In February, Utah Gov. Spencer Cox signed legislation outlawing collective bargaining by the state’s public employees, affecting teachers and other state and local government employees in Utah who are or could be members of unions. Thanks to the new law, unions can no longer bargain on behalf of these Utah workers over wages, working conditions or any other employment-related practices. Opponents have begun organizing to seek repeal of this legislation by referendum; time will tell if they ultimately succeed.
Utah’s move on collective bargaining certainly isn’t the first in the country. Since the Great Recession of 2007-09, several other states have taken steps to reduce the collective bargaining rights of state and local government employees. They did so in response to state fiscal crises and a growing perception that public employees are overpaid, especially in terms of pensions and retiree healthcare benefits.
Critics blame politically powerful public employee unions for getting states to promise to pay their members generous retirement benefits that state governments have been unwilling to adequately fund. More recently, the Trump administration has sought to curtail the collective bargaining rights of federal government employee unions by signing an executive order taking away collective bargaining rights from two-thirds of the federal workforce.
Anti-union sentiment likely peaked in the years following the Great Recession. Most of the efforts to limit collective bargaining rights of public sector unions took place in the early 2010s. In 2018’s Janus vs. AFSCME, the Supreme Court further weakened public sector unions by preventing them from requiring government workers to pay dues as a condition of employment. Since then, several states have passed laws to enhance the collective bargaining rights of government workers. But the Utah legislation goes in the opposite direction and could be a precursor of further efforts to reduce the power of public sector unions in the future.
A Collective Bargaining Primer
Collective bargaining is a process by which organized groups of workers choose a representative to negotiate contracts with their employer. According to the National Labor Relations Board, “Each party must bargain in good faith about wages, hours and other terms and conditions of employment until they agree on a labor contract or reach a standoff or ‘impasse’.” In the case of an impasse, the employer can impose terms and conditions as long as they were offered to the union prior to the impasse. Each state has its own laws, some supplemented by local ordinances, that govern collective bargaining rights of state and local government employees. Not all unions have the right to bargain collectively. Unions without collective bargaining rights can bargain informally or use the political process to elect officials who will better pursue the interests of their members.
Until the 1950s, court decisions upheld restrictions on union collective bargaining among public sector workers based on the view that the government possesses sovereign immunity and that allowing it would involve an unconstitutional delegation of power to its employees. But as early as the 1930s, before they had collective bargaining rights, some organizations of public employees were able to secure better wages and working conditions through informal negotiations and verbal agreements. Their early victories formed the foundation for subsequent political success in gaining collective bargaining rights in many states.
The first legislation establishing the right of public sector workers to bargain collectively was enacted in Wisconsin in 1959. Many other states followed suit in the 1960s and ’70s. This legislation came about in response to calls from elected officials, citizens and scholars to provide public sector workers with rights comparable to those private sector workers had enjoyed since the 1930s. In many states, politicians from both parties supported this extension of collective bargaining rights to government employees.
Those who support public sector unions use some of the same arguments as supporters of private sector unions, contending that public sector workers should have the same rights as their private sector counterparts. But they also argue that:
Unions help achieve “labor peace,” reducing strikes, lockouts, “sick-outs” and other job actions, and efforts to sabotage employer equipment;
Public sector unions help achieve political balance in American democracy by offsetting the declining private sector labor movement; and
Government unions provide “a bulwark against the tendency of politicians to underinvest in public goods.”
Those who oppose extending collective bargaining rights to public sector workers do so based on three arguments:
Demand for public sector workers is unresponsive to price because unlike private firms, “public employers could not shut down or move operations.” This gives public sector unions more power than private sector unions to raise wages.
It would give public sector unions an unfair bargaining advantage because their political support could be decisive in electing the very officials who are on the other side of the bargaining table.
The threat of a strike is considered the primary force for motivating agreements between private sector employers and their unionized employees. But strikes by public employees would “inappropriately challenge democratic government” and disrupt the flow of essential services.
Today, one can find many examples of public sector workers who are lavishly compensated because of collective bargaining agreements. Besides the high salaries they earn while working, many ordinary state and local government employees and teachers have amassed considerable wealth at taxpayer expense, if the present values of their pensions are counted as part of their net worth. One example among many is a police officer in Delray Beach, Florida, who retired in 2005 at the age of 42 and began collecting a $65,000-per-year pension, which is guaranteed for life and indexed to inflation.
Public vs. Private
Even without collective bargaining rights, workers in public sector unions have considerable power to influence the wages and working conditions determined by the government agencies that employ them. Their unions can exercise power through politics, especially by seeking to influence the outcome of elections. In negotiations with workers, government officials do not have strong incentives to keep compensation down. Civil service laws provide important protections to public sector workers, protecting them from arbitrary decisions by their employers and counteracting spoils systems where employment decisions are based on political connections.
This contrasts with the private sector, where even large corporations, which are motivated to increase the profits of their shareholders, have incentives to drive hard bargains with workers. The power of private sector unions is limited by market forces. When private sector unions bargain for higher wages or costly work rules, the firms that employ unionized workers will likely raise prices, sell less and experience lower profits. As a result, unionized firms often lose market share, and some go out of business.
Companies may also move their operations to a location where workers are less likely to unionize. This has led to a long-term decline in the share of workers who are unionized. In the 1940s, almost 35% of U.S. workers were unionized, but the share has been declining steadily since the late 1950s. By 2024, just 5.9% of private sector workers were union members.
