association shall reimburse the District for the President’s salary in proportion to the amount of release time.”11 Although the agreement does not stipulate that the union reimburses the district for benefits, the Jefferson County Education Association has provided a document showing that the union does reimburse the district for the union president's salary and benefits.

B) Union Leave for Other Teachers. The Jefferson County collective bargaining agreement prescribes 275 “release days per calendar year for professional leave” at the disposal of “official representatives” of the union for the purpose of “attending JCEA, CEA and NEA functions.”The district is responsible for providing substitute teachers on these days. This provision equates to a massive subsidy to the union:

2) Denver Public School District

With an enrollment of 70,847 students, DPS is the second largest school district in the state of Colorado and serves the city and county of Denver. The current collective bargaining agreement in Denver is binding from September 1, 1999- August 31, 2002. Its subsidies to the DCTA break down as follows:

A) Leave for the Union President. The DPS collective bargaining agreement requires the district to provide “full salary, benefits and all other entitlements” to the union president “during the President’s term in office.” However, “on an annual basis, the Association shall remit to the District the amount commensurate with salary and benefits costs of employing a replacement teacher.” Generally, the union president is an experienced educator with an established salary, and the district hires a more inexperienced interim teacher as a replacement; accordingly, the difference in salary and benefits between the union president and the replacement teacher can easily equal as much as $20,000. That difference is a net subsidy to the teachers union out of the taxpayer’s pocket.

B) Union Leave for Other Teachers. The DPS collective bargaining agreement provides for 250 days of union leave. During the first 150 days, the district pays the full costs of the teachers’ salary and the pay of the substitute; for the last 100 days, if used by the union, the cost of providing the substitutes falls to the union while the cost of the teachers’ salary remains with the district. Under the provisions of the collective bargaining agreement, the following subsidy is calculated:

If the Union exercises its option for 100 more leave days as provided in the contract, it receives a net subsidy of the teachers’ salaries minus the pay of the substitutes:

If all of the elements of this provision are exercised, the total taxpayer subsidy for union leave equals $39,812.

Total Possible Annual Taxpayer Subsidy to the Teachers’ Union through the Denver Public Schools Collective Bargaining Agreement = $59,812.

3) Cherry Creek School District No. 5

The third largest school district in the state, Cherry Creek School District No. 5, is located in the southeastern metropolitan area and educates over 42,000. The current collective bargaining agreement is binding for the 1999-2000 and 2000-2001 school years.

A) Leave for Union President. The president of the Cherry Creek Education Association may be granted up to full-time leave to discharge his or her duties during the tenure of office. The union pays “seventy-five percent of the appropriate portion of the salary and benefits...paid on behalf of the President.” The district pays the other 25 percent and carries the cost of “the classroom replacement.” If full-time leave is granted to the union president, the district’s subsidy to the union could be $12,500.

B) Union Leave for Other Teachers. Under the current collective bargaining agreement the Association is granted 110 days of union leave per school year. The district continues to pay the per diem rate for the teachers using this leave, and the union pays for the substitutes in the classroom. This arrangement is reversed for any days used over 110, with the union paying the per diem cost and the district financing the substitute.

Total Taxpayer Subsidy to the Teachers’ Union Through the Cherry Creek School District No. 5 Collective Bargaining Agreement = $27,782.

4) Douglas County School District Re-1

Douglas County School District Re-1 is situated in the southern metropolitan area of Denver. In recent years the area has experienced an explosion in population, ballooning to a student enrollment of nearly 35,000. Unlike the other education associations in Colorado, the Douglas County Federation of Teachers is affiliated with the American Federation of Teachers and the AFL-CIO. The respective collective bargaining agreement is valid for two years, from 2000-2002.

A) Leave for the Union President. In Douglas County School District Re-1 the union president is granted an amount of release time “mutually agreed upon on an annual basis, by the Union and the District” in order to discharge the duties of the union president. The union pays the cost of salary and benefits commensurate with the percentage of time granted for such leave while the district pays the remainder of the president’s salary.

B) Union Leave for Other Teachers. Under the current collective bargaining agreement, the union receives 24 days of union leave per school year. The union bears the cost of providing substitutes on twelve of these days while the district pays the substitute on the remaining twelve days. Additionally, the union may be granted an additional 26 union leave days; on these days the union is required “to reimburse the District for the cost of the substitute.”

Total Taxpayer Subsidy to the Teachers’ Union through the Douglas County Collective Bargaining Agreement = $6950.

 

5) Colorado Springs School District 11

Colorado Springs School District 11, located in El Paso County, is a district of around 32,000 students. Its collective bargaining agreement is valid from July 1, 2000-June 30, 2002.

A) Leave for the Union President. Under the collective bargaining agreement, the union president is given the option of taking a yearlong leave of absence or 1⁄2 day every school day to discharge his/her duties. In either case, the school district funds 25% of the salary and 100% of the benefits of the union president, a sum easily reaching $15,000.

B) Union Leave for Other Teachers. Union leave must be preapproved by the District. It is financed entirely by the union when leave time is spent on union activities.

Total Possible Subsidy to the Teachers’ Union through the Colorado Springs 11 Collective Bargaining Agreement = $15,000.

6) Adams-Arapahoe 28J

The Adams-Arapahoe School District 28J, also known as the Aurora Public Schools, is located in the eastern metropolitan area and services an enrollment of over 30,000 students. Its current collective bargaining agreement is valid from 1999-2002.

A) Leave for the Union President. The union president is granted a leave of absence by the Board of Education and is "maintained on the district payroll.” The union reimburses the district the full salary of a replacement teacher, calculated as the average salary paid to new teachers that year, and the cost of the union president’s fringe benefits. The difference in salary can equal a subsidy of $17,000.

B) Union Leave For Other Teachers. Under the current collective bargaining agreement, the union may use up to 50 days of union leave with pay given the union will reimburse the district for the cost of substitutes on such leave days.

Total Subsidy to the Teachers’ Union through the Adams-Arapahoe 28J Collective Bargaining Agreement = $23,258.

7) Adams County School District No. 12

Adams County School District No. 12, also known as Northglenn Thornton District No. 12, is a district of 30,079 students in suburban Adams County. Its collective bargaining agreement covers school years 1998-2001.

A) Leave for the Union President. “The Board shall grant full release time with pay and benefits to the president of the Association during the president’s term of office.” Furthermore, “the Board shall grant half release time with pay and benefits to the coordinator of the Association.” The union remits the equivalent of the salary and benefits of a step-two replacement (on the salary schedule) for the union president and half of the salary and benefits of a step-two replacement for the union coordinator. This difference, however, can be as large as $20,000 for the union president and $10,000 for the union coordinator, a total subsidy of $30,000.

B) Union Leave For Other Teachers. “The district shall provide twenty-five and one-half (25.5) days per school year of Association leave without cost to the Association,” meaning that the district pays for a substitute. Any additional leave taken for union purposes is charged to the union at the rate of pay for substitutes during those days.

This subsidy increases when the union exercises its entitlement to further union leave days.

Total Taxpayer Subsidies to the Teachers’ Union through the Adams County School District 12 Collective Bargaining Agreement = $35,751.

8) Boulder Valley School District RE2J

The Boulder Valley School District services approximately 27,000 students in the city and county of Boulder. The collective bargaining agreement in this district runs from July 1, 2001-June 30, 2002.

A) Leave for the Union President. The Boulder Valley School District RE2J collective bargaining agreement “the Board agrees…that the president and vice president of the Association…should be relieved of their duties without loss of salary, seniority, or fringe benefits.” The union compensates the district for the cost of a replacement teacher for the union president, remitting to the district an amount equal to the average salary and benefits of first-year, non-probationary teachers hired by the district that year. The difference between these rates of compensation can be as high as $20,000. The union also pays for a half-time replacement for the union vice president using a formula of one-half times the average salary paid to first-year, non-probationary teachers that year. The difference between these pay rates can reach $10,000. In total, the taxpayer subsidizes the salary and benefits of union employees to the tune of $30,000.

B) Union Leave For Other Teachers. Under the terms of the collective bargaining agreement “The Board shall grant the Association 100 days paid leave for its representatives to attend workshops, conferences, and other activities of the Association and its state and national affiliates.”The district pays the cost of a substitute on these days. The union may petition the district to allow more than the allocated total of 100 days if the union compensates the district for the full cost of the substitutes hired each day above the 100 Association days.

If the union exercises its option for more union leave days, this figure can easily be much higher.

Total Taxpayer Subsidy to the Teachers’ Union through the Boulder Valley RE2J Collective Bargaining Agreement = $52,814.

9) Poudre School District R-1

Servicing the city of Fort Collins, the Poudre School District R-1 includes an enrollment of 24,052 students.

A) Leave for the Union President. Under policies promulgated by the Poudre School District Board of Education, “the district provides funding for the president of the Poudre Education Association. The district bears “the actual cost less 1⁄2 Teacher B.A. base rate of pay reimbursed by PEA.” In other words, the district pays the union president’s salary, and the union contributes one-half of the base salary to the cost of the replacement teacher. The union president is granted full-time release from teaching duties, meaning that under this arrangement the net taxpayer subsidy to the PEA easily equals $35,000.

B) Union Leave For Other Teachers. Under an agreement with the superintendent, the Poudre Education Association receives 30 total union leave days to attend the Colorado Education Association delegate assembly at no expense to the union. This allowance creates the following taxpayer subsidy:

Total Taxpayer Subsidy to the Teachers’ Union through the Poudre Valley Collective Bargaining Agreement = $41,329.

10) Mesa Valley County School District No. 51

The Mesa County Valley District No. 51 is located on the Western Slope of Colorado in and surrounding Grand Junction. The District boasts an enrollment of nearly 20,000 students. The collective bargaining agreement in Mesa County Valley School District is valid from July 1, 1998- June 30, 2001.

A) Leave for the Union President. Under the current collective bargaining agreement, the union president is granted either half or full-time release from teaching duties during the tenure of office with no loss of “salary, insurance, and retirement benefits.” If half-time leave is requested, the union reimburses the district one-half of the union president’s salary and benefits. If full-time release is requested, “the Association will reimburse the District commensurate with Range 2, Step 3” of the salary schedule, including benefits, to hire a replacement.This difference in salary and benefits can equal $17,000.

B) Union Leave. Requests for professional leave are initially approved by the building principal. After gaining such approval, these requests are submitted to the Teacher Professional Leave Panel (TPLP), “consisting of five (5) teachers selected by the Association and one (1) administrator in an ex officio capacity.” Four hundred fifty (450) days of professional leave with substitutes financed by the district are available for distribution by the TPLP. An additional 50 days per year may be granted to teachers’ requesting professional leave and paying for their own substitutes. Furthermore, the district “will also appropriate fifty-three thousand dollars ($53,000) each school year to the TPLP,” funds available to defray expenses incurred in the use of this leave. “The decision of the TPLP is final.” If the TPLP elected to allow these professional leave days to be used exclusively for union activities, the total subsidy from the taxpayer to the local union would be:

If the additional 50 leave days are used, the amount of the subsidy grows:

The District also provides the additional fund of $53,000.

Total Possible Taxpayer Subsidy to the Teachers’ Union through the Mesa Valley County School District No. 51 Collective Bargaining Agreement = $171,015.

11) St. Vrain Valley School District No. RE-J1

The St. Vrain Valley School District No. Re-J1 covers a large portion of Boulder County, providing education to nearly 19,000 students. The current collective bargaining agreement took effect on July 1, 2000 and expires on December 31, 2002.

A) Leave for the Union President. Under the current collective bargaining agreement, the union president “shall be relieved of his/her teaching duties without loss of salary, fringe benefits, or status” during the year. The union compensates the district an amount equal to 123% of the district’s base salary. The difference, a net subsidy to the union, can reach $17,000.

B) Union Leave for Other Teachers. Each academic year the union is “granted 55 days of Association leave…to participate in Association activities as determined by the Association president.” These days are provided by the district at no cost to the union. Therefore, in any given year, the amount of the taxpayer subsidy to the union through union leave is equal to:

Total Taxpayer Subsidy to the Teachers’ Union through the St. Vrain Valley School District Collective Bargaining Agreement = $28,965.

12) Pueblo School District No. 60

Pueblo School District No. 60, located in southern Colorado, has an enrollment of 17,636 students. The current collective bargaining agreement runs for two years, from September 1, 2000-August 31, 2002.

A) Leave for the Union President. Under the Pueblo School District No. 60 collective bargaining agreement the Pueblo Education Association pays the salary and benefits of the union president during his/her term of office.

B) Union Leave for Other Teachers. The Pueblo Education Association is given 200 “duty days per school year…for Association representatives to attend Association workshops, conferences, conventions, and other Association activities.” The union reimburses the district for the cost of hiring substitutes on these days. The net taxpayer subsidy through union leave is equal to the amount of salary paid by the district to teachers on leave during these days minus the amount remitted by the union to the district to defray the cost of providing substitutes.

Total Taxpayer Subsidy to the Teachers’ Union through the Pueblo School District No. 60 Collective Bargaining Agreement = $22,144.

13) Academy District 20

Academy District 20 is located in El Paso County and serves more than 17,000 students. This District does not have a collective bargaining agreement; however, the Union requests 1-2 leave days per year, reimbursing the District the cost of hiring substitutes on these days.48

14) School District No. 6 (Littleton)

School District No. 6, otherwise known as the Littleton School District, has an enrollment of over 16,000 students. Located in suburban Arapahoe County, its current collective bargaining agreement began on August 1, 2000 and runs until July 31, 2003.

