Rethinking Public-Service Unions
America's labor movement has become increasingly concentrated in the public sector. As a result, modern debates about formal labor relations often take for granted that many of the workers involved are government workers. For people holding public office in much of the country, building relationships with these public-sector unions has become a priority.
The public sector's importance to the labor movement is beyond dispute. As of 2019, 49% of America's 14.7 million union members worked for government units. And while about 34% of public-sector workers today belong to unions, less than 7% of those in the private sector do. The handful of unions that have gained strength in recent years are primarily either groups devoted almost entirely to unionizing public-sector workers, like the American Federation of State, County and Municipal Employees (AFSCME), or entities that organize in both public and private sectors, like the Service Employees International Union (SEIU).
When unions engage in politics, they lean heavily to the left. This, too, is beyond dispute. In recent election cycles, Democrats never received less than 85% of organized labor's campaign contributions. They also received nearly 100% of the contributions from public-sector unions not involved in public safety. This group of "public-service" unions, which will be the focus of this article, represents a major source of opposition to conservative candidates and many of the policies they support. This has led to a deeply antagonistic relationship between public-service unions and most right-of-center officeholders.
In some places, Republican officials have taken on public-service unions, winning major victories that advance their overall fiscal and operational goals as well as their policy agendas. Former governor Scott Walker's largely successful efforts against Wisconsin teachers' unions — and his ability to survive a recall election — show what can be accomplished when those who oppose unions prevail.
But such efforts are not always successful. Next door to Walker's Wisconsin, former Illinois governor Bruce Rauner — a Republican more politically and temperamentally moderate than Walker — took on his state's unions but found himself stymied at every turn. Rauner's Illinois may have served as the nexus for the Supreme Court's 2018 Janus v. AFSCME decision (which made union dues optional for government employees), but the governor himself made only modest progress in his own union-reform efforts, ultimately losing his re-election bid to a progressive Democrat. It's thus no accident that successful Republican governors of deep-blue states — like Maryland's Larry Hogan and Massachusetts's Charlie Baker — have worked to secure union endorsements.
The reality is that, in states and localities across the country, debates over the appropriateness of public-employee unionism are largely beside the point; eliminating public-service unions is probably not feasible as a practical matter. Most government workers that are part of unions want to keep their unions intact, and public-service unions themselves play such a meaningful role in so many institutions that left-of-center politicians almost certainly wouldn't allow them to decline. While Janus may have hurt unions' influence and their ability to engage in politics, it will not destroy public-service unions altogether. Indeed, some such unions in states like California actually gained members in the aftermath of the decision.
Of course, laws in California and other strong-union states make it difficult for workers to avoid paying dues, which has allowed membership rates in these states to remain steady or even increase in Janus's wake. But the federal government has always operated under Janus's open-shop model — meaning workers don't have to pay union dues even if they are covered by union contracts — and yet over a quarter of its workers still belong to unions. Thus even if the political power of public-service unions ultimately diminishes post-Janus, unions will inevitably remain strong in large swaths of the country.
Therefore, rather than trying to wage an existential battle that the public-service unions are likely to win, it would be best for public officials in these states and localities to figure out how to collaborate with public-service unions in ways that benefit union members, taxpayers, and those who rely on public services.
But how can officeholders — particularly those with right-of-center agendas lacking a natural political kinship with unions — accomplish this while navigating the difficult politics of labor relations?
They can do so by keeping in mind two interrelated points. First, they should recognize that building good working relationships with public-service unions while improving the delivery of public services can be accomplished by marketizing services, reforming or repealing counterproductive rules, and drawing on the wisdom of methods developed by unionized private-sector employers. These efforts may not achieve any grand ideological goals, but they can improve the delivery of core services while spending tax dollars more efficiently, which is what local government is all about.
Second, because working alongside public-service unions is politically risky — particularly for right-leaning political leaders not generally sympathetic to unions' objectives — any successful effort will require a combination of good labor-relations practices and smart politics. This approach should emphasize worker empowerment and benefits to taxpayers rather than the reforms themselves. So long as they keep this guidance in mind, right-leaning officeholders can develop strong, positive partnerships with the serious public servants who belong to unions without sacrificing any essential principles.
