University Studies of the University of Nebraska


Date of this Version



University of Nebraska Studies : New Series no. 50


Published by The University at Lincoln


The Issue of Public Sector Collective Bargaining

PERHAPS THE MOST significant single phenomenon III the area of labor relations in the past ten years has been the rapid emergence of collective bargaining in the public sector of the United States economy. This phenomenon has occurred at all levels of government and has encompassed many diverse groups of employees. Of course, the major labor legislation which has been enacted in this country-the Wagner Act, the Taft-Hartley Act and the Landrum-Griffin Act-has excluded consideration of public sector employees. But the signing of Executive Order 10988 by President John F. Kennedy in 1962 opened the door to collective bargaining arrangements for federal employees. It also led state legislatures across the country to pass laws according public employees most of the rights which their private sector counterparts had earlier acquired.

This phenomenon raises some new and important questions for economists. The profession has been concerned for some time with the wage and employment effects of unions, but this concern has centered primarily on those private sector labor markets where unions have historically been strong. The belief persists that labor markets in the public sector are somehow different. Recently, for instance, several attempts have been made to develop theories of wage determination in public employment, and most of these theoretical undertakings have considered unionization in some way as a relevant variable.

Moreover, from a public policy point of view, improvement in our knowledge of the effects of collective bargaining in the public sector is crucial. In the private sector experts have long recognized the social, political, and economic legitimacy of unions. Albert Rees, for example, in his well-known book The Economics of Trade Unions, states:

If the job rights won for workers by unions are not conceded by the rest of society simply because they are just, they should be conceded because they help to protect the minimum consensus that keeps our society stable. In my judgement, the economic losses impossed by unions are not too high a price to pay for their successful performance of this role.

However, the applicability of this type of argument to unionization in the public sector has been seriously questioned. In an important recent book, Harry H. Wellington and Ralph K. Winter, Jr., have argued:

Collective bargaining in public employment ... seems distinguishable from that in the private sector. ... It imposes on society more than a potential misallocation of resources through restrictions on economic output, the principal cost imposed by private sector unions. Collective bargaining by public employees and the political process cannot be separated ... the issue is how powerful unions will be in the typical municipal political process if a full transplant of collective bargaining is carried out.

The conclusion is that such a transplant would, in many cases, institutionalize the power of public employee unions in a way that would leave competing groups in the political process at a permanent and substantial disadvantage. 3

Besides the inconvenience to voters and the possibility that prolonged disruption of public sector service provision would endanger the public health and safety, Wellington and Winter envison another reason, economic in nature, which might give unions in the public sector an advantage greater than that which exists for their private sector counterparts. In their view, the demand for many public sector goods and services is relatively inelastic. Hence, because the demand for labor is a derived demand, the wage-employment trade off is reduced for workers in public employment and union power may be realized more easily and exploited more fully than in the private sector.