A) Leave for the Union President. Under the terms of the collective bargaining agreement, the union president, during his/her leave of office, maintains full salary and benefits as if employed by the District. The union reimburses the district for “the full salary costs of the average salary of those new teachers employed for the contract year of the President’s term of leave plus eighteen (18%) of that figure to offset fringe benefit costs." The district continues to pay the union president's PERA, health, life, dental, and disability insurance benefits. The difference between these rates of pay, a net subsidy to the Littleton Education Association, can reach $20,000.

B) Union Leave for Other Teachers. “The Littleton Education Association may be granted up to fifty (50) days of release time per calendar year to be used by L.E.A. representatives.” The union reimburses the district the cost of substitutes on those days.

Total Taxpayer Subsidy to the Teachers’ Union through the Littleton School District Collective Bargaining Agreement = $26,204.

15) Weld County School District 6

The Weld County School District 6 provides educational services to 15,998 students in Greeley and Evans.

A) Leave for the Union President. In Weld County School District 6, “the president of the Association will be granted 100% release time with full pay and benefits during the term of office and will receive full experience credit and advancement to the appropriate step of the salary schedule annually.” The Greeley Education Association reimburses the district the equivalent of the lowest starting salary of a first year replacement teacher. Because of the sliding pay scale, this difference can amount to $25,000 of taxpayer money funneling into the union’s coffers. Furthermore, the district places $5,000 in an account “to support the cost associated with the president’s release time.”

B) Union Leave for Other Teachers. The collective bargaining agreement in Weld County School District 6 stipulates that “the Association representatives will be granted thirty (30) contact days release time per school year” with the express purpose of attending “the Colorado Education Association Delegate Assembly” with substitutes financed by the district.

The Greeley Education Association further reserves the right to designate individuals who may use union leave days during the school year. The GEA pays the costs of substitute teachers on those days, but the district pays the teachers’ salaries. This arrangement grants an increasingly larger subsidy to the union.

Total Taxpayer Subsidy to the Teachers’ Union through the Greeley School District No. 6 Collective Bargaining Agreement = $36,169.

16) Thompson School District R2-J

The Thompson School District R2-J, based in Larimer County, is a district of more than 14,000 students. The collective bargaining agreement is renewed annually, with the agreement examined here covering the 2000-2001 school year.

A) Leave for the Union President. The Thompson School District R2-J collective bargaining agreement states that “the president of the Association shall be granted full-time release with full pay and benefits during the term of his/her office” financed by the district. The district and the union bear the cost equally of hiring a replacement teacher up to a Step 3, Column 3 salary ($27,718 in 2000-2001). In addition, the replacement’s "benefits and any additional salary will be paid by the Thompson School District." Therefore, the net subsidy to the Thompson Education Association is equal to the union president’s salary plus salary and benefits for the replacement teacher minus the amount paid by the union for a replacement teacher. This figure can easily reach $35,000.

B) Union Leave for Other Teachers. The Thompson Education Association receives 24 days of union leave “to attend the Colorado Education Association Delegate Assembly and other association-related activities.” The substitutes are furnished by the district on these days. The district, furthermore, grants paid release time to any Thompson Education Association teacher “elected to a Colorado or National Education Association position” provided the union pays the cost of any necessary substitutes.

Total Taxpayer Subsidy to the Teachers’ Union through the Thompson School District Collective Bargaining Agreement = $35,088.

17) Adams County School District 50

Located in the northwest metropolitan area, Adams County School District 50, otherwise known as Westminster School District 50, serves nearly 11,231 students. Its current collective bargaining agreement became binding on July 1, 2000 and expires on June 30, 2003.

A) Leave for the Union President. The Adams County School District 50 collective bargaining agreement states “the Board will grant the president of the Association released time from District responsibilities without penalty as to placement on the salary schedule, PERA coverage, fringe benefits or specific job assignments.” The union reimburses the district “for the salary, benefits, and PERA costs of the president.” Other teachers are allowed to donate personal accumulated leave time to the union to defray the cost of reimbursing the district for the president’s salary.

B) Union Leave for Other Teachers. “The Association shall be entitled to up to seventy (70) days of release time during each school year provided the Association pays the cost of the substitute teacher at District substitute daily rate.” This agreement creates the following subsidy:

Total Taxpayer Subsidy to the Teachers’ Union through the Adams County School District No. 50 Collective Bargaining Agreement = $7,025.

18) Harrison School District 2

The Harrison School District, located in El Paso County with an enrollment of over 10,000 students, has no collective bargaining agreement with the Union. District has not received a request for a leave day in the last five years.

19) Widefield School District 3

Widefield School District No. 3, located in El Paso County, has an enrollment of over 8,000 students.

A) Leave for the Union President. Although the Widefield School District has no collective bargaining agreement, any organization that meets the district’s definition of an association is granted up to 20 days of paid leave each year. An association officer must submit a request for leave from the superintendent at least three days in advance and the association pays the cost of a substitute on those days. Not more than five days will be granted for one individual.

B) Union Leave for Other Teachers. See “Leave for the Union President.” Assuming there is only one recognized association in the district, this provision creates the following subsidy:

Total Taxpayer Subsidy to the Teachers’ Union through the Widefield District 3 Board of Education Policy = $2,046.

20) School District No. 70 (Pueblo)

School District No. 70, otherwise known as Pueblo School District No. 70, is located in southern Colorado and serves approximately 7,000 students.

A) Leave for the Union President. The union president is released from his/her duties for the full year at no loss of salary and benefits. The union pays the cost of the president’s salary and benefits.

B) Union Leave for Other Teachers. “Forty-two (42) days of Association Leave per school year may be granted to teachers to permit them to attend conferences or conventions sponsored by the Colorado Education Association or the National Education Association…at no charge to the Association.” This provision produces the following subsidy to the Pueblo County Teachers’ Association:

Total Taxpayer Subsidy to the Teachers’ Union through the Pueblo School District No. 70 Collective Bargaining Agreement = $7846.

Total Combined Possible Annual Taxpayer Subsidy to Local Education Associations through the Collective Bargaining Agreements in the 20 Largest School Districts in Colorado = $661,623.

* John Gore is a Research Associate for the Independence Institute, which is a non-profit, non-partisan Colorado think tank. Mr. Gore wrote this Issue Paper 7-2001, which was originally published in October 9, 2001, but was revised on January 31, 2003. Copyright ©2001 is retained by the Independence Institute, which granted permission to reprint. The Independence Institute is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.

 

ENDNOTES

 

1 Much of the methodology, observations, and recommendations applied in this study were borrowed from a similar study conducted by Myron Lieberman, Ph.D., and entitled Collective Bargaining In Florida School Districts (Tallahassee: The James Madison Institute)

2 Master Agreement between Board of Education School District No. 12, Adams County and District Twelve Educators Association School Years 1998-2001, p. 90.

3 Agreement Between The Board Of Education and the Employees represented by The Boulder Valley Education Association of the Boulder Valley School District RE2J, July 1, 2001-June 30, 2002, p. 57.

4 Master Agreement between The Colorado Springs Education Association and The Board of Education School District No. 11, July 1, 2000- June 30, 2002, p. 36.

5 Ibid., pp. 1-2.

6 Addendum to the Agreement between the Mesa Valley Education Association and the Mesa County Valley School District No. 51 July 1, 1998-June 30, 2001, May 18, 1999, p. 2.

7 Ibid.

8 Ibid.

9 Lewis, Charles The Buying of the President 2000 (New York, Avon Books, Inc), p. 53.

10 William L. Sanders and Sandra P. Horn, “Research Findings from the Tennessee Value-Added Assessment System (TVAAS) Database: Implications for Educational Evaluation and Research” Journal of Personnel Evaluation in Education, 12:3, 1998, p. 247.

11 Agreement between Jefferson County School District R-1 and Jefferson County Education Association, 1999-2003, p. 75.

12 Ibid., p. 67.

13 Agreement between School District No. 1 and the Denver Classroom Teachers Association, 1999-2002, p. 53.

14 Ibid.

15 Ibid., p. 54-55.

16 Cherry Creek School District #5 Board of Education Policies and Negotiated Agreement for Teachers, 1999-2000, 2000-2001, p. 82.

17 Ibid.

18 Ibid.

19 Contract Between Douglas County Federation of Teachers and Douglas County School District Re-1, 2000-2002, p. 2.

20 Ibid.

21 Ibid.

22 Master Agreement Between The Colorado Springs Education Association and The Board of Education School District No. 11 Colorado Springs, Colorado, July 1, 2000-June 30, 2002, p. 7-8.

23 Ibid., 36.

24 Agreement between The Board of Education for Aurora Public Schools and the Aurora Education Association, July 1, 1999-June 30, 2002, p. 12.

25 Ibid.

26 Ibid.

27 Master Agreement between Board of education School District No. 12, Adams County and District Twelve Educators’ Association, School Years 1998-2001, p. 90.

28 Ibid.

29 Ibid.

30 Ibid., p. 13.

31 Ibid., p. 13.

32 Agreement Between The Board of Education and the employees represented by the Boulder Valley Education Association of the Boulder Valley School District RE2J, July 1, 2001- June 30, 2002, p. 57.

33 Ibid.

34 Ibid.

35 Ibid., p. 58.

36 Poudre School District Employee Agreement Policy Code: Am031, http://www.psd.k12.co.us/report/agreement/am031.html 

37 Ibid.

38 Addendum to Agreement between the Mesa Valley Association and the Mesa County Valley School District No. 51, July 1, 1998- June 30, 2001, May 18, 1999, p. 1.

39 Ibid.

40 Ibid., p. 1-2.

41 Ibid., p. 2.

42 Ibid.

43 Ibid.

44 Agreement between the St. Vrain Valley Education Association and the St. Vrain Valley School District No. RE-1J, July 1, 2000-December 31, 2002, p. 32.

45 Ibid.

46 Agreement Between the Pueblo School District No. 60 and the Pueblo Education Association Incorporated, September 1, 2000-August 31, 2002, p. 9.

47 Ibid.

48 Personal telephone conversation with administrator in Academy District 20.

49 Collective Bargaining Agreement Between School District No. Six and the Littleton Education Association, August 1, 2000-July 31, 2003, p. 7.

50 Ibid., p. 6.

51 Master Contract between the Greeley Education Association and the Board of Education, School District No. 6, July 1, 2000, p. 8.

52 Ibid., p. 9.

53 Ibid., p. 8.

54 Memorandum of Understanding between the Thompson Education Association and the Thompson School District R2-J Board of Education, p. 4.

55 Ibid., p. 3.

56 Agreement Between The Westminster Education Association and the Adams County School District #50 Board of Education, July 1, 2000- June 30, 2003, p. 46.

57 Ibid.

58 Ibid.

59 Private telephone conversation with administrator in Harrison District 2.

60 Widefield School Board Policy GBB.

61 Negotiated Agreement Between School District No. 70 and the Pueblo County Teachers’ Association, July 1, 2000- June 30, 2003, p. 28.

62 Ibid.

 

Independence Institute

Jon Caldara is President.
David Kopel is Research Director.
Pamela Benigno is Director of the Education Policy Center.
John Gore is a Research Associate.

NOTHING WRITTEN here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.

HABIT 6: REFORM COLLECTIVE BARGAINING* by Kirk A. Johnson and Elizabeth Moser Mackinac Center for Public Policy

The sixth and final habit of fiscally responsible public school districts is collective bargaining reform.45 Michigan’s compulsory union law, the Public Employment Relations Act (PERA) requires collective bargaining where employees have unionized, but many of these collective bargaining agreements restrict school administrators’ ability to do their jobs, and therefore unnecessarily block fiscally responsible reforms.

This is not to say that individual employees should not be free to associate in any organization they choose. At the same time, school boards should not necessarily be forced to negotiate collective bargaining agreements and should be free to negotiate individually with teachers, if they so desire.

Every school day, the current widespread collective bargaining regime makes a financial difference in school’s operations, educational environment, and the ability of children to learn. School districts therefore have a fiduciary interest in assuring that collective bargaining is not so burdensome that it diverts precious resources from student learning.

From a 1998 analysis of more than 500 collective bargaining agreements, seven improvements (not already suggested in previous sections) are recommended to assure that these agreements allow effective school management. Many of these problems may be avoided by demanding well–worded contract language. Implementing the seven improvements will dramatically enhance the ability of public school districts to enact needed reforms.

Improvement #1: Strengthen Management Rights Clauses

Every collective bargaining agreement should specifically detail the rights and responsibilities that remain vested in the school board. As elected officials, school board members form the only public body with the legitimate responsibility and authority to operate a school district; neither teachers nor school employee unions have been granted authority by the electorate to undertake this responsibility.

The management rights contract language, or “rights of the board of education,” is the contract provision that establishes school board control over the operation of the school district. School districts should adopt strong management rights clauses that explicitly designate the specific, exclusive rights reserved to the school board, administrators and management.46

Improvement #2: Limit Exclusive Bargaining Representative Clauses

When a public employer recognizes a collective bargaining representative as the agent representing the employees in a defined bargaining unit, PERA grants exclusive recognition to that agent to act for those employees in issues involving wages, hours, and terms and conditions of employment.47 In addition to including such recognition, more than 500 contracts contain a separate provision by which the school board agrees not to negotiate with any other teacher organization.