WORKING WITH UNIONS
The most well-known model for a new type of partnership between officeholders and public-service unions, at least on the political right, is the one that Mayor Stephen Goldsmith built in Indianapolis-Marion County, Indiana, where he served as mayor between 1992 and 2000. One of us, Stitt, served as senior deputy mayor and chief operating officer under Goldsmith for much of his term and played a major role in the administration's efforts to build relationships with the city's public-service unions. Because these efforts did tremendous good for both city workers and taxpayers, they are worth looking toward as models.
As mayor of Indianapolis, Goldsmith could have gutted the power of local public-service unions under municipal laws. And although he was portrayed in many accounts then and now as a proponent of privatizing government services — thereby eliminating the jobs belonging to unionized workers — neither Goldsmith nor any high-level official in his administration saw the shedding of government-provided services per se as an intrinsically desirable end.
Instead, the mayor realized that the overwhelming majority of services delivered by unionized workers at the time were inevitably going to be provided by or through the government. While wasteful and pointless government programs certainly exist, the majority of nearly all state and local budgets is spent on public schools and intrinsically governmental functions, including core infrastructure and sworn police and fire services. Simply asking the private sector to take over these functions — as it might for some activities the government currently engages in, like mail delivery or passenger-rail service — is thus not an option; public money will inevitably be spent on such activities. The question, then, is how to spend this money wisely.
The approach Goldsmith and his team took represented the marketization of services through what he then called the "Yellow Pages test" (often called the "Google test" today). Under this test, if a phone-book (or internet) search turns up multiple private firms offering a given service, public officials should investigate whether these firms can provide the service more efficiently and effectively than the government can. For Goldsmith, the mere existence of such firms did not guarantee that a given government contract was awarded to a private firm; instead, these firms offered officials a standard against which to measure public-service-union performance.
Through its marketization efforts, Goldsmith's team found that public employees tended to outperform their private competitors in certain tasks, while the private competitors excelled elsewhere. Private firms tended to demonstrate advantage over unions in completing larger projects where they could leverage technology, global best practices, and significant economies of scale. In one long-term wastewater-treatment project, for example, costs fell from $30 million to about $18 million a year when performed by a private entity. Public employees, on the other hand, were especially efficient at completing repetitive and standardized labor-intensive projects — like street maintenance and routine facilities management — where incumbent staff had substantial experience delivering the service.
The lesson here is intuitive but often overlooked: Employees who already provide public services — including unionized workers — can outperform their private competitors. After all, for all the natural inefficiencies inherent to public ownership, the government does have certain significant advantages over the private sector, including a generally lower cost of capital, lack of a tax burden, and freedom from the need to return profits to shareholders. Perhaps most importantly, unionized public-service employees often have a great deal of practical knowledge about how to do their jobs well, which gives them an edge over their less-experienced competitors.
Unfortunately, unionized public employees are frequently stymied by a range of bureaucratic and political rules as well as a management structure that's based as much on political juice as it is on competence. Goldsmith cribbed a phrase from management theorist W. Edwards Deming — "good people, bad systems" — to describe this phenomenon. When incumbent employees are allowed to unleash their creativity, however, they can prove themselves more than capable in their delivery.
In recognizing these circumstances, Goldsmith re-organized and streamlined the delivery of public services. Importantly, he ensured public-service unions a role in the process. Both before and during marketization, union leaders worked alongside administration officials to determine which rules were outdated, how to remove those rules, and how to make service delivery more efficient in general. This team effort empowered unionized workforces to do what they did best. Steven Quick, Sr., who headed AFSCME Local 725 in Indianapolis, put it best when he observed, "city workers are no longer asked to check their brains at the door when coming to work." Once Goldsmith's team and union leaders completed their efforts, unionized workforces actually won the majority of contracts put out for bid.
Making changes on terms agreeable to the unions required some concessions, many of which were significant. But without them, public-service unions would never have come to the negotiating table. One such concession was to require private competitors to offer comparable pay and benefits to the city's incumbent staff and to recognize and negotiate with their unions. The city also committed to a no-layoff policy and promised there would be no involuntary transfers for union staff, which meant that any cuts that occurred had to be made in political management ranks or via natural attrition. Through careful, position-by-position analysis and collaboration, the city and its labor partners were able to manage this process so that no union employees lost their jobs involuntarily, yet the non-public-safety workforce fell by about 40% over Goldsmith's eight-year term.
