The Real Scoop on Public Service Unions – Part II
By Tibor Machan - June 21, 2012

In many states of the country, including California, there is a crisis brewing in the public service employment region. No longer are public service employees expected to be motivated by service, as distinct from their private sector colleagues who are pretty much looking for the best deal they can strike with potential employers. In public service work one is supposedly doing part of one's labor from a sense of devotion to the public good, not from the private motive! Or so you may have thought.

Consider, however, why labor unions exist in a free society: to facilitate employees' efforts to improve their bargaining power in negotiating with employers. This, in turn, presupposes a free-market system. Employees are free to organize into unions so as to bargain and get a good deal and employers are free to hire different workers whose offers they prefer to those of the organized groups. But most importantly, prospective customers are free to find some other firm from which to purchase goods or services, ones not seriously encumbered by crippling labor disputes.

Now, public workers are different because they work for public or government agencies that are usually monopolies – only one first class mail delivery outfit, the US Postal System, only one source of "free" education for which property owners are forced to pay, etc. You get the point.

So when public workers threaten to strike, there is usually nowhere for the customers to go to purchase the services they want other than the government agency that employs these public workers. When public workers organize into a union and threaten to go on strike, their employers are the only game in town. There is nowhere else the customers can go to obtain these services, no competition with public agencies and, therefore, with public services workers.

Now this is patently wrong. If customers aren't free to shop elsewhere, if they are hostage to the government agencies providing the public service, those who work for those agencies ought not to be able to threaten and walk of their jobs. That's especially so with the likes of members of teacher unions whose income depends upon confiscated resources, obtained via taxation. In free markets if the employees want to use their sizable numbers to improve their bargaining power, they aren't the only ones with such clout. Customers can also leave the employee and shop elsewhere for their wares without breaking the law. But if taxpayers want to change the employers with whom they want to deal, those in public schools or private ones, they aren't free and will be breaking the law if they stop paying taxes.

All the wrangling about public service unions and how they are able to secure for their members enormous retirement benefits tends not to take these points into consideration. These unions are very different from labor unions in free-market systems where such workers must compete with others and offer terms to employers that are not impossible to meet and which competing workers are free to contest. They aren't exorbitant as are the pay demands of a great many public service unions, especially in the state of California. And while economists use the term "demand" to characterize what customers want from providers, actually no demands are in play at all – they are just proposals from which the parties can walk away until the deals have been struck. But in the case of public service employees there really are demands being made: "You will pay us this, or we walk off the job and no other options to obtain our kind of work are available to you!"

America is supposed to be a free country as are, in fact, all others supposed to be, and here some semblance of such a country had been attempted. But public service unions, as many other "pseudo-market" agents – companies receiving subsidies and protection from foreign competition – are subverting this attempt. It is high time to put an end to it all.

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