In other words, if a school board wished to contract with a math, science or professional teacher organization for the purposes of professional development for its staff members (a term of employment), it would first require the union’s permission. School boards should remove exclusive bargaining representative clauses that require such permission before employees can explore opportunities with other professional organizations.

Improvement #3: Remove Mandatory Support Clauses

Many school board members and other citizens mistakenly believe that union membership is required for all teachers working under a collective bargaining agreement. The truth is that there is no statute that requires teachers to either become union members or pay union dues in the absence of a contractual agreement between a school district and a union.

The mandatory support clause (sometimes called a “union security” clause), if included in a collective bargaining agreement, is what forces school employees to pay union dues. School boards that agree to such a clause become union financial enforcers, often by agreeing to fire any employee who fails to pay dues.

School boards should negotiate mandatory support clauses out of their collective bargaining agreements. The coercive and unfair nature of such clauses negatively affects school employees’ morale, productivity and professionalism. Unions that excel in representing their members will have no difficulty attracting and keeping the voluntary support of those members.

Improvement #4: Limit Just Cause” Discipline and Discharge Clauses

“Just cause” refers to contractually established standards of conduct that an employee must breach before he can be disciplined or discharged. Due process is the legal procedure instituted when an employer wishes to discipline or discharge an employee who has breached the “just cause” standard.

“Just cause” is distinct from an “at will” employment arrangement. “At will” means either party may terminate the employment relationship at any time for any reason. The “just cause” standard, on the other hand, is typically applied to employees who have a property interest in the employment relationship. Teachers who have received tenure status, for example, enjoy property rights in their employment relationships.

The “just cause” standard and the resulting due process proceeding for employee discipline or discharge is a burdensome and time–consuming process for districts that wish to remove ineffective, unproductive or even criminal teachers from the classroom. Under this standard, a school board can face increased and unplanned expenses in processing employee discipline and discharge matters, including substantial liability for teacher re–instatement or back pay in the event of an unfavorable arbitration or tenure ruling.

School boards should limit the “just cause” standard to include only tenured teachers and provide a less rigid standard for probationary teachers, who are still being evaluated for their competence. Boards are legally obligated to provide “just cause” employment only to tenured teachers, so they should carefully review their collective bargaining agreements for any language that makes a “just cause” standard applicable to probationary teachers.

School boards and administrators should carefully follow the established seven–point test when building a case for the “just cause” discipline or discharge of a tenured teacher. The seven points include:

• Did the employer forewarn the employee of possible disciplinary consequences of conduct?
• Was the rule or directive involved reasonably related to the orderly, efficient operation of the business?
• Before administering discipline, did the employer properly investigate to determine that the employee did violate or disobey the rule or directive?
• Was the employer’s investigation done in a fair and impartial manner?
• Through the investigation, did the employer obtain enough evidence to prove the employee was, in fact, in violation of the rule or directive?
• Was the rule, directive, and penalty applied fairly and without discrimination?
• Was the discipline applied reasonably related to the gravity of the offense and was the amount of discipline reasonable given the employee’s overall record?48

Arbitrators are unlikely to uphold the discipline or discharge of an employee if the school district does not properly follow and document the steps showing “just cause.” School boards and administrators who adhere to the requirements for “just cause” will avoid unnecessarily costly and unfavorable arbitration rulings.

Improvement #5: Strengthen Teacher Evaluation Clauses

The teacher evaluation plays an important part in a school’s ability to effectively educate its students. School officials must be able to evaluate the competency and performance of each teacher in order to judge how well he or she uses professional skills to help students learn and achieve.

Because each evaluation is part of a continuum that builds over time, a proper teacher evaluation must go beyond the mere “performance” of an instructor in the classroom and address a teacher’s overall ability to establish and maintain a positive learning environment for students. School boards and administrators must keep this focus in mind as they bargain over contract language that affects these evaluations.

Collective bargaining agreements in Michigan, with few exceptions, place more restrictions on school administrators’ rights to evaluate their teachers than do any statutory requirements. Former NEA President Bob Chase acknowledged that, “The heart of education is this: the daily engagement between teacher and pupil, and the commitment that both parties bring to the task.”49 Yet unions such as the MEA (the NEA’s Michigan affiliate) often demand uniformity in the teacher evaluation process, a cookie–cutter approach that ignores the differences in goals, objectives, standards and style between elementary and secondary teaching.

School board members and administrators should use the five points established under the Michigan Teacher Tenure Act when evaluating a teacher’s competency. Unsatisfactory performance in any one of these five points is sufficient to determine that a particular teacher is not competent:

• knowledge of the subject;
• ability to impart the subject;
• manner and efficiency of discipline over students;
• rapport with parents, students, and other faculty; and
• physical and mental ability to withstand the strain of teaching.50

The course of action pursued by the school district with regard to a poorly performing teacher must be based on the extent or severity of the poor performance.

School boards should also remove from their collective bargaining agreements any language that allows teachers grievance rights over the content of a teacher evaluation. The content of teacher evaluations should be left to the sole discretion of school administrators, not to arbitrators in lengthy and expensive grievance proceedings. By making evaluation content a grievable matter, school boards wind up placing the judgment of arbitrators, who do not work with or see the teachers being evaluated, above the judgment of the school administrators, whose responsibility it is to observe and evaluate the teachers’ abilities.

Improvement #6: Replace Seniority-Based Salary Schedules with Performance-Based Pay Scales

Most public school teachers in Michigan are paid according to a seniority–based salary schedule, which awards compensation according to a teacher’s years of experience and level of education. This is in contrast to most other areas of commerce and industry, where employees working under a “merit–based” schedule receive compensation that is commensurate with their job performance and productivity.

Under a seniority–based, or “single salary schedule,” system, individual teachers have a reduced incentive to innovate or excel in the classroom since their level of compensation is not tied to their performance. Most collective bargaining agreements in Michigan establish teacher salary schedules based solely on a teacher’s level of education and years of experience.

These salary schedules are organized into a “grid” which provides for automatic pay increases based upon the number of years a teacher has spent in the district and the kind of college degrees or number of additional academic credit hours he or she has accumulated or both (commonly referred to as “step” increases).

In most school districts, entry level teachers with only a bachelor’s degree and no prior teaching experience receive the base negotiated salary; few districts reserve the unrestricted right to establish the starting salary for a teacher on any step of the pay scale. This makes it difficult for schools to hire high–demand positions such as special education, math or science teachers.

School districts attempting to establish performance–based pay schedules for their teachers have invariably met with union resistance. However some districts, such as Saginaw, have been successful in bargaining a portion of their teachers’ salaries based on the requirement that teachers meet certain district–wide goals adopted by the school board.51

The Michigan Legislature strengthened school districts’ right to create performance–based salary systems when it passed Public Act 289 in 1995, which states in part that, “A school district or intermediate school district may implement and maintain a method of compensation for its employees that is based on job performance and job accomplishments.”52

Improvement #7: Eliminate Class Size Limitation Clauses

The number of students per teacher in a classroom has been an issue in collective bargaining since the first contract negotiations began in Michigan more than 30 years ago. Unions maintain that smaller classes allow teachers to spend more time with each student, thus boosting educational achievement. Consequently, many of Michigan’s school districts have negotiated language that affects class size into their bargaining agreements.

Over a third of collective bargaining agreements in Michigan currently establish a maximum number of students for each class and provide for mandatory teacher salary bonuses any time this maximum is exceeded.

Negotiating smaller class sizes has proven to be a costly arrangement for school districts, especially those with growing student populations. Further, there is little good evidence suggesting that small classes predictably and systematically yield higher student achievement.53 Establishing class size requirements within a collective bargaining agreement restricts the school administration’s decision–making about the most effective use of staff, space and scarce financial resources.

In short, every school district now has the ability through careful collective bargaining to effect reforms that will help meet the demands of parents, taxpayers, students and teachers. School board members in all of Michigan’s school districts must seize the opportunity to transform the bargaining process from an adversarial one into one more focused on cooperatively improving the educational product, increasing value, and protecting the rights of all concerned.

* This text is part of the larger publication: The Six Habits of Fiscally Responsible Public School Districts. Copyright © 2002 by the Mackinac Center for Public Policy. Posted on the Mackinac web site on Tuesday, December 03, 2002. Republished here in the Government Union Reviewby permission. 

ENDNOTES

45 Much of this section is adapted from La Rae G. Monk, “Collective Bargaining: Bringing Education to the Table” Mackinac Center for Public Policy Report, August 1998.Back to Text

46 Ibid., pp. 23-24.

47 MCL 423.211.

48 Grief Brothers Cooperage Corp, 42 LA 555 (1964).

49 Bob Chase, “Running on Empty: Why Our New Unions Must Put Teacher Quality First,” Education Week, Jan. 21, 1998, p 14.

50 MCL 38.101, et. seq.; MSA 15.2001 et seq.

51 Saginaw Public School Master Agreement, 1995-1998, Appendix A, p 70.

52 1995 PA 289, MCL 380.1250.

53 See, for example, Kirk A. Johnson, Ph.D., “Do Small Classes Influence Academic Achievement? What the National Assessment of Educational Progress Shows” The Heritage Foundation CDA Report #00-07, June 9, 2000 at http://www.heritage.org/Research/Education/CDA00-07.cfm and Eric Hanushek, “Some Findings from an Independent Investigation of the Tennessee STAR Experiment and from Other Investigations of Class Size Effects,” Educational Evaluation & Policy Analysis, Vol. 21 (1999), p. 144.

WHY UNIONS ARE STILL POWERFUL Romanticism and Interest-Group Politics Trump the Rule of Law* by David Y. Denholm**

Summary: Where do labor unions find the power to force employers and employees to accept unwanted union representation? The answer lies in a falsified history of the union movement and the unchecked influence of interest groups in politics.

Why do we tolerate laws that allow labor unions to speak for workers who don’t want to be represented by them? And why do we sanction contracts between unions and employers that compel workers to pay for this unwanted representation? Are unions somehow so essential to our nation’s prosperity that we owe them these special privileges and legal immunities? If not, how do unions get away with it?

When many Americans today talk about labor unions they often preface their remarks by saying, “They were needed once, and they did a lot of good, but….” The sentence then usually trails off because the speaker is too ashamed to articulate his skepticism about unionism. Moreover, the Gallup Poll consistently finds that when Americans are directly asked, “In general, do you approve of labor unions?” the majority respond in the affirmative.

Labor unions enjoy this tacit support and tap into the public’s fund of goodwill for several reasons. First, many of us have a romantic image of unions that is unrelated to reality. We are enthralled by the heroic picture of Sean Connery in “The Molly McGuires” or Sally Field in “Norma Rae.”

But then we complicate these unrealistic positive images with real fears. We know labor unions are politically powerful organizations, and this makes many of us reluctant to make a case against them. Politicians are particularly sensitive to union wrath and don’t want to be labeled “anti-union.” Labor activists and organizers have defined “anti-union” to mean anyone who opposes the special privileges and legal immunities that politicians first gave unions some seventy years ago. Unions have succeeded in capturing the definition of what constitutes “pro-worker” legislation.

But union membership has been in decline for the past fifty years. Yet our country’s fundamental structure of labor laws, practices and institutions survives almost unscathed. The “labor paradigm” still holds many employer-employee contracts within its grasp, and it casts a spell over too many of our politicians. How did this happen, and what are its consequences?

A History of Privilege

Our current labor “paradigm”—the set of assumptions that underlie national labor policy—was formulated during the Great Depression of the 1930s. This was a time of great economic uncertainty when unemployment was at record levels. Consequently, it was easy for many citizens to reach the conclusion that workers had no bargaining power when they dealt with employers. This assumption of worker powerlessness is reflected in the preamble to the Norris-LaGuardia Anti-Injunction Act of 1932: “[T]he individual unorganized worker is commonly helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and conditions of employment.”

Even during the Great Depression, this assumption was debatable. Perhaps it applied to some employees, but it certainly didn’t apply to all of them. And economic conditions during the last 70 years have changed so much that it’s hardly accurate today. The condition of employees has steadily improved with or without union representation.

A second key feature of our labor paradigm is the assumption that “labor peace” is impossible unless the federal government regulates labor relations, including the requirement that employers must “recognize” unions. This assumption about the requirements of labor peace was needed so that Congress and the courts could stretch the Commerce Clause of the Constitution to justify the federal government’s power to regulate labor relations.

According to the National Labor Relations Act introduced by New York Senator Robert Wagner and signed by President Roosevelt in 1935:

Experience has proved that protection by law of the right of employees to organize and bargain collectively safeguards commerce from injury, impairment or interruption, and promotes the flow of commerce by removing certain recognized sources of industrial strife and unrest, by encouraging practices fundamental to the friendly adjustment of industrial disputes arising out of differences as to wages, hours or other working conditions, and by restoring equality of bargaining power between employers and employees.

In the 1930s it was generally believed that higher wage levels would generate increased consumption so that we could “spend our way” out of the Depression. That “high wage” theory has been thoroughly debunked, but the labor policies it fostered are still with us. So to secure peaceful employer-employee relations and increase wage and income levels, the federal government became an active proponent of forced unionism and collective bargaining.