No-layoff policies cannot always be ensured, of course. But it will be almost impossible to come to an agreement with a public-service union without one. Fortunately, such policies are actually easier to manage than they might initially appear. The Bureau of Labor Statistics has found that average public-sector tenure is less than seven years for state employees and less than nine years for local employees — numbers that are made artificially high by long tenures in some intrinsically governmental jobs (like police officers) as well as the relatively high average age of all public employees. That the average age of the public-sector workforce continues to rise means opportunities for trimming jobs through natural attrition will only increase in the next few decades. In fact, roughly half of any government's workforce is likely to turn over during a typical four-year mayoral or gubernatorial term, which allows officeholders to reduce employee headcount without layoffs that public-service unions will inevitably fight with enormous enthusiasm.
LEARNING FROM THE PRIVATE SECTOR
Building good labor relations cannot end with simply changing work rules and putting contracts out for bid. In the 85 years that the National Labor Relations Act (NLRA) has set the terms of unionization in the United States, the private sector has developed plenty of practices worth emulating. The most important of these is probably gainsharing — the practice of incentivizing a higher level of performance through the structured involvement and participation of employees in the organization's overall success. Under a gainsharing system, as performance improves and cost-savings increase, employees share in the financial gain. In the public sector, this means that a portion of every taxpayer dollar saved could potentially go to the public employees who produced those savings.
Gainsharing dates back to the 1940s, when steel-union local president Joseph Scanlon — a professional boxer who also taught at the Massachusetts Institute of Technology — developed an arrangement that would come to be called the Scanlon Plan. Scanlon himself described it this way:
[W]hat we are actually trying to say is simply this: That the average worker knows his own job better than anyone else, and that there are a great many things that he could do if he has a complete understanding of the necessary. Given this opportunity of expressing his intelligence and ingenuity, he becomes a more useful and more valuable citizen in any given community or in any industrial operation.
While underused in the public sector, gainsharing can work there too. And public-service unions, considered properly, can be partners in setting up the system. The specifics can be outlined through the formal collective-bargaining process that is both known to members and relatively democratic, which makes the plan fairer and more transparent. As staff come to understand the costs of certain practices and recognize that meaningful gainsharing incentives are available, they often become eager to eliminate wasteful processes. This produces real savings. After gainsharing was implemented in Indianapolis's solid-waste division, cost per household fell 15%, customer complaints fell 75%, and tonnage picked up per employee rose 20%. Employee headcount also declined via attrition, which enabled further savings. In the end, participating employees received a gainsharing payment of $1,750 per person. Gainsharing in Indianapolis's unionized fleet-management and street-maintenance services generated similarly promising results.
Reaching this point is never easy, of course. It certainly wasn't in Indianapolis. Any successful gainsharing arrangement requires good communication and an atmosphere of trust, the latter of which doesn't often exist in the adversarial-by-design system of labor relations under the NLRA and its public-service counterparts. Gainsharing must also be developed and nurtured as part of an integrated strategy of communications, process improvements, and management. Additionally, such projects require a meaningful commitment from core labor and management teams.
In increasingly riven political times where many public-service unions are part of a broader progressive coalition, cooperating with a politician not seen as pro-union can be extremely difficult for union leaders. To make a partnership with union leaders work, officials intent on building positive labor relations must respect unions as business enterprises with their own interests. Officials should also keep in mind that while the overwhelming bulk of people running unions as a career are committed to maintaining their members' well-being, they also see unionism and the solidarity it represents as goods in and of themselves. In short, they want the union itself to be successful. And because unions measure their success largely based on the number of people they represent, leaders will often be reluctant to allow changes that reduce the number of union members, even if those changes come without layoffs and with higher benefits and wages for those who remain.
In Indianapolis, Goldsmith's team sought union buy-in by tacitly assuring AFSCME that its membership would not fall. Members who held jobs that were transferred to the private sector via competition were given the option to remain AFSCME members, and union workers had the opportunity to reclaim work from the private sector if they reduced costs and met the required quality standards. In one instance, the city and the union reduced the number of employees mowing athletic fields — a task where private companies were more cost effective than union workforces — and simultaneously expanded work maintaining streets, where the public sector was highly efficient.