Government agencies do not face the same kinds of competition as companies do in the private sector. If public sector unions bargain for higher wages, governments can raise taxes or increase the share of revenue going to agencies whose workers are unionized. Because they are not subject to market forces, government agencies employing workers that are unionized may not need to reduce employment to offset the higher wages they pay in response to union demands. It’s not surprising, then, that the share of public sector workers who are unionized was 32.2% in 2024, and that share has not changed much since the 1970s.
Looking at the Impact of Unions
During the 1960s and ’70s, the arguments for and against extending collective bargaining rights to public sector workers were largely theoretical. Since then, some empirical work has been done on the effects of public sector unions, but important issues remain unsettled. Evidence that unions raise wages for public sector workers is persuasive, but empirical questions remain about whether public sector workers are under- or overpaid relative to private sector workers.
Collective bargaining by public sector unions may have different effects depending on the kind of jobs the unionized workers do. Consider the impact of teacher unions. When teachers have collective bargaining rights, their unions bargain for rules that increase wages, reduce class size, make it more difficult to weed out mediocre teachers, and reduce the power of administrators to make decisions about the work assignments of each teacher. Some of these rules, such as smaller class size, might also benefit students. We might expect teachers to pursue their self-interest at the bargaining table, but they could also apply their expertise to seek policies that will make students better off.
Stanford political science professor Terry Moe tested the impact of restrictive union work rules (such as those governing how teachers are evaluated and guaranteeing teacher preparation time) on student performance in California school districts, creating an index of the restrictiveness of work rules derived from a coding of collective bargaining contracts and estimating the relationship between it and an index of school performance derived from student test scores. He found that more restrictive work rules are associated with worse student performance in larger school districts but did not observe any effect in smaller districts.
Several research studies have empirically tested the impact of public sector unions on wages and employment. Evidence consistently shows a positive impact of public sector unions on employee compensation. More recent data shows that collective bargaining by unionized firefighters and police has a larger impact on fringe benefits than on wages. Empirical evidence is inconclusive as to whether unions raise, reduce or have no impact on employment in the public sector. But regardless of the effect on employment, the effect on wages is large enough that total government spending on wages is higher if employees bargain collectively.
Some proponents of public sector unions argue that the compensation of public sector workers is lower than that of comparable workers in the private sector, and therefore, they contend that unions are needed to level the playing field. But comparing the compensation of private sector workers with their public sector counterparts is complicated by differences in the characteristics of private sector versus public sector jobs, such as job security, amount of paid time off and other job perks.
One recent study by researchers at the Economic Policy Institute finds that on average, compensation for public sector workers is more than 10% lower than for comparable private sector workers. But this and other EPI studies only count what the government contributes each year toward the cost of public employee pensions. The total annual cost of all state government pension accruals is more than twice as large as what governments have been contributing. Adding in the cost of accrued state government pensions that are not fully funded and promised retiree health benefits raises the value of public sector workers’ compensation so that it exceeds private sector workers’ compensation in many states.
Nevertheless, some public sector employers, such as police and fire departments, may have monopsony power since there is little local competition for the services of their employees. This means they could hold down wages by hiring fewer workers. This is less likely to be the case in large metropolitan areas with many separate jurisdictions that compete for the same kinds of workers. Where public sector employers have monopsony power, union bargaining could lead to increased staffing, which could increase the quantity and quality of services provided.
The Burden of Collective Bargaining
On balance, evidence supports the assertion that in public sector labor markets, unions raise costs and reduce accountability. By promoting employee rights, collective bargaining agreements make it more difficult to fire or reassign employees based on subjective judgment. But, as Philip K. Howard recently put it in Persuasion, “the most important qualities of employees”—like a positive attitude and prudence—“can’t be captured by objective criteria.” By diminishing the power of subjective judgment, collective bargaining agreements make it easier for bad workers to continue on with impunity.
Although collective bargaining agreements can contribute to better treatment of public sector workers, they can also contribute to serious problems like generous but inadequately funded pensions. In response to pressure from unions but also pressure to keep taxes reasonable, many states and cities have made promises to unionized workers that they cannot afford to keep. They evade spending limits and budget constraints by resorting to accounting gimmicks. The result is a growing share of state and local government budgets going to pay for retiree benefits, while the quality of the services they provide deteriorates.
As federal and state government budgets become increasingly unsustainable, changes are needed to promote greater fiscal responsibility. Eliminating or lessening the collective bargaining rights of public sector unions could play an important role.
Following the 2010 election, several states took steps to limit the collecting bargaining rights of public sector unions. Wisconsin led the way by enacting sweeping reforms to weaken public sector bargaining. Ohio followed suit, but the changes enacted by the state legislature were subsequently overturned by a majority of voters in a union-backed referendum. Several other states with Republican governors or legislative majorities also enacted legislation to limit collective bargaining rights. State budget shortfalls and the role of public sector unions provoked actions by some Democratic elected officials as well. Democratic governors in New York and California fought with unions over wages and concessions. In 2011, Gov. Deval Patrick of Massachusetts, a Democrat, signed legislation to limit the rights of public employees to bargain over healthcare.
As fewer state governments experience budgetary shortfalls, political pressure to limit the power of public sector unions has largely dissipated. In recent years, several states, including Massachusetts, California, New York, New Jersey, Illinois, Washington and Oregon have passed laws to enhance public sector workers’ collective bargaining rights. There is no indication that other states are considering following Utah’s example. But when states experience serious budget shortfalls in the future, as they did during the Great Recession, some states may recognize that reducing public sector workers’ collective bargaining rights could make it easier to limit state spending.
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