Both of these assumptions led the federal government to grant unions the special privileges and legal immunities that survive today even though American society and its economy are so vastly different. These privileges and immunities, described below, include:

 

 

  • the power to compel contract negotiations with an employer who does not want to be a party to the contract;
  • the power to impose contract provisions on employees who are not a party to the contract;
  • the corresponding power to compel unwilling employees to join or support a union as a condition of continued employment;
  • exemption from federal prosecution for extortionate violence;
  • exemption from anti-trust laws.

Compulsory Contract Negotiations

Aside from labor unions, no institution of civil society has a legal right to compel you to negotiate. Imagine someone approaching you and announcing that he wants to negotiate with you about purchasing your home. If you don’t want to sell it, you can’t be compelled to negotiate about its sale. Or what if a supplier of some service were to tell a company that it wanted to begin negotiations with the company over its purchase of the supplier’s services? No company is required to negotiate if it doesn’t want to buy the service.

Of course, neither of these examples works when the party demanding to negotiate is the government. But unions are not government. Citizens do not elect union officials or give them the authority to compel negotiations. Unions are special-interest groups within civil society. Nevertheless, federal labor law makes it an unfair labor practice to “refuse to bargain collectively.”

Compulsory Union Membership

No special privilege for labor unions has caused more controversy, or been more misunderstood, than the issue of compulsory union membership.

In 1908, the case for voluntary union membership was famously made by Samuel Gompers, the first president of the American Federation of Labor:

The workers of America adhere to voluntary institutions in preference to compulsory systems which are held to be not only impractical but a menace to their rights, welfare and their liberty.

However, this statement needs to be put into historical context. In 1908 the AFL opposed contracts that forced workers to become union members as a condition of employment because it feared employer-controlled “company unions.” The federation also opposed “yellow dog contracts” in which workers voluntarily agreed not to join unions. That’s why the 1935 National Labor Relations Act—the “Wagner Act,” which was hailed as “Labor’s Magna Carta”—outlawed both company unions and the yellow dog contract. By contrast, Gompers had no quarrel with “closed shop contracts,” which require employers to hire only union members. The closed shop, which was sanctioned by the Wagner Act, gave enormous power to unions because it allowed them to decide who would work and who wouldn’t.

The Taft-Hartley Act of 1947 (bemoaned by unions as the “Slave Labor Act”) introduced two reforms. First, it outlawed the closed shop and replaced it with the “union shop.” In a union shop, employees can be hired even if they are not union members as long as they join the union within a specific time period after being employed—usually 30 days. The Taft-Hartley Act also permitted states to enact “right to work” laws, which prohibit contracts that require union membership at any time as a condition of employment.

Taft-Hartley had one interesting legal twist regarding compulsory union membership. One section of the law specifically permitted union shop contracts. But another section said an employee could only be fired for not being a union member if he or she failed to pay the dues and fees required of union members. In other words, employees didn’t really have to be union members as long as they pay the union as if they were members. This would be an important escape hatch for any employee who became subject to internal union discipline for such crimes as crossing a picket line or making statements that held the union in bad repute.

Still, there is something troubling about one law that forces a person to join an organization in order to keep a job. And there is something irrational about another law that allows employees to opt out of the organization as long they pay it fees as though they remained members.

The U.S. Supreme Court has wrestled with this injustice, and it has come up with some ingenious excuses for tolerating it. Even though compulsory unionism violates the constitutional right to freedom of association, the Court has discovered a “legitimate state interest” for allowing it.

The Supreme Court says that the state’s interest in “labor peace” and avoiding “free riders” is sufficient to justify the injustice. Compulsory unionism is labeled “union security.” In other words, workers must be forced to join a union so that the union will be secure, and secure unions lead to “labor peace.” Now in this context labor peace has nothing to do with preventing violence; instead, it means that unions do not compete with one another for members. When someone is forced to join or support a union it becomes more difficult for another union to raid it of members. It’s a mystery why this is in the interest of employees or, for that matter, the state.

It’s also a mystery why avoiding “free riders” is in the state’s interest. Union representation can actually harm a minority of employees who don’t figure high on the union’s agenda. So why should the High Court rule that all employees in a union shop must pay the union for its “services”? How does violating the Constitutional rights of those who don’t want the union’s representation serve the state’s interest?

No doubt, there are free rider employees who will take advantage of union representation and refuse to pay for it. Similarly, there are businesses that benefit from the lobbying activities of the U.S. Chamber of Commerce but refuse to pay dues. And many communities benefit from the activities of independent civic associations. But usually no one suggests that every town resident be forced join the Rotary or Red Cross and pay for its benefits.

Moreover, the National Labor Relations Act also mandates that a union that is chosen as a bargaining agent by a majority of employees within a workplace will be the exclusive representative of all the employees. In short, the terms and conditions of a union contract may be imposed on workers who have no desire for a particular union’s representation.

Why is monopoly representation so important for unions? In a famous 1946 essay “Some Reflections on Syndicalism,” the economist Henry C. Simons observed:

All bargaining power is monopoly power. Such power, once attained, will be used as fully as its conservation permits and also used continuously for its own accretion and consolidation. The closed shop, like overt violence, is an invaluable device for acquiring power and yet, as an explicit privilege or contract provision, is of almost no importance for the exercise of power once acquired and strongly held.”

Our contemporary, University of Chicago law professor Richard A. Epstein, explains a corollary:

A system that allows the employee freedom to deal directly with an employer or to join a voluntary union of his own choosing is far superior to a system in which the state selects the ‘bargaining unit’ under the usual set of complex and indeterminate criteria, which always work against the interests of a political minority.”(Simple Rules for a Complex World, Harvard, 1995)

Here’s the crux of our current labor paradigm. Can we meaningfully give individual employees the right to opt out of a union at the same time that we give the union the exclusive right to negotiate the terms and conditions of all workers’ employment, including that of non-members?

Both the unions and employers have their own reasons for rejecting any suggestion that an employee can pay union dues but not be a union member. The unions object that if the terms of a union contract don’t apply to all employees, the employer will undercut the union by hiring at less than union rates. Employers also object that if a single union isn’t the exclusive employee representative, they may have to negotiate with several different unions. But these objections rest on a flawed premise. Both unions and employers accept the current labor paradigm that assumes it is the business of government to regulate labor relations and compel collective bargaining. Neither is willing to allow an individual employee the freedom to decide whether to join a union or to authorize the union’s negotiations on his or her behalf.

Exemption from Prosecution for Extortion

The current labor paradigm violates the rule of law in a free society. But the powers of monopoly and compulsion it give labor unions are only a part of its social injustice. Current labor law also exempts unions from federal prosecution for crimes of extortion. The history of this exemption is another demonstration of how lawmakers and courts have shown unprecedented and unjustified deference to labor unions.

In 1934 Congress enacted the Anti-Racketeering Act to prosecute organized crime. The law applied to any person who, through interstate commerce:

 

  1. Obtains or attempts to obtain, by the use of or attempt to use or threat to use force, violence, or coercion, the payment of money or other valuable considerations, or the purchase or rental of property or protective services, not including, however, the payment of wages by a bona-fide employer to a bona-fide employee; or
  2. Obtains the property of another, with his consent, induced by wrongful use of force or fear, or under color of official right; or
  3. Commits or threatens to commit an act of physical violence or physical injury to a person or property in furtherance of a plan or purpose to violate (sub) sections (a) or (b).

 

You might think that the exemption for wages would satisfy union concerns. However, because the AFL feared that the law would be applied to union organizing activities, it successfully lobbied for an amendment which states,

“No court of the United States shall construe or apply any of the provisions of this act in such a manner as to impair, diminish or in any manner affect the rights of bona-fide labor organizations in lawfully carrying out the legitimate objects thereof, as such rights are expressed in existing statutes of the United States.”

The key word is “lawfully.” In 1942, the U.S. Supreme Court was given an opportunity to decide whether extortionate union activity was also exempt from the law. The case United States v. Local 807, International Brotherhood of Teamsters concerned a legal challenge to a common practice of members of Local 807. They would meet trucks at the New York City line and charge the non-union driver a toll, equal to a day’s wages for a Teamsters member, for the privilege of driving the truck into the city. Refusal to pay the toll was met by violence.

The Court reasoned that demanding pay for not working was a legitimate union activity! It compared the “toll” to “the ‘stand-by’ orchestra device, by which a union local requires that its members be substituted for visiting musicians, or, if the producer or conductor insists upon using his own musicians, that the members of the local be paid the sums which they would have earned had they performed.”

The Court continued:

If, as it is agreed, the musician would escape punishment under this Act even though he obtained his ‘stand-by job’ by force or threats, it is certainly difficult to see how a teamster could be punished for engaging in the same practice. It is not our province either to approve or disapprove such tactics. But we do believe that they are not ‘the activities of predatory criminal gangs of the Kelly and Dillinger types’ at which the Act was aimed, and that on the contrary they are among those practices of labor unions which were intended to remain beyond its ban.

The Supreme Court’s 1942 decision in Local 807 spurred a confused congressional reaction. The 1946 Hobbs Act was supposed to reverse the Supreme Court decision. But President Truman vetoed the original bill and several months later signed another bill that preserved the union special exemption.

The Supreme Court next considered the issue of union violence in 1973 in the case United States v. Enmons. During a strike against an Alabama power company union officials used a high-powered rifle to shoot holes in the transformers, draining the oil from them and causing them to fail. Once again, the Court ruled that the use of force wasn’t wrongful because the purpose of the extortion was a legitimate union objective.

 

Strangely, the Court noted that “Congressional disapproval” of its 1942 Local 807 decision was “swift”: “Several bills were introduced with the narrow purpose of correcting the result in the Local 807 case,” the Court claimed. But the Hobbs Act wasn’t signed until 1946 and it did not close the loophole. Apparently, the Supreme Court favored this interpretation in order to put its Enmons decision on new, safer ground.

Antitrust Exemption

Labor unions are also exempt from antitrust laws, which presents an interesting irony.

According to the Sherman Antitrust Act of 1890, the first antitrust law, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”

But it further declares, “The labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.”

Here’s the irony. If “the labor of a human being is not a commodity or article of commerce,” then how can the federal government justify regulating labor relations under the Commerce Clause of the Constitution? This may explain why Senator Wagner went to great lengths to include the patently absurd statements mentioned above in the preamble to the National Labor Relations Act.

A New Paradigm?

Congress has passed legislation and the U.S. Supreme Court has found constitutional laws that provide for monopoly union representation and compulsory union membership. This means the federal government has given labor unions the power to govern, which is a delegation of legislative authority. When the National Industrial Recovery Act made a similar delegation of governing authority to industry councils in 1933, the U.S. Supreme Court found those councils unconstitutional in 1935. Why does it avoid the same issue when it concerns labor unions?

Without its extraordinary special privileges and legal immunities, labor unions would not function as they do. But the current labor paradigm assumes labor union contributions to society are so vital that their extra-legal powers must be tolerated and even promoted.

The myths that prop up unionism pervade American intellectual life. Even Charles Murray defers to unions in his book What It Means To Be A Libertarian. Murray proposes a wholesale dismantling of the modern state, yet in a chapter entitled “Removing Government from Economic Life,” he writes that the government will need to preserve “some special protections of collective bargaining” because employers enjoy disproportionate power.

But other economists have recognized the negative influence of labor unions for some time. In his 1977 book The Economics of Trade Unions, labor economist Albert Rees says that unions “benefit most those workers who would in any case be relatively well off, and while some of this gain may be at the expense of the owners of capital, most of it must be at the expense of consumers and the lower-paid workers.”

Labor economist Morgan Reynolds, in his 1987 book Making America Poorer: The Cost of Labor Law, finds that “Labor [union] monopolies are a serious disharmony that keeps production, employment and economic expansion below their potentials here and around the world.”

And in 2002, labor economists Richard K. Vedder and Lowell E. Gallaway concluded that,

“While there are no doubt many individual members of labor unions who feel that they have benefited from collective bargaining, the overall evidence is overwhelming that labor unions in contemporary America have had harmful aggregate effects on the economy”(http”//nlpc.org/olap/lrev/economy.pdf).

What we need is a new labor paradigm. Union organizers say they want one. But what they really want are even more union special privileges and legal immunities. Indeed, the Clinton Administration’s Commission on The Future of Worker-Management Relations, also known as the Dunlop Commission, sketched such a paradigm in 1993. The Bush Administration has the opportunity to do something very different. If it understands that unions and collective bargaining are not indispensable to employees, then it should develop a strategy that pulls government out of the business of regulating labor relations. If it understands that monopoly and compulsion are unacceptable, then it should educate citizens, employers and employees about the social injustice of federal enforcement of union power.

“So long as the powers that the unions have been allowed to acquire are regarded as unassailable, there is no way to correct the harm done by them but to give the state even greater arbitrary power of coercion,” wrote F.A. Hayek in The Constitution of Liberty. “We are indeed already experiencing a pronounced decline of the rule of law in the field of labor. Yet all that is really needed to remedy the situation is a return to the principles of the rule of law and to their consistent application by legislative and executive authorities.”