Of course, such an elegant solution may not always be possible. A promise to allow union membership to remain stable cannot be written into a contract. Requiring private companies to allow employees to remain union members may reduce the willingness of those companies to bid on projects. Thus, a promise on behalf of the private firm to remain neutral or even to support potential unionization efforts can be key to crafting a deal with which everyone can live.
As an alternative, governments can implicitly concede to incremental organizing, such as refraining from standing in the way of unions trying to organize non-unionized groups of city workers. The difference between 15 and 16 bargaining units is likely insignificant to taxpayers or to anyone in government, but it can make a substantial difference for those in charge of public-service unions. Allowing incremental organizing activities like these can often be a helpful, and even necessary, step for reaching agreements that improve services and reduce overall costs.
Given that states have significant latitude to write their own labor-relations laws, state officeholders should try experimenting with public-service unions on measures that might be difficult or even downright impossible to adopt in the private sector. If a union is to lose membership because of some new management-efficiency proposal, for example, state officials could explore strategies to allow the union an opportunity to participate in a gainsharing plan as an organization — something that would be illegal in the private sector under the NLRA. The union could use the proceeds to offer enhanced services to existing members or for additional organizing efforts. Officials could pursue even more aggressive, more visionary approaches if state laws were to authorize such measures.
Leaders of strong-union states in particular should be open to making their states laboratories for entirely new labor structures that will empower workers, reduce costs, and improve services. Works councils — which allow workers to participate in management — already exist in many public-service workplaces and a fair number of private ones. But as far as we can discern, no state has developed a formal structure for them. The public sector would be a good place to experiment with such arrangements.
Equally attractive is the idea of allowing public-service unions to "unbundle" their services in cases where doing so would produce benefits for taxpayers and improve service delivery. In practice, this would mean that in firms and industries without full-scale collective-bargaining agreements, public-service unions might be encouraged to sell more services to workers — and even to the government itself — on an à-la-carte, competitive basis. Public-service unions already have some experience in this area. For example, the health plans of the National Association of Letter Carriers and the American Postal Workers Union sell their services to nearly everyone who works for the federal government (including members of other unions and non-union members) under the Federal Employees Health Benefits Program. One could envision states developing analogous programs for other types of services to similar effect.
By the same token, public-service unions — which already play a sizable role in employee training — could be encouraged to play an even larger one. A recent white paper from the Center for American Progress (CAP) outlines existing training programs and proposes ways to build new ones. While some of CAP's recommendations appear to support granting an outright preference to unions as training providers, some public-service unions do have deep, hands-on experience in providing government services that could be sold to others through training programs. Union-run training may not be the best option in all cases — the American Federation of Teachers may not have an edge over a university or private firm in providing supplementary training to educators, for example. But when it comes to training for some inherently governmental tasks, public-service unions may have a natural market advantage that they can and should be encouraged to sell as part of an effort to transform their roles in a post-Janus era.
Other business ventures involving public-service unions also deserve exploration. Unions might serve as benefits consultants, for example, and even develop stronger marketing partnerships with merchants that sell goods of interest to their members. While public-service unions, as private organizations, may be able to adopt a few of these measures on their own, policymakers looking into such proposals should assess them based not only on what they offer unions, but on the benefits they bring to all residents. Only practices that can produce benefits to the public at large should be allowed and encouraged.
For all the promise of a new and enhanced role for public-service unions in the wake of Janus, the politics of putting it into practice are tricky. In Goldsmith's case, an effective local policy was not helpful for him politically at the statewide level.
From a local perspective, the success of Goldsmith's labor policy is difficult to contest. Under his leadership, Indianapolis's services improved significantly, its taxes were cut, and the city started gaining in population. In 1995, Goldsmith was re-elected mayor. National attention and plaudits for the mayor began pouring in. Goldsmith was invited to write an article for a Heritage Foundation magazine with the cover line "Why I Love Unions." The Ford Foundation and the Kennedy School (where Goldsmith now teaches) gave the city of Indianapolis an award for civic innovation. Leaders ranging from New York's Michael Bloomberg (for whom Goldsmith later served as a top deputy) to Baltimore's Martin O'Malley cited Goldsmith's labor policy as influencing their own work with public-service unions. Goldsmith's political and electoral successes boosted his national profile and secured his place as the Republican nominee for Indiana's 1996 gubernatorial election.
