U.S. taxpayers and workers won a big victory recently, with the Supreme Court of the United States ruling 5-4 in Janus vs. American Federation of State, County and Municipal Employees (AFSCME) that government employees not part of a union could not be forced to pay union dues.
Previously, government employees in 22 states were forced to pay union dues to cover the cost of collective bargaining, even if they weren’t members of the union. One such employee, Mark Janus, at the Illinois Department of Healthcare and Family Services contended that the union dues he was obligated to pay the AFSCME violated his rights.
When Janus was hired for his job, he wasn’t told that a union was involved, he said, until he noticed the deductions coming from his paycheque to pay the union. These dues forced him as a condition of employment to pay for political advocacy undertaken by the union that he didn’t support.
The court’s ruling means that Janus, along with millions of other government employees, no longer have to pay into unions without consenting to dues. This makes unions more accountable to workers – if they don’t think the union is representing them well or if the union takes political positions contrary to what workers want, the workers can withhold funds.
By striking a blow against powerful government unions, the court’s decision – in addition to benefiting workers who don’t want to pay into public-sector unions – is a victory for taxpayers and the private economy. That’s because the presence of powerful unions tends to make government workers more expensive and less productive.
Emily Raimes, vice-president and senior credit officer at Moody’s Investors Service, said the court’s decision “may lower public union revenues, membership and bargaining power in the 22 states that can no longer allow mandatory fees.”
Indeed, the Empire Center think-tank notes that New York’s public-sector unions stand to lose $110 million in fees collected from 200,000 non-unionized workers, and will lose even more funds if additional workers choose to leave the union.
According to Raimes, lowering the revenues and membership of public-sector unions “could change how state and local governments set employee wages and pensions, resulting in a positive long-term impact on government finances.”
Adam Schuster of the Illinois Policy Institute agreed, pointing to data showing that median incomes in the private sector were relatively flat compared with the rapid growth of incomes of AFSCME workers employed by the state of Illinois – an “unsustainable trend.”
But while the U.S. is moving in the right direction by curtailing the strength of powerful public-sector unions, in Canada (where more than 70% of public-sector workers are unionized, roughly double the rate in the U.S.), federal and provincial government finances continue to be stretched by the high cost of public-sector workers.
One study by the Canadian Federation of Independent Business estimated that, on average, federal government employees receive 33% higher compensation (salaries and benefits) than comparable private-sector workers, with taxpayers paying a premium of over 20% for provincial and municipal workers.
Similarly, a Fraser Institute study estimated that Canada’s public-sector workers enjoy a wage premium of 10.6% over comparable private-sector workers. Consider that more than 80% of public-sector workers have defined-benefit pension plans (compared with only about 11% in the private sector) and the damage to taxpayers is even higher.
If the federal and provincial governments in Canada want to improve public finances and save taxpayers money, they should learn from the United States and start cracking down on powerful public-sector unions. •
Matthew Lau is a research associate with the Frontier Centre for Public Policy.