*This article was first published in Labor Watch, a publication of the Capital Research Center of Washington, DC, in October 2003, and is published herein by permission.Back to Text

** David Denholm is president of the Public Service Research Foundation in Vienna, Virginia, which publishes this journal, the Government Union Review.Back to Text

THE NEW ZEALAND EMPLOYMENT RELATIONS ACT TURNS THREE SHOULD WE CELEBRATE? WHAT HAS IT ACHIEVED? by Paul Tremewan*, Esq. New Zealand

Introduction

New Zealand has had a legislative framework covering labour relations for over 100 years, starting with the Industrial, Conciliation and Arbitration Act of 1894. Several labour relations laws succeeded the 1894 Act until a watershed act was passed in 1991—the Employment Contracts Act—which almost caused the disappearance of the union movement, and limited labour relations regulations to the contractual relationship between employers and employees. Union access to workplaces was only by agreement with the employer, which meant that unions lost huge numbers of members because they were unable to access them at work.

The Labour Government elected in 1999 passed as a matter of priority the Employment Relations Act of 2000, which promoted good faith bargaining and collective bargaining, and sought to recognize and correct what it perceived to be an inequality of bargaining power during the previous decade. Companies responded to the 2000 Act by moving off shore and refusing to face the prospect of the same industrial chaos and turmoil which had plagued New Zealand labour relations during the 1980s.

When the original legislation was proposed, it was part of a bigger package that included: changes to the Accident Compensation Commission (ACC)--which runs the no-fault accident insurance plan for all of New Zealand, paid parental leave and other matters, which all added to the compliance costs of employing people. At the time, we wrote to the Prime Minister (PM) and the Minister of Labour, the Hon. Margaret Wilson, stating that 13 companies whom we represented decided that legislation would create too much of a disincentive to remain in New Zealand, and they all relocated to Australia where they would service New Zealand out of Sydney. When they did move, all those jobs disappeared and have never been replaced. Regarding our letter, we never received the courtesy of a response from either the PM or the Minister of Labour.

One of the aims of the new legislation was to increase the influence of unions. The Objectives of the Act of 2000 included acknowledging and addressing the inherent inequality of bargaining power. However, statistics from the Monitoring and Policy Unit of the Department of Labour show that, in March 2001, the percentage unionized of the total employed labour force was 17.7%. The latest figures are for March 2003, which show the unionized rate now at 17.6%, an actual drop in percentages.

More significantly, Paul Merwood of the Labour Department says that the figure in real numbers is slightly different. From March 2001, the number of union members was 331,313; and in March 2003, the number of union members was 334,044. This gives an increase in union membership of .82%. The new legislation caused a lot of pain and difficulty for an actual return in union membership numbers of less than 1%. Was it worth it?

The Union Movement

One of the major benefactors from the new legislation has been the union movement. When the Act was passed union membership was at an all-time low of 17% of the total employed workforce. While the Labour Minister, when challenged some months after the passing of the Act, responded that she did not in fact believe that the number of union members in the workforce would ever be over about 30%, there was still a very real trepidation among employers that this new legislation would totally unionize all workplaces.

The main part of the legislation for Unions was that it gave them right of access to recruit members—something that they could only do under the previous legislation with the permission of the employer. This was seen as a great deal for most unions who had been decimated during the previous ten years. First, unions went on recruitment binges. However this caused problems. While it became relatively easy to convince a worker of the benefits of union membership by way of promised collective agreements and enhanced wages and conditions, the reality was much harder to deliver.

Some unions deliberately cut back on recruitment, as they simply were not able to service such a new influx of members. And as a consequence of that many joined for weeks or even months, and then left the unions just as fast as they had joined. There was a real problem in that the unions, except for the major unions such as the New Zealand Engineers Manufacturing and Printing Union (NZEMPU)and the New Zealand Public Service Association (NZPSA), have not been able to deliver on the their promises.

The Sanford Limited strike in the South Island, trying to force a multi-site collective agreement, lasted 10 weeks before there was a return to work. The members endured 10 weeks of Timaru and Bluff extremes on picket lines chasing something they thought the Act would deliver: a multi-site agreement because that was what the Union claimed. The Act was not able to deliver such benefits.

The Act, while it requires the parties to bargain in good faith, has been a great problem for the Unions because it makes no obligation on either party to enter into a collective agreement. The Council of Trade Unions (CTU)--the central trade union organization representing all the aligned unions--are seeking to have this part of the Act changed so that the parties have to negotiate towards the establishment of the collective agreement. This will be hotly contested by employers, who do not mind bargaining, so long as they still have the right to say, "well, no, you have not convinced us of the need for a collective agreement."

After three years, we still do not know how to bargain in good faith, but at what point this process ceases to be in good faith—as when one party declines to enter into a collective—is still open for debate and is still subject to proceedings before the Authority.

As far as delivery for a moribund union movement, the Act appeared a godsend. The rights of entry were a lifeline to securing new members. However while this happened initially, the membership numbers have slipped, the promises of newly negotiated riches have not materialized, and the number of concluded collective agreements has fallen. We recently negotiated one covering two union members!

There have also been a great number of new unions created, with the help of law firms specializing in setting up in-house unions. The benefit of these unions is that they are unimpeded by union movement politics and external agendas. These unions are set up and negotiate their collective agreement, and then all goes quiet once again. This effectively has subverted the Act, as this was what was happening under the previous legislation save for the requirement to become a registered union.

Good Faith

The Act made much of the obligation for parties in employment relationships to deal with one another in good faith. Indeed the first major case dealt with this requirement. Baguley v. Coutts Cars went all the way to the Court of Appeal, but once there the court said that all the new legislation did was to reinforce the obligations of good faith, which pre-existed the Act. In other words, the new legislation introduced no novel concepts regarding good faith. According to Baguley v. Coutts Cars, these notions pre-existed the new Act. So why were they codified in the stated objectives of the Act?

 

It seems to be a major factor for all parties—employees, employers and unions—to work together in good faith for the continued employment of members and for the sustained success of the employing enterprise. This is a concept long espoused by the general secretary of NZEMPU, Andrew Little, who recognizes that for his members to remain in long-term employment, their employers need to be able to compete successfully. However, the recent case of AMI v. Finsec was a bit of an aberration when the Chief Judge of the Employment Court made statements firmly undermining any requirement on the part of unions or employers, that is, to act in good faith or work toward the benefit of all in relation to each other. The Chief Judge observed that unions and employers are viewed as competitors: “they are not in any relationship of co-operation.… It may very often be precisely the duty or in the interests of unions and employers to undermine each other’s interests.” And another stunning observation from the Chief Judge, regarding the company’s complaint about the unions attack on non-union members:

“Unionists do not hesitate to use pithy epithets to describe non-union employees in this category (employees not willing to join the union), it is a way of pricking the consciences of non-union employees, but such statements cannot possibly have any impact on the employer that it is entitled to complain about in a court of law.”

The Minister would have to be wondering how far this has put back her campaign for all parties, unions, employers and employees, to work together to the benefit of all.

The Mediation Service

Originally the Employment Tribunal members had a dual role. They were mediators and then in another case the adjudicator. The roles interchanged, and any mediation had the benefit of a mediator who in the next case might be the adjudicator. The system was very efficient and effective. These were highly experienced and skilled practitioners. They were judicial officers.

The Hon. Margaret Wilson, with the passing of the Act, has managed to make the Mediation Service just another adjunct to the Labour Department; and the appointed mediators were clearly not chosen for or seen as judicial appointments. Immediately following the passing of the Act, the Mediation Service faced severe credibility issues. The rash of new mediators appeared remarkable in their collective inexperience in employment law, industrial relations and employment relations issues. Fortunately for the Service, several of the former Tribunal Members stayed. These few senior mediators have had to bear the burden of the serious mediation work where industrial disputes have occurred over the last three years. Walter Grills in Dunedin mediated the Sanford ten-week strike, and the log-ship loading disputes at various South Island Ports. Colleen Hicks and Judith Scott dealt with the teachers and nurses and related medical sector major disputes in the North Island. A former Tribunal Member from Christchurch, Maurice Teen, was the mediator of the Kinleith CHH--Carter Holt Harvey is one of New Zealand's largest privately owned companies; its United States partner owns 51% and the rest is publicly owned in New Zealand--three-month restructuring/wage talk disputes. Now after three years the Mediation Service seems to have set its own meritocracy in its allocation of resources to resolve disputes. It needed to. One has to observe that the majority of the appointments from three years ago have all developed into competent, efficient and effective mediators.

The Mediation Service is a success story under the new Act. While there were real fears about its structure after it was set up, it now has an 80% success rate at resolving matters which are referred to it. Given the objective of the Act of making mediation the primary dispute solving procedure, then the Act has certainly delivered on this.

The Employment Relations Authority

The Employment Relations Authority ("the Authority") started in a blaze of unexpected and possibly unwanted publicity when one of the new Members, Susan Bathgate, a Wellington barrister, was found to be in full-time pay as an ERA Member, at the same time as she was being paid as a Member of two other judicial bodies. Triple-time pay is not uncommon in the industrial world, but not at Authority level.

The Authority replaced the Employment Tribunal, where highly skilled and long serving Tribunal members were both mediators and adjudicators. Several of the existing members became Authority members. The Hon. Margaret Wilson caused great concern when she appointed a raft of totally new people to conduct the business of the new Authority. The number of Tribunal members was suddenly effectively redundant. Several brought a bitterly contested case against the Crown based on the unexpired parts of the Warrants. They were unsuccessful. But it showed that the Minister was going to put “her stamp” on the selection of individuals who were to run the Authority. Susan Bathgate wasn’t a good start.

The Authority has been reasonably successful in that it was the first New Zealand judicial body which conducts its proceedings on an investigative method. This means that the Authority Member conducts the Investigation, and then lawyers and advocates and advisors all follow along behind and help the Authority by suggesting that certain lines of enquiry might be followed, or certain lines of questions should be asked. Generally the lawyers are very much bit in the standard Authority hearing.

One of the major problems the Authority faces after three years is the difference in the quality of the procedures followed by its various members. There are those who conduct the full investigation, and then open it for questions; and there are those who begin the investigation, but then let the whole process lapse into a rather expensive across-table mediation, where basically anything goes. This causes a great deal of stress to parties before the Authority who are unsure of whether they should get involved in the debate across the table rather than wait to be asked. Then, if that does not work, the Act provided for the whole matter to be heard all over again—this time in the Employment Court where at least the rules of evidence and procedure are given some modicum of recognition.

One of the benefits of the new Act has been the fact that cases can now get to the Authority without too much delay, cost, drama, or preliminary proceedings; and once there, matters are usually disposed of reasonably efficiently. The Authority, as an institution, has proven over its three years that this method of dispute resolution is more efficient than the process under the old Employment Tribunal. Whether they get the answer more correct than the Tribunal is always a question that does not have any justifiable or provable answer.

The Employment Court

The Employment Court is probably the least affected of the institutions following the passing of the new legislation. However, there was a great deal of concern when the Employment Relations Act provided that any party not satisfied with a determination of the Authority could file for a de novo hearing in the Employment Court. In the past, one was only able to appeal on questions of law. Now if a party is not happy after the Authority’s decision, the whole matter can be heard all over again in the Court. There were already long delays in getting cases before the Employment Court, so the promise of droves of disappointed litigants became another reality. However, while the Employment Court has been relatively unscathed by the new legislation, it has been busy dealing with the interpretive cases. One point that the Court has taken on is the stated objective in the legislation that mediation should be the primary problem solving mechanism. Often now, the Court will direct parties back to mediation, even part way through a hearing. Previously, the Court always imagined that if a case was going to be solved, it was probably going to be solved before the opening addresses.

The Labour Inspectorate

Three years ago, the Hon. Richard Prebble described this body as “industrial traffic wardens.” Nothing they have done in the past three years has changed that perception. It is now the role of the Occupational Safety and Health (OSH) Office--a government agency responsible for policing health and safety in employment matters--to oversee the industrial accident and safety matters which used to be the domain of the labour inspectorate. There can be no justification to retain both a group of people who offer employment advice and assistance on a 0800 number, and at the same time have people in the Labour Department whose primary role it seems is to bring Holidays Act prosecutions.

 

Conclusion

In a recent address to the Employment Law Institute, Hon. Margaret Wilson said that the Employment Relations Act was implemented to “build and maintain productive employment relationships, as part of its broader strategy for a more productive and equitable society and economy.” But in 2001 she saw stagnant productivity, a significant reduction in the level of unionism, and increasing levels of income inequity leading to a decline in the skills base. This led to the passing of the Act to swing the “power pendulum” back to the workforce. But has it happened? The economic indicators are all positive with the economy never as robust as it has been in the past three years, so there is little to argue about. But what did the Act do? Not a lot, we suggest, other than function as a disincentive to employ new staff, and an incentive to look for ways to contract out of direct hire and if possible relocate off shore. None of these were in New Zealand workers interests.

My post graduate Diploma students over the last three years have been completing assignments gauging the impact of the Act on their respective businesses. They have been asked whether their employers have encompassed the spirit of the Act. The overwhelming number have researched and found that the Act has had no impact whatsoever, other than the requirement to provide all new employees with employment agreements. Was the loss of employment opportunities justification for that?

The New Zealand Journal of Industrial Relations, in January 2003, published the findings of a survey of 639 businesses, which showed that only 5% of employers found the Act to have had a positive effect on their businesses. On the other hand only 28% said that there was a negative effect. And as echoed above, 56% said that it had no impact whatsoever.