With the encouragement of AFSCME, other cities across the country — including Memphis and Baltimore — sought to build better, more productive relationships with their public-service unions on similar terms. Goldsmith himself and one of the authors helped replicate the Indianapolis model in locales across the country. However, most of these replications involved only one or two services; 20 years later, few large cities with unionized workforces have embraced both marketization and gainsharing on a city-wide basis (although San Diego has tried). Unfortunately, many municipal officials elected with heavy union support are disinclined to rock the boat, even in cases where public-service unions can be assured a place at the table, a gainsharing framework, and better perquisites for their members.
The success of Goldsmith's Indianapolis reforms did not help further his own political career, either. Though he was re-elected mayor and even had the tacit support of some leaders of union locals — who remained officially neutral while speaking highly of him during the campaign — Goldsmith's own elective political career came to an abrupt halt shortly after the end of his second term as mayor. He lost the 1996 race for governor of Indiana without even carrying Indianapolis-Marion County. Although he became a close advisor to President George W. Bush and held high-level positions in the governments of New York City and Washington, D.C., Goldsmith has never run for elected office since then.
The city of Indianapolis has also trended Democratic since Goldsmith left office. As of this writing, nearly all offices in Unigov — the integrated city-county government of Indianapolis-Marion County — are held by Democrats. Only one Republican has served as mayor of Indianapolis since Goldsmith. The county, which was one of the few large counties to consistently vote for Republicans in the post-civil-rights era, has also veered Democratic, awarding Barack Obama over 60% of its votes during the 2008 election.
It's too facile to pin this state of affairs on Goldsmith's labor reforms. Under Unigov, areas that would constitute inner-ring suburbs in other metropolitan regions are consolidated with Indianapolis's historic core, and similar suburbs have trended Democratic all over the country. Furthermore, Goldsmith was part of a long string of Republican mayors, meaning any reformer of the same party would have shaken up the status quo. Nonetheless, Goldsmith's reforms were certainly not a net positive for his own quest for higher office or for members of his party in Indiana.
Quite simply, good policy at the city level may have made for bad, or at least neutral, politics at the statewide level. Republican governors who served in Indiana following Goldsmith's tenure as mayor were all familiar with the model he built, but they did not replicate it. One reason for their reluctance to follow Goldsmith's example may have been that his reforms eliminated or largely disempowered the managers and bureau heads who held their positions at least partly for political reasons. The loss of so many patronage positions — many of them held by core members of the Republican Party — almost certainly damaged Goldsmith politically. Indeed, news accounts at the time often remarked on how little enthusiasm the state party's brass had for Goldsmith's gubernatorial campaign. The thinning of management ranks wasn't the only factor, of course; Goldsmith's defeat of the then-state-party chair in the Republican primary was almost certainly a more significant element in the lack of state-party enthusiasm for his candidacy than his labor reforms. But the reforms were, at minimum, not a political plus on the statewide level.
So how can political leaders — particularly those who lack natural affinities with organized labor — manage to work with public-service unions to reform public services without giving up their political careers or handing themselves over to a left-of-center agenda? There's no magic bullet, of course, but several precepts can help guide the way.
First, those who want to work with public-service unions simply need to take advice from Labor Relations 101: Build trust, communicate openly and honestly, and readily admit mistakes. This is easier said than done, of course, but being culturally conscious and treating unions with respect is simply a matter of good labor-relations practices. Negotiating on unions' own turf — either at union halls or in other locations in the neighborhoods where union members live — is also helpful. Other common best practices for labor negotiations include giving public-service-union leaders real power — since they need some sort of leverage to make deals — and listening to employees who work within the department that is the topic of a given negotiation. If union leaders are halfway decent at their jobs, they will have taken this latter step — they need majority support from members to approve the contract, after all. Those negotiating on behalf of taxpayers should do the same. Finally, officials should know that the best issues to negotiate are almost always going to be work rules and roles, not wages and benefits. Unions, with good reason, hate to do givebacks, even in financially tough situations, and their members will understandably be averse to losses.
Again, these methods are by no means guaranteed to succeed in every case, but they have shown promise where they've been tried. At the very least, they can mitigate the possibility of unions coming out in force against Republican candidates who work with organized labor while advancing a right-of-center agenda that public-service unions are unlikely to endorse in full.
