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News from EPI Public-Sector Employees in States with Full Collective-Bargaining Rights Earn More than Their Counterparts in Right-to-Work States

Only public employees in states with full collective bargaining make as much as their private-sector peers, according to a new report from EPI. Their counterparts in “right-to-work” states and states that prohibit collective bargaining earn lower wages and compensation than their private-sector peers.

In Eliminating Fair Share Fees and Making Public Employment “Right-to-Work” Would Increase the Pay Penalty for Working in State and Local Government, Jeffrey H. Keefe, a professor emeritus  in the School of Management and Labor Relations at Rutgers University, examines the effects of collective bargaining and union security on public employees’ wages and compensation. This examination comes as the Supreme Court prepares to consider Friedrichs v. California Teachers Association, which concerns whether public-sector employees who receive the benefits of a collective-bargaining agreement (wages, benefits, protection against unjust firings, etc.) should be required to pay their “fair share” of the cost of negotiating and protecting those benefits, regardless of whether they belong to the union.

“Even though their education level is higher, state and local government employees earn less than similar private-sector workers,” said Keefe. “When states provide full collective-bargaining rights and permit the enforcement of provisions that allow unions to collect dues from all employees they represent, regardless of membership, unions can lessen and even eliminate this gap. This makes it possible for state and local governments to attract workers that might otherwise go to the private sector.”

If the Supreme Court overturns the requirement, it would essentially make all states right-to-work (no-fair-share) states in the public sector, thereby shrinking union membership and lowering wages for local and state government employees. Between 2000 and 2014, 20.3 percent of public-employee bargaining units in right-to-work states were free-riders—employees who the public-sector unions were certified to represent but who had not joined the union or paid dues. In non-right-to-work states, meanwhile, only 6.8 percent of bargaining units were nonunion members—and they made fair contributions to their representation. While public-sector employees in right-to-work states suffer a 10 percent public-sector pay penalty, their counterparts in non-right-to-work states suffer only a 1 percent penalty.