In conclusion, the economy is very strong and all is well, so let’s not change the current legislative environment. But after three years, one has to ask whether it was all worth it, given the curtailment of employment opportunities being offered, businesses moving off shore and businesses looking more and more to contracting out. We predict that the next three years will be more of the same; minimum union activity, except in the traditional areas; and for the rest, nothing will happen, other than all new employees will be issued new employment agreements to sign before they actually commence employment.

*Paul Tremewan is an employment lawyer and human resources consultant who lives in Auckland, New Zealand, who and teaches employment law at the University of Auckland.Back to Text

LABOR RELATIONS LAW* Prepared by Charles W. Baird,Ph.D.**

Congress should:

  • eliminate exclusive representation, or at least pass a national right-to-work law, or codify the U.S. Supreme Court’s decisions in National Labor Relations Board (NLRB) v. General Motors (1963) and Communications Workers of America v. Beck (1988);
  • repeal section 8(a)2 of the National Labor Relations Act (NLRA), or at least permit labor-management cooperation that is not union-management cooperation only;
  • codify the Supreme Court’s ruling in NLRB v. Mackay Radio & Telegraph (1938) that employers have an undisputed right to hire permanent replacement workers for striking workers in economic strikes;
  • overturn the Supreme Court’s ruling in U.S. v. Enmons(1973) that prohibits federal prosecution of unionists for acts of extortion and violence when those acts are undertaken in pursuit of "legitimate union objectives";
  • overturn the Supreme Court’s ruling in NLRB v. Town & Country Electric (1995) that forces employers to hire paid union organizers as ordinary employees;
  • protect the associational rights of state employees by overriding state and local laws that impose NLRA-style unionism on state and local government employment;
  • proscribe the use of project labor agreements on all federal and federally funded construction projects; and
  • repeal the 1931 Davis Bacon Act and the 1965 Service Contract Act.

In a market economy it makes little sense to distinguish between producers and consumers because most people are both. It also makes no sense, outside discredited Marxist theory, to distinguish between management and labor because both are employed by consumers to produce goods and services. Management and labor are complementary, not rivalrous, inputs to the production process. Unfortunately, U.S. labor relations law is based on the mistaken ideas that management and labor are natural enemies; that labor is at an inherent bargaining power disadvantage relative to management; and that only unions backed by government power, which eliminate competition among sellers of labor services, can redress that situation. The National Labor Relations Act (NLRA), as amended, is based on ideas that might have seemed sensible in the 1930s but do not make any sense in today’s information age. That act is an impediment to labor market innovations that are necessary if the United States is to continue to be the world’s premier economy. The NLRA ought to be scrapped, or at least substantially amended so it reflects modern labor market realities.

The Labor Front Today

Unions represent a small and declining share of the American labor market. In 2001 only 9.0 percent of the private-sector workforce was unionized. That figure has been declining since 1953 when it was 36 percent, and soon it will be no higher than 7 percent—exactly where it was in 1900. Unions, at least in the private sector, are going the way of the dinosaur. They are institutions that cannot succeed in the competitive global economy of the future. Firms and workers must be more innovative and have the freedom to adjust to changing market conditions if they are to reap the rich rewards of a more prosperous world economy.

Further, nearly half of union members now work for federal, state, and local governments. In 2001, 37.4 percent of the government-sector workforce was unionized. Even that number has declined from its 1995 peak of 38.8 percent. Yet, despite the decline of unions, the old regime that supports them is still in place.

Exclusive Representation and Union Security

The principle of exclusive representation, as provided for in sec. 9(a) of the NLRA, mandates that if a majority of employees of a particular firm vote to be represented by a particular union, that union is the sole representative of all workers whether an individual worker voted for or against it or did not vote at all. Individual workers are not free to designate representatives of their own choosing. While workers should be free, on an individual basis, to hire a union to represent them, they should not be forced to do so by majority vote. Unions are not governments; they are private associations. For government to tell individual workers that they must allow a union that has majority support among their coworkers to represent them is for government to violate those workers’ individual freedom of association. Freedom of religion is not subject to a majority vote; neither should freedom of association be.

Union security is the principle under which workers who are represented by exclusive bargaining agents are forced to join, or at least pay dues to, the union with monopoly bargaining privileges. In the 22 right-to-work states such coercive arrangements are forbidden by state law. (Sec. 14[b] of the NLRA gives states the right to pass such laws.) The union justification for union security is that some workers whom unions represent would otherwise get union-generated benefits for free. But if exclusive representation were repealed, only a union’s voluntary members could get benefits from the union because the union would represent only its voluntary members. The right-to-work issue would be moot. Forced unionism would, at long last, be replaced by voluntary unionism.

The NLRA serves the particular interests of unionized labor rather than the general interests of all labor, and it abrogates one of the most important privileges and immunities of U.S. citizens—the right of each individual worker to enter into hiring contracts with willing employers on terms that are mutually acceptable. Unfortunately, no court has had the courage to take up the issue since the 1930s. It is time for Congress to do so.

Congress has three options for remedying the current situation:

  • Eliminate exclusive representation. Ideally, the current restrictions on the freedom of workers to choose who if anyone represents them should be eliminated. The 1991 New Zealand Employment Contracts Act would be an excellent model to follow. Although 85 percent of that country’s population opposed that approach in 1991, in 1999, 73 percent of employees reported that they were "very satisfied" or "satisfied" with their working conditions and terms of employment. Still, initially it might be politically difficult to pass a similar act in the United States. Thus, several short-term options are available.
  • Adopt a national right-to-work law. Under this option workers would still be forced to let certified unions represent them, but no worker would be forced to join, or pay dues to, a labor union. This is a poor second best to members-only bargaining.
  • Codify the U.S. Supreme Court’s decisions in National Labor Relations Board (NLRB) v. General Motors (1963) and Communications Workers of America v. Beck (1988) by passing a federal "payroll protection" statute that guarantees that union members as well as nonmember agency-fee payers can opt out of union political activities. This is a third-best alternative to members-only bargaining.

In General Motors the Court declared that the only permissible form of compulsory union membership under the NLRA is the payment of union dues. Neither unions nor employers are allowed to compel "full membership in good standing." Notwithstanding this decision, the NLRB and the Court still allow unions and employers in non-right-to-work states to include union security clauses in collective bargaining contracts that assert that workers must become and remain members of unions in good standing as a condition of continued employment.

On November 3, 1998, a unanimous Supreme Court, in Marquez v. Screen Actors Guild, decided that union security clauses may continue to state that "membership in good standing" is required as a condition of employment. It remains true that, in this context, "membership in good standing" does not mean what almost everyone thinks it means. It means only that "members" must pay some money to the union that represents them in order to keep their jobs. But unions and employers are now free to continue to deceive workers into thinking that ordinary union membership is required as a condition of employment. Only Congress can put this travesty right.

In Beck the Court declared that the compulsory dues and fees collected by unions from workers they represent could not be used for purposes not directly related to collective bargaining, principally for political contributions. Many unions have effectively nullified Beck by creative bookkeeping. In 1996 the NLRB turned a blind eye to such deceit in its California Saw and Knife Works decision. In that case the board accepted the union’s own staff accountants’ categorization of expenditures on activities related to and not related to collective bargaining. It stated that, under Beck, dissenting workers had no right to an independent audit of the union’s books. In this regard, Congress should incorporate, for private-sector workers, the procedural and substantive protections that were granted to government workers who are forced dues payers in Chicago Teachers Union v. Hudson (1986). Among them is an indisputable right of dissenting government workers to independent audits in all cases involving disputes over union uses of forced dues and fees. The Supreme Court is eventually likely to take up the issue of the applicability of Hudson to the private sector because of a conflict between two circuit courts of appeal. The D.C. Circuit, in Ferriso v. NLRB (1997), ruled that Hudson does apply, and the Seventh Circuit, in Machinists v. NLRB (1998), ruled that it does not.

A related problem concerns whether union expenditures for organizing union-free workers are chargeable to private-sector agency-fee payers. In Ellis v. Railway Clerks (1984), the Supreme Court explicitly said that organizing expenses are not chargeable to agency-fee payers under the Railway Labor Act, which sets the rules of unionism for workers in the railroad and airline industries. Until October 7,1999, most experts assumed that the Ellis rule would also apply to workers under the NLRA. However, on that date the NLRB ruled in two cases (United Food and Commercial Workers, and Meijer, Inc.) that the Ellis rule does not apply. In June 2001 a three-judge panel of the Ninth Circuit Court of Appeals overruled the NLRB in Meijer, but in April 2002 that same court, sitting en banc, reversed the panel and sided with the NLRB.

The issue of which procedural rules apply and which union expenses are and are not chargeable to nonmember agency-fee payers is a morass. It keeps a lot of judges, lawyers, arbitrators, and accountants busy, but not in the public interest. Congress must act to establish fair labor laws.

A "paycheck protection" statute that codifies Beck, Ellis, and Hudsonprotections for nonmember agency-fee payers does not go far enough. Because of exclusive representation, individual union members should also be protected by requiring unions annually to get written permission from a dues payer before spending any of his or her dues on politics. Under exclusive representation many workers may choose to be union members to get to vote on the collective bargaining agreements that affect them. Those workers also deserve to be able to opt out of union political activities. Not even a national right-to-work act would protect those workers against misuse of their dues for politics. Without exclusive representation no worker would be subject to the terms of a collective bargaining agreement unless he or she chose to be a union member. Union membership would be genuinely voluntary. If Congress abolished exclusive representation, and protected individual workers from union violence, there would be no need for payroll protection.

The history of attempts to enforce Beck and related cases demonstrates how complicated the issues are and how expensive it is to litigate them. Congress created these problems, and only Congress can eliminate them.

Repeal Section 8(a)2 of the NLRA

This is the section that outlaws so-called company unions. More important, it is the section that unions have discovered they can use to block any labor-management cooperation that is not union-management cooperation. Labor-management cooperation is crucial to America’s ability to compete in the global market. The Employment Policy Foundation in Washington, D.C., has found that employee involvement plans increase productivity by from 30 percent to more than 100 percent. Under existing law union-free firms in America are not allowed to implement such plans unless they agree to take on the yoke of NLRA-style unions, and doing so usually reduces productivity in other ways.

Workers who want to have a voice in company decision-making without going through a union should be free to do so. A 1994 national poll of employees in private businesses with 25 or more workers, conducted by Princeton Survey Research Associates, revealed that 63 percent preferred cooperation committees to unions as a way of having a voice in decision-making. Only 20 percent preferred unions.

In the 1992 Electromation case, the NLRB declared that several voluntary labor-management cooperation committees, set up by management and workers in a union-free firm to give employees a significant voice in company decision-making, were illegal company unions. The Teamsters, who earlier had lost a certification election at the firm, then argued that the only form of labor-management cooperation the government would allow was union-management cooperation. On the basis of that argument, the Teamsters won a slim majority in a second certification election. As a result of the Electromation decision, Polaroid Corp. was forced to disband voluntary labor-management cooperation committees that had been in existence for 40 years.

In the 1993 DuPont case, the NLRB ruled that labor-management cooperation committees in a unionized setting were illegal company unions because they were separate from the union. The voluntary committees were set up to deal with problems with which the union either could not or would not deal. Under exclusive representation, management must deal only with a certified bargaining agent in a unionized firm. The solution is simply to abolish exclusive representation.

The report that was issued by the Dunlop commission on January 9, 1995, recommends "clarifying" rather than doing away with sec. 8(a)2. It says that voluntary worker-management cooperation programs "should not be unlawful simply because they involve discussion of terms and conditions of worker compensation where such discussions are incidental to the broad purposes of these programs." That will do little to solve the problem. What is "incidental"? Who will decide? Answer: the NLRB that has already given us the Electromation decision.

It is time for Congress to state unequivocally that employers and workers may formulate and participate in any voluntary cooperation schemes they like so long as any individual worker may join and participate in any union he or she chooses without penalty.

Short of repealing sec. 8(a)2 outright, Congress should amend it to permit labor-management cooperation that is not union-management cooperation.

The Teamwork for Employees and Managers Act (H.R. 473 and S. 295), passed by Congress but vetoed by President Clinton in 1996, is an excellent second-best model. Unions supported Clinton’s veto because they do not wish to compete on a level playing field with alternative types of labor-management cooperation.

Codify the Supreme Court’s Ruling in NLRB v. Mackay Radio & Telegraph (1938)

Once and for all, it should be made clear that, although strikers have a right to withhold their own labor services from employers who offer unsatisfactory terms and conditions of employment, strikers have no right to withhold the labor services of workers who find those terms and conditions of employment acceptable. Strikers and replacement workers should have their constitutional right to equal protection of the laws acknowledged in the NLRA.

Overturn the Supreme Court’s Ruling in U.S. v. Enmons (1973)

The federal Anti-Racketeering Act of 1934 was enacted to cope with the violence, intimidation, and injury to persons and property associated with organized crime. For example, it prohibits the use of violence, intimidation, and injury to extort money or other things of value from people or to force individuals to join or make payments to organizations they don’t like. While this legislation was wending its way through Congress, the American Federation of Labor (AFL) noticed that its provisions could apply just as well to many union activities as to the activities of the mob. To forestall that use of the law, the AFL lobbied to exempt union activities from the provisions of the statute. Congress obliged by adding a clause that says, "No court of the United States shall construe or apply any of the provisions of this act in such a manner as to impair, diminish or in any manner affect the rights of bona-fide labor organizations in lawfully carrying out the legitimate objects thereof, as such rights are expressed in existing statutes of the United States" (emphasis added). Notwithstanding that the clear language of the statute protected only lawful actions of the unions, courts soon interpreted the act to protect violence and intimidation by unions during strikes on the preposterous grounds that strikes are legal and they are undertaken to achieve legal ends such as improvements in the terms and conditions of employment for strikers. The Supreme Court made this interpretation of the law official in United States v. Local 807, International Brotherhood of Teamsters (1942).