In communicating labor-reform efforts to the public, the benefits to be gleaned from improved labor relations should not be sold in terms of management reforms or efficiency, but in terms of concrete benefits to voters. As Goldsmith points out, few if any people vote for management or labor-relations innovations in the abstract. Instead, they tend to vote for candidates who emphasize how new partnerships with public-service unions can reduce taxes or produce improved public services. In Goldsmith's earlier, more successful political ventures, he and his colleagues focused on "the way a better partnership with labor created a new sidewalk, a new library or helped improve the police." Speaking on his later efforts, Goldsmith regretted the lack of effort "on our part [in communicating] how [a] new form of management produces value for residents." This, by his own account, was a grave political mistake.
Even if candidates on the center right cannot obtain the support of public-service unions as organizations — and they usually won't — those running in places where there is little choice but to work with unions would be foolish not to make a play for members' votes. The stereotypical Reagan Democrat, after all, was a union member. A fair number of candidates on the federal level — senators Marco Rubio and Rick Santorum, to name two of particular prominence — have made explicit bids for union members' support, and in many cases received it despite having minimal formal support from organized labor. If candidates running for re-election have presided over an administration that has made agreements that are beneficial for public-service union workers, they shouldn't be afraid to talk about those agreements in certain settings.
Of course, to make all of this work, public-service unions have to be true to their missions of being organizations created by and for the benefit of their members. If union leaders are focused exclusively on politics, they will be unlikely to work with people who do not share their ideology, even if doing so would advance their members' interests. Those who choose this path, of course, are likely failing at their fundamental mission. But we believe, perhaps idealistically, that most people running public-service unions wish to do their jobs well. Those jobs inherently involve collective bargaining and representation, which, by their very nature, are give-and-take processes that require making deals with people who likely will not acquiesce to all public-service union demands.
At the same time, political leaders shouldn't be overly optimistic about what is possible through better labor relations. It's unlikely, for instance, that cities with massive pension or bond debts can address them simply by building better partnerships with unions. It's possible to save money and improve services while resolving a recessionary budget crunch through such partnerships, but improved relationships with public-service unions are not a panacea for deeply entrenched structural problems.
Officials should also keep in mind that some unions may be heavily resistant to change. For example, while we can point to numerous examples of successful negotiations along the model outlined here with public-service unions, we struggle to think of any transformative agreements that officials have reached with teachers' unions. Goldsmith certainly did not reach any in Indianapolis. The complexities of educational financing, combined with taxpayers' willingness to raise spending for schools, make the political dynamics of implementing such plans very difficult. Moreover, education reform is often linked to broader and more complex issues that are tough to disentangle. The dynamics of educational outcomes mean that even a successful agreement with a teachers' union may not produce near-term gains in test scores, graduation rates, college readiness, narrowing of achievement gaps between ethnic groups, or other metrics commonly used to assess schools. And if these gains do manifest, they may not necessarily produce savings that can be shared. Although a few gainsharing approaches have been floated for teachers' unions — former D.C. public-schools chancellor Michelle Rhee proposed one, as did Bill Gates — it's difficult to think of many robust versions that have produced meaningful education outcomes in any large school district.
THE LONG ROAD AHEAD
In much of the United States, public-service unions are a fact of life. In these places, trying to attack unions directly is likely to be politically unsuccessful and accomplish little in the long run.
Yet irrespective of labor-union politics, many localities have no choice but to search for savings in the near future. The combination of debts related to pensions and other post-employment benefits, combined with deferred maintenance on infrastructure, will have severe consequences in economic down-times — particularly in places that have lost population. This is already evident thanks to the Covid-19 pandemic and its resulting economic pressures. Improving services through better labor relations is one way to build a leaner government without cutting core government functions.
When the need exists, public-service unions can and should be implored to collaborate with elected officials for the good of both taxpayers and their own members. Successful partnerships with unions are possible and, provided they are willing to come to the table, public-service unions are fully capable of working with political officials who do not share their ideology in full to provide high-quality public services.
For elected officials who do not share the politics of public-service unions on all issues, implementing new labor policies will not be an easy road. What's more, strong labor relations — even model labor relations — will not always translate into success on the electoral front. But good union relations can be good politics, particularly if candidates are careful to emphasize the concrete voter benefits rather than the reforms themselves. With the right attitudes, public officials and public-service unions can become partners in the efficient, effective delivery of public services.