How this Supreme Court case could impact workers' wages

A case that went before the Supreme Court on Monday could mean trouble for the labor movement and im...

Posted: Feb. 26, 2018 9:33 PM
Updated: Feb. 26, 2018 9:33 PM

A case that went before the Supreme Court on Monday could mean trouble for the labor movement and impact the wages and benefits of millions of workers.

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At issue: whether public sector workers should be forced to pay fees to the unions that represent them.

Cutting off those fees could further weaken unions, which have slowly eroded in recent years as state after state passes laws that make it difficult for them to retain members.

Economists have linked the decline of unions to wage stagnation and rising inequality, as workers lose the bargaining power to demand better pay. But conservative groups, such as the Heritage Foundation, have long made the case that unions reduce the number of jobs available to everyone else and that public sector union workers, in particular, are costly to taxpayers.

One place where unions remain relatively strong is at the government level, where they represent 7.9 million workers - ranging from teachers to police officers. That's 37.9% of the workers in the public sector, compared with the 7.3% of workers unions represent in private industry.

That could change if the justices rule in favor of Mark Janus, a child support specialist for the state of Illinois who filed a lawsuit saying he shouldn't be required to send part of his paycheck to the union that bargains with his employer.

Related: Supreme Court to hear case on unions

Currently, 23 states allow unions to charge "agency fees" to all workers covered by their contracts. (Only members pay full dues, which can be used for political action as well.) Janus argues that because the contract with the state government is inherently political, mandatory dues violate his right to free speech.

Should the justices rule in Janus' favor, workers will only pay dues on a voluntary basis.

After similar right-to-work laws were introduced in several states between 2000 and 2016, researchers at the Georgia Institute of Technology found that the wages of unionized workers didn't grow as quickly as they otherwise would have. In Michigan, Oklahoma, Indiana, Michigan and West Virginia, the researchers found that wage growth was 0.6% lower for workers covered by private and public sector collective bargaining agreements in the first year after each new contract. However, the employers hired more workers and invested more as a result, the researchers found.

Overall, median weekly earnings for unionized public sector workers are 19.5% higher than non-unionized public sector workers, according to the Bureau of Labor Statistics. That may stem from differences in factors like age and gender across unionized and non-unionized workers, but a 2004 study by Dartmouth economist David Blanchflower found that the wage premium holds up when correcting for those and other factors.

Related: Gorsuch silent as court sharply divided on union fees

In addition, public sector workers' total compensation is more weighted toward retirement and health care benefits. For 2011, the Bureau of Labor Statistics found that unionized state and local government employees cost 35.7% more per hour worked than non-union employees, when all benefits were included.

Conservative groups argue that the cost of pensions for unionized workers has hamstrung state budgets, resulting in higher borrowing costs, reduced spending in critical areas and tax increases.

"In the public sector, it is taxpayers, not business owners and consumers, who foot the bill - and the bill is often steep," wrote 20 Republican-governed states in an amicus brief supporting Janus.

However, employing right-to-work laws could have a costly impact on women and people of color. A new working paper by Rutgers University professor William Rodgers III found that right-to-work laws hit the earnings of black and Latino workers the hardest because they are disproportionately represented in unions. Black women, in particular, make up 17.7% of public sector employment, and thus would suffer most.

That's why the unions have gained support from a broad swath of civil rights groups.

"We very much see our mission for all women to have access for all types of support for their reproductive lives tied into things like economic security, like fair pay, like breastfeeding rooms in the workplace," says Ilyse Hogue, president of NARAL Pro-Choice America, a reproductive rights advocacy group. NARAL was one of 87 civil rights groups to file an amicus brief in support of the American Federation of State County and Municipal Employees' Chicago local, the respondent in the Janus case.

A Supreme Court decision to effectively extend right-to-work laws nationwide for public sector employers could impact private sector wages as well. There are studies that back up the idea, but it's hard to predict how big the effect will be.

Related: Here's what happened to teachers after Wisconsin gutted its unions

For example, a 2011 study by the Economic Policy Institute, which is partially funded by unions, found that right-to-work laws depress overall wages by 3.2% on average, and reduce employer-sponsored healthcare coverage by 2.6%. A 2017 study by University of Illinois professor Robert Bruno found that the passage of right-to-work laws in Indiana, Michigan and Wisconsin lowered real hourly wages by 2.6% on average.

The AFSCME has also been making the case that strong government unions help everybody else -- not just through wages, but by advocating on a political level for paid leave laws and better public services.

"We're lifting everyone's boats when we're negotiating collectively," says AFSCME president Lee Saunders.

Ultimately, if Janus doesn't go the unions' way, the impact will depend on how successfully public sector unions hold on to members.

In advance of a similar Supreme Court case two years ago, the unions embarked on a campaign to make the case to members about why they should pay dues voluntarily.

"Many times we would lead with the political discussion when knocking on doors," Saunders says. "And now we don't do that, because we want to talk first about what's on their minds."

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