Congress reacted swiftly to the Local 807 decision by enacting the Hobbs Act amendments to the Anti-Racketeering Act over President Truman’s veto in 1946. The clear intent of Congress was to proscribe acts of violence and intimidation by unions as well as organized crime. However, the federal judiciary refused to go along. They continued to apply the Local 807 decision in most cases of union violence and intimidation during strikes. Unions continued to get away with egregious attacks against persons and property, including robbery and arson, whenever any case could be made that such aggression was in pursuit of "legitimate union objectives." The Supreme Court removed all doubt concerning union immunity to federal anti-racketeering laws in 1973 with its ruling in U.S. v. Enmons. By a 5–4 decision the Court upheld the right of strikers under federal law to fire high-powered rifles at three utility company transformers, to drain oil from and thus ruin a transformer, and to blow up a transformer substation. The Court said it was up to state and local officials to prosecute such behavior. The federal government had to stay out of it because it involved a legal strike under the NLRA.

Congress must try again to make it clear that violence and intimidation are not acceptable no matter who initiates them and no matter for what purpose they are initiated. Equal protection of the laws is an important constitutional principle. Victims of union thuggery deserve as much protection as victims of mob thuggery. The Freedom from Union Violence Act (S. 764) proposed in the 106th Congress is a good model for the 108th Congress to adopt.

Overturn the Supreme Court’s Ruling in NLRB v. Town & Country Electric (1995)

Sec. 8(a)3 of the NLRA makes it an unfair labor practice for an employer to discriminate against a worker on the basis of union membership. According to the Supreme Court, that means that an employer cannot refuse to hire or cannot fire any employee who is a paid union organizer. Unions send paid organizers (salts) to apply for jobs at union-free firms and, if employed, to foment discontent and promote pro-union sympathies. In the Town & Country Electric decision the Court said that employers could not resist that practice by firing or refusing to hire salts. In other words, employers must hire people whose main intent is to subvert their business activities. That is like telling a homeowner that it is illegal to exclude visitors whose principal intent is to burglarize his home. Congress should allow employers to resist this practice. The Truth in Employment Act (H.R. 758), which was quashed by the threat of a filibuster in the 105th Congress, is a good model for the 108th Congress to adopt.

Protect the Associational Rights of State Employees with a Federal Statute

Congress has constitutional authority under the Fourteenth Amendment to protect the privileges and immunities of citizens of the United States. Thus it is not necessary to undo the harm of government employee unionism state by state.

The principles of exclusive representation and union security abrogate the First Amendment rights of government employees who wish to remain union free. Government is the employer; hence there is sufficient government action to give rise to Bill of Rights concerns.

Under the Bill of Rights, government is not supposed to intrude on an individual citizen’s right to associate or not associate with any legal private organization. A voluntary union of government employees is a legal private organization. But forcing dissenting workers to be represented by, join, or pay dues to such an organization is an abridgment of those workers’ freedom of association.

Moreover, in government employment, mandatory bargaining in good faith (a feature of the NLRA incorporated into 31 state collective bargaining statutes) forces governments to share the making of public policy with privileged, unelected private organizations. Ordinary private organizations can lobby government, but only government employee unions have the privilege of laws that force government agencies to bargain in good faith with them. Good-faith bargaining is conducted behind closed doors. It requires government agencies to compromise with government employee unions. Government agencies are forbidden to set unilaterally terms and conditions of government employment (questions of public policy) without the concurrence of government employee unions. Not even the Sierra Club has that special access to government decision-makers or that kind of influence over decision-making. In short, government employee unionism, modeled on the NLRA, violates all basic democratic values. It should be forbidden. That is why Title VII of the 1978 Civil Service Reform Act greatly restricts the scope of bargaining with federal employee unions and forbids union security in federal employment. It ought also to forbid exclusive representation and mandatory good-faith bargaining in federal employment.

Incredibly, in the 106th Congress there was bipartisan support for a statute (S. 1016 and H.R. 1093) that would force all states to give exclusive representation, mandatory bargaining, and union security privileges to unions representing police and firefighters. That same measure was promoted by many members of the 107th Congress under cover of the September 11, 2001, terrorist attacks. It is a measure to benefit union leaders, not firefighters and police on the front lines. The record of disaster in the states that already give public safety unions such privileges is clear. Firefighters who are prohibited by union leaders from fighting fires and police who are prohibited by union leaders from maintaining order and preventing crimes during strikes undermine civil society. The public safety strikes in San Francisco during the 1970s prove the point. The proposed legislation would expose the 20 states that now deny NLRA-style privileges to public safety unions to the same predation. It proscribes strikes by public safety personnel, but the record is clear. Public-sector unions with NLRA-style privileges are almost never deterred by laws that make strikes illegal. Moreover, once states are forced to give public safety unions such privileges, the teachers’ unions and other public-sector unions will demand equal treatment. The 108th Congress should drive a stake through the heart of this idea as soon as possible.

Proscribe the Use of Project Labor Agreements on All Federal and Federally Funded Construction Projects

A project labor agreement (PLA) is a device used by unions in the construction industry to make it extremely difficult for union-free contractors to bid successfully for construction projects funded by taxpayer money. In 1947 construction unions had an 87 percent market share nationwide. In 2001 that figure was only 18.4 percent. Failing the market test, construction unions have turned to politics at all levels. Construction unions lobby politicians to require that open-shop (union-free) contractors sign agreements to operate according to union rules before they are permitted to bid on any project funded, in whole or in part, with taxpayer money.

An open-shop contractor that signs a PLA in order to be able to bid agrees to (1) force all its employees to either join, or pay dues to, the unions specified in the PLA; (2) do all new hiring associated with the PLA through designated union hiring halls; (3) operate according to union work rules and craft jurisdiction definitions; and (4) force its employees to pay (or agree to pay on their behalf) into union welfare, benefits, and pension funds. Since it usually takes at least five years for workers to become vested in such funds, and most projects last less than five years, the money is forfeited to the unions when the projects are completed. Moreover, unless employees are to lose their regular benefits and pension plans, payments to them must be maintained during the life of the PLA project.

PLAs should not be confused with "prevailing wage" regulations in taxpayer-funded construction. The federal Davis-Bacon Act (see below) forces successful union-free bidders to pay their employees union wages on taxpayer-funded projects. But even when forced to pay union-scale wages, union-free contractors have cost advantages over union-impaired contractors that enable them to bid lower to get contracts. The unions’ restrictive work rules and job classifications drive up costs substantially. The obvious solution from the unions’ point of view is, through PLAs, to remove all union-free cost advantages.

Unions claim that PLAs are a way of ensuring safe, on-budget quality work without labor disputes and project delays. Facts belie those claims.

A nationwide study in 1995 by Charles Culver, a former Occupational Safety and Health Administration official, revealed that on-the-job fatalities were significantly lower in union-free construction than in comparable unionized construction in every year from 1985 through 1993. Moreover, the quality of union-free work is usually just as good as unionized work, and it is often better. It is revealing to note that union-free contractors deemed unqualified to do a job all of a sudden are deemed well qualified when they sign a PLA.

PLAs are not even effective guarantees against strikes by the unions on the jobs they win. For example, the San Francisco Airport PLA includes a no-strike pledge that has been violated at least three times. And PLAs are not effective guarantees against project completion delays. The Boston ‘‘Big Dig’’ PLA has resulted in substantial delays. The project was supposed to be completed in 1998; now the earliest possible completion date is 2004. As for on-budget performance, the original budget for the Big Dig was $2.5 billion. Best estimates now put the cost at $15 billion.

On February 17, 2001, President Bush signed Executive Order 13202, which prevents federal government agencies from including PLAs as bid specifications on federal construction projects. Under the executive order, union-free firms can use their cost advantages to try to win the bid, but if a contractor submits a winning bid for a federal construction project he is thereafter free to agree with construction unions that he and his subcontractors will work on a union-only basis. The reason the executive order permits union-only agreements after bids are won is that after a contract is awarded all subsequent labor relations questions are controlled by the NLRA, which clearly permits union-only agreements among private parties. All the president can do is prohibit federal agencies from requiring PLAs as a condition for bidding.

The legality of PLAs at the state level was affirmed in 1993 by the U.S. Supreme Court in the Boston Harbor case. This involved a massive cleanup of Boston Harbor. The Massachusetts Water Resources Authority (MWRA) said that no union-free contractors could bid on the project unless they first agreed to the terms of a PLA. Opponents of the PLA argued that the NLRA preempted state authority to impose a PLA. The Court upheld the PLA on the grounds that MWRA was acting as an owner-developer of the project, not the employer of the employees who actually worked the project. The NLRA controls relations among employers, employees, and unions, not relations between owner-developers and the employers with whom they contract. So, under Boston Harbor, a state agency is free to choose whether or not to impose a PLA as a bid qualification.

Labor unions and their logrolling partner, the Sierra Club, immediately challenged the legality of Bush’s executive order in federal district court, and on November 7, 2001, Judge Emmet Sullivan declared, on the basis of the Boston Harbor case, that the executive order was preempted by the NLRA. This was a manifestly silly ruling because in Boston Harbor the Supreme Court ruled that the NLRA does not preempt state PLAs if the state agency involved is an owner-developer rather than an employer. If Boston Harbor says anything about federal PLAs, it says that the president, as owner-developer of federal projects, is free to permit or forbid PLAs. Judge Sullivan’s decision was overturned by the D.C. Circuit Court of Appeals on July 15, 2002.

Congress should settle this issue by enacting legislation that goes beyond Bush’s executive order to preserve open competition at all stages of federal construction projects including subcontracting. Primary contractors should not be permitted to discriminate against subcontractors on the grounds of whether they are unionized or not. The rule in federal contracting should be that the lowest bidder who is capable of doing the specified job always wins. That would save taxpayers millions of dollars each year, and it would set a good model for states to follow.

Union-only agreements between private parties would be unobjectionable if labor union participation were a matter of free choice for all individual workers. However, as long as we have compulsory unionism (exclusive representation, union security, and mandatory good-faith bargaining), taxpayers need protection against the inflated costs that inevitably follow.

Repeal the 1931 Davis-Bacon Act and the 1965 Service Contract Act

The Davis-Bacon Act, passed at the beginning of the Great Depression, had two purposes: to stop prices and wages from falling and to keep blacks from competing for jobs that had previously been done by white unionized labor. Both of its purposes were wrong. Falling wages and prices were precisely what were needed to reverse the collapse of real income and employment in the early 1930s. (Both fell from 1929 to 1933, but prices fell by more than wages. Thus the real cost of hiring workers increased during that time period.) The purchasing power fallacy that misled first Herbert Hoover and later Franklin Roosevelt (e.g., the National Industrial Recovery Act) did as much to deepen and prolong the Great Depression as did the Smoot-Hawley tariff.

The racist motivation behind the legislation is plain for anyone who reads the Congressional Record of 1931 to see. For example, Rep. Clayton Allgood, in support of the bill, complained of "cheap colored labor" that "is in competition with white labor throughout the country."

While most current supporters of Davis-Bacon are not racists, the law still has racist effects. There are very few minority-owned firms that can afford to pay union wages. As a result, they rarely are awarded Davis-Bacon contracts, and many of them stop even trying for those contracts.

Moreover, Davis-Bacon adds over a billion dollars each year directly to federal government expenditures, and billions more to private expenditures on projects that are partially funded with federal funds, by making it impossible for union-free, efficient firms to bid on construction contracts financed in whole or in part with federal funds. Today Davis-Bacon serves no interest whatsoever other than protecting the turf of undeserving, white dominated construction trade unions.

The claim, on January 6, 1995, by Robert A. Georgine, president of the AFL-CIO Building and Construction Trades Department, that Davis-Bacon has long been supported by the GOP because it adheres to "free market principles by recognizing existing wages within each community set by the private marketplace, not by imposing an artificial standard or deleterious government interference," is self-serving nonsense. Prices set by the free market do not need any government enforcement at all. They are the prices at which the production and exchange plans of buyers and sellers of inputs and outputs are coordinated with each other. They are the prices that would exist in the absence of any government involvement. The AFL-CIO and its constituent unions want government to impose prices that are more favorable to their members and officers than the marketplace would produce. The "prevailing wage" or "community wage" set by the Department of Labor under the Davis-Bacon Act is almost always the union wage—not the free-market wage. After all, unions insist that they make wages higher than market-determined wages. Only members of the GOP in thrall to unions’ in-kind and financial bribes would support Davis-Bacon. No member of Congress, of either party, who supports the free market can be against repealing Davis-Bacon.

