The Perils of Slavish Devotion to Organized Labor
Labor unions maintain a political stranglehold on legislation in Pennsylvania despite representing less than two out of 10 workers.
Their strength is the product of decades of favorable federal and state laws that are extraordinarily resistant to reform. The result is that organized labor and collective bargaining play a dominant role in Pennsylvania’s business climate, economic fortunes and government.
Undoubtedly, the single most important union-related decision in Pennsylvania was choosing not to become a right-to-work state under provisions of the Taft-Hartley Act.
In non-right-to-work states, employees of firms with a collective bargaining agreement can be forced to pay dues or fees to the union as a condition of employment. In right-to-work states, there is no such requirement.
Not having the right to choose whether to join a union severely curtails economic freedom for both the employee and the employer. Indeed, a state’s status regarding right to work correlates closely with the state’s overall position on the role of government in the economy.
Also very costly is Pennsylvania’s wage law that requires workers on any construction project receiving $25,000 or more in government money to be paid the “prevailing wage,” which, in effect, means the union wage. Conservatively estimated, this law costs Pennsylvania taxpayers upward of $1 billion a year more than paying competitive market wages.
Further, Pennsylvania’s heavily union-favoring laws governing public sector employees are extremely costly. Three examples demonstrate the point:
• First, Pennsylvania is one of only 13 states that allow public school teacher strikes and one of only five that have actually had a strike in the last several years.
Indeed, Pennsylvania accounts for about half of all teacher strikes in the nation. Teachers face no financial penalty for striking and get paid for the full school year since Pennsylvania requires 180 days of instruction to be completed.
Moreover, teachers cannot be laid off because of financial hardship in a district. Layoffs can occur only when there has been a significant enrollment decline.
Pennsylvania’s teachers are well paid compared with most white-collar workers on a per-hour basis and they receive very generous health care and pension benefits. The ability to strike with impunity creates an enormous negotiating advantage in contract talks. It’s an advantage teacher unions have exploited extremely well.
• Second, Pennsylvania’s public safety employees (police and fire) bargain under Act 111, which prohibits strikes and instead requires binding arbitration.
However, Act 111 does not require arbitrators to take into account key factors such as the financial condition of the municipality or comparative compensation packages received by workers in other cities. Binding arbitration laws in other states have such requirements.
Moreover, the manner of selection of arbitrators in the commonwealth does not ensure balance on the board. As a result of the procedural shortcomings, arbitration panels have a tendency to side with the union in deciding the terms of a new contract. Certainly, the experience of Pittsburgh bears that out.
• Third, Pennsylvania is one of a very small number of states that allow public transit workers to strike. The threat of a shutdown of mass transit gives the union tremendous leverage at the bargaining table because of management’s concerns over the hardships inflicted on transit users and the economic damage to the community.
The costs of these labor-favoring laws are staggering to Pennsylvania’s taxpayers both monetarily and in terms of the inefficiencies arising from the absence of competitive pressures.
Until legislators loosen labor’s grip on Pennsylvania’s workers, businesses and government, we will have to accept the commonwealth’s continuing status as one of the worst-performing states in the nation in terms of economic freedom and prosperity.
Editor’s Note: This is the third in a series of occasional commentaries on how Pennsylvania can turn around its economy. Click to access the first and second installments.
Matthew J. Brouillette is president of the Commonwealth Foundation for Public Policy Alternatives. Jake Haulk is president of the Allegheny Institute for Public Policy.