Several states have their own "little Davis Bacon Acts." In 1994 a federal district court in Michigan found that state’s prevailing wage law violated federal Employee Retirement Income Security Act regulations. As a result the Michigan law was suspended between 1994 and 1997 when an appellate court reinstated it. According to a study done for the Mackinac Center for Public Policy, as a direct result of the suspension more than 11,000 new jobs were created. Comparing the costs of state government construction projects during the suspension with their costs under the prevailing-wage rules suggests that those regulations add at least $275 million per year.

The Service Contract Act does for federal purchases of services what the Davis-Bacon Act does for federally funded construction. It wastes billions of taxpayer dollars for the sole purpose of attempting to price union-free service providers out of the market. Both acts should be placed in the dustbin of history along with the syndicalist sympathies that inspired them.

Conclusion

The more integrated global economy of the new millennium offers greater opportunities for American enterprises and workers to prosper. Greater productivity worldwide means more wealth for those who can exchange their services with willing customers. But to do so, American workers and the enterprises that employ them must be empowered to act quickly to meet market demands. That means eliminating the laws and regulations that destroy jobs and make workers a burden rather than an asset to employers. The outmoded perceptions of the 1930s should not be allowed to shackle the American economy of the 21st century.

Suggested Readings

Baird, Charles W. "Are Quality Circles Illegal? Global Competition Meets the New Deal." Cato Institute Briefing Paper no. 18, February 10, 1993.

_____. "Outlawing Cooperation: Chapter Two." Regulation, no. 3 (1993).

_____. "The Permissible Uses of Forced Union Dues: From Hanson to Beck,"’ Cato Institute Policy Analysis no. 174, June 30, 1992.

_____. "The PLA Hustle." Ideas on Liberty, August 2002.

_____. "Right to Work before and after 14(b)." Journal of Labor Research 19, no. 3 (Summer 1998).

_____. "Salt without Savor." Freeman, May 1998.

_____. "Toward Voluntary Unionism." Journal of Private Enterprise 17, no. 1 (Fall 2001).

_____. "Unchaining the Workers." Regulation 24, no. 3 (Fall 2001).

Bernstein, David. "The Davis-Bacon Act: Let’s Bring Jim Crow to an End." Cato Institute Briefing Paper no. 17, January 18, 1993.

Culver, Charles A. Comparison of Nonunion and Union Contractors Construction Fatalities. Gainesville, Fla.: National Center for Construction Education and Research, 1995.

Deavers, Ken, Anita Hattiangadi, and Max Lyons. The American Workplace 1998. Washington: Employment Policy Foundation, 1998.

Moore, Cassandra Chrones. "Blocking Beck." Regulation, Spring 1998.

Nelson, Daniel. "The Company Union Movement, 1900–1937: A Reexamination." Business History Review 56 (Autumn 1982).

Reynolds, Morgan O. Making America Poorer: The Cost of Labor Law. Washington: Cato Institute, 1987.

Summers, Robert S. Collective Bargaining and Public Benefit Conferral: A Jurisprudential Critique. Ithaca, N.Y.: Cornell University, Institute of Public Employment, 1976.

Theiblot, Armand J., Thomas R. Haggard, and Herbert R. Northrup. Union Violence: The Record and the Response by Courts, Legislatures, and the NLRB. Fairfax, Va.: George Mason University Press, 1999.

Vedder, Richard. Michigan’s Prevailing Wage Law and Its Effects on Government Spending and Construction Employment. Midland,Mich.: Mackinac Center for Public Policy, 1999.

*Labor Relations Law was originally published as Chapter 34 of the CATO HANDBOOK FOR CONGRESS: POLICY RECOMMENDATIONS FOR THE 108TH CONGRESS, by the Cato Institute in Washington, D.C. Cato granted permission to reprint it herein.Back to Text

**Charles W. Baird is a Professor of Economics at California State University, Hayward, California, and is on the Board of Fellows of the Public Service Research Foundation.Back to Text

PROJECT LABOR AGREEMENTS: ECONOMIC ILLITERACY 101 by Steven Greenhut*

Perhaps it’s the result of a dumbing-down of the American citizenry, but these days economic debates are waged with the most illogical premises.

For instance, in recent weeks news stories have discussed plans by some California cities to use tax dollars to build power plants, rather than to keep buying power from the quasi-private utility companies. The rationale: Cities don’t pay taxes and don’t need to make profits, so they can generate electricity more cost-effectively than Southern California Edison. No one even thought to question this premise.

Now if that were true, governments ought to be able to provide food, housing, and automobiles more cost-effectively than the private sector. The idea is called socialism. Yet in public-policy debates, this debunked ideology is gaining ground, despite what everyone supposedly has learned since the fall of the Berlin Wall.

“From the very beginnings of the socialist movement and the endeavors to revive the interventionist policies of the precapitalistic ages, both socialism and interventionism were utterly discredited in the eyes of those conversant with economic theory,” wrote Ludwig von Mises in his 1956 book, The Anti-Capitalistic Mentality. “But the ideas of the immense majority of ignorant people are exclusively driven by the most powerful human passions of envy and hatred.”

In other words, the more economically illiterate the population, the better off the economic interventionists will be. Throw in normal human passions of envy and hatred, and sound economic thinking goes out the window. Grievous examples are all around us.

It’s no surprise that organized labor has been on the cusp of economic illiteracy since the early stages of the labor movement, exploiting the passions that Mises describes. Work rules based on seniority rather than achievement, support for government-mandated minimum wages and labor standards to reduce competition from non-organized workers, and the collection of mandatory union dues from anyone who wants to work in a union-dominated industry are among the counterproductive or coercive union policies most Americans take for granted.

But as union membership declines throughout the private sector in the United States, union leaders are looking for new and innovative ways to gin up their dwindling ranks. They are having startling success, thanks to the increased amount of dollars flowing to the public sector. By imposing what are known as project labor agreements (PLA) on municipalities that hand out contracts for airports, roads, or other public-works projects, unions can bypass most of their competitors.

It’s quite simple, and strikingly coercive. Organized labor meets with city councils or county boards of supervisors and offers a promise they cannot refuse. Sign an agreement that requires all successful bidders on public-works projects to use union-only labor, and unions won’t organize picket lines or fund their political opponents.

The typical PLA, according to the nonunion Associated Builders and Contractors (ABC), includes the following elements:

 

 

  • Workers must join the union or pay union dues even if they have no desire to do so;
  • Construction companies with winning bids must lay off their non-union work force and hire all new employees through the union hiring hall, based on the seniority system;
  • Companies must contribute to union health and retirement programs even if the workers are unlikely to join the union and ever see a scrap of those benefits;
  • Companies must use union apprentices rather than recognize non-union training programs and adopt restrictive union work rules, job classifications, and arbitration procedures.

Advocates for PLAs argue that these agreements are not unfair because non-union contractors are free to bid on the projects. Indeed, they are, but if they offer the accepted low bid, they must conform to the rules above and become de factor union employers.

Where’s the Benefit?

This is where Economic Illiteracy 101 comes in. Unions convince local officials that imposing these monopoly agreements on public-works contacts are in the best interest of government budgets and employ the soundest of economic reasoning.

Most of us can understand the dynamics of the situation. In Orange County, California, where I work, the Republican-dominated county Board of Supervisors embraced a PLA for all county public-works projects to win union political support for a now-defunct airport plan. This shows that unions will use a variety of political pressure points to impose PLAs on taxpayers.

In Orange County, 80 percent of the workforce is non-union, which means that a small number of contractors are likely to bid on any project, although out-of-county contractors are free to bid. A local survey revealed the cost of an ongoing maintenance contract at the county-run airport increased about 20 percent the year after the PLA was signed, mainly due to a lower number of bidders. That figures. Most non-union contractors are unwilling to become de facto union contractors simply to get some public-works dollars, especially when the private economy is booming, which means fewer bidders and higher prices.

In January, the Beacon Hill Institute in Massachusetts completed one of the more extensive looks at the costs imposed by public-works PLAs. (Some private projects use PLAs also, but ultimately private projects must compete in the marketplace.) Their results were stunning.

“In our analysis of 52 school construction projects undertaken in the Greater Boston area since 1995, we find that costs are substantially higher when a school construction project is executed under a PLA. After adjusting the data for inflation … and after controlling both for the size of projects and for whether they involve new construction or renovations, we find that the presence of a PLA increases project costs by $31.74 per square foot (in 2001 prices) relative to non-PLA projects. This price differential represents 17.3 percent of the cost ($184 per square foot) of the average PLA project and amounts to an average of more than $4.1 million out of the $24.2 million cost per school.”

What would one expect to happen after reducing competition?

Yet at a recent board meeting of a Santa Ana, California, community-college district that’s looking to spend $332 million from a recently passed facilities bond, the majority of board members asked the chancellor to begin negotiating a PLA with local trade unions. They insisted that it will save costs for hard-pressed taxpayers by reducing the possibility of strikes and ensuring on-time completion. More localities nationwide are taking similar actions.

But since when do non-union contractors get hit by strikes? How can encouraging more unionization lead to fewer strikes?

“PLAs are rationalized on the basis that they buy labor peace and lead to on-time and on-budget projects,” a Wall Street Journal editorial stated in 2001. “But the largest PLA ever granted, the rebuilding of San Francisco International Airport, belies that. It is now $259 million over budget, six months late and has already suffered strikes by electricians and carpenters.”

What about non-economic arguments, such as those dealing with “fair wages” and quality-of-life issues?

“Project Labor Agreements bring order out of chaos on construction jobs by setting wages, establishing work rules, and methods of settling grievances,” said one union official, quoted in a recent International Brotherhood of Electrical Workers press release. “They provide safe, fair working environments for crafts people, and they level the playing field for all competing contractors, union and non-union.”

Nearly all government-funded projects must pay union wages, so the wage issue is bogus. Non-union workplaces have better safety records than union workplaces, according to federal records. The state imposes all sorts of safety rules and, last time I checked, most states still have a legal system available for settling most types of grievances. I’m not arguing that government rules are a good thing—the private sector does a better job setting wages and fixing most workplace problems without regulators. But the existence of these rules undermines the non-economic portion of the PLA argument.

It’s really about coercion, plain and simple. It’s about building union power and cutting out competition by force of law.

Based on Coercion

The most appalling part of PLAs is that they force employers to become union companies, and workers to become union members, if they wish to work on public-works projects. Here’s a typical clause from a PLA: “All employees who are employed by employers to work on the project will be required seven (7) days after their date of employment to become members and maintain membership in the appropriate union for the duration of their work on the project.”

You can’t get much more coercive than that. Join the union and pay dues to an organization that you despise and that might use the dues for political causes you oppose, or you can’t work. Many of these projects, perhaps most, shouldn’t even be done in the public sector. But until we succeed in separating school and state, or roads and state, it’s unfair to limit all such work to those who are part of a coercive, but politically powerful movement.

Ironically, as the Associated Builders and Contractors points out, PLAs discriminate against women and minorities, two groups that government officials often claim to be protecting. “Most minority and women-owned construction companies in California are subcontractors, and most of them—like the construction industry at large—are not signatory to a union,” according to the ABC. “In addition, the majority of minority construction workers in California have exercised their right not to belong to a union. Pre-hire PLAs, in effect, benefit a few minorities and women at the expense of the majority by limiting bids to companies signatory to a union.”

It’s yet another example of government rules working to undermine stated government objectives.

President George W. Bush won’t win any awards from libertarians for promoting a free society, but he at least recognized the evils of PLAs when in April 2001 he signed Executive Order 13202. His goal, the order said, was to “promote and ensure open competition of federal federally funded or assisted construction projects … maintain government neutrality towards government contractors’ labor relations … reduce construction costs to the federal government and taxpayers … expand job opportunities … prevent discrimination against government contractors or their employees based upon labor affiliation or lack thereof … [and] prevent the inefficiency that may result from the disruption of a previously established contractual relationship.”

Noble goals, even if one might raise legitimate objections to the use of executive orders in general. Specifically, the order forbids PLAs for federally funded projects, although it was later amended to exempt existing projects that already have adopted PLAs. The U.S. Supreme Court has turned back AFL-CIO challenges to the order.

But it doesn’t do anything to stop PLAs for non-federally funded projects, which means concerned taxpayers need to pay careful attention to how state transportation officials, school districts, and city councils bid local construction projects.

The Right Debates

Foes of PLAs need to understand that the economic arguments in favor of them are thoroughly bogus. They need to recognize that forcing a worker or company to support a union is coercive, and that approving a PLA is tantamount to throwing away potentially millions of taxpayer dollars.

It’s a tough chore these days. One chief of staff of a local Republican official argued to me recently that more projects should be done in the public rather than private sector because the public sector is more fair and less susceptible to the sort of unethical behavior that has accompanied the Enron and Arthur Andersen scandals.

It’s hard to know where to begin. But the PLA is a prime example of what’s wrong with that argument. The more projects the government finances, the more susceptible tax money is to political machinations.

Imagine if schools and roads were privately funded and paid for by parents and drivers in a market system. Sure, private companies could impose PLAs, just as many private companies negotiate with unions, but ultimately market forces would punish those companies for foolish decisions. Overpay on a contract and a competitor could come along and offer its services for less money.

This sounds simple, but too few people understand how markets work. Until they do, PLAs and other forms of socialism will flourish.


*Steven Greenhut (sgreenhut@ocregister.com) is a senior editorial writer and columnist for the Orange County Register in Santa Ana, California. This article was first published in Ideas on Liberty in June 2003, and is herein republished by permission the Foundation for Economic Education.Back to Text