The U.S. Supreme Court has observed that collective bargaining with government is not a fundamental right under the U.S. Constitution, but rather a matter subject to state law. In the 1979 case Smith v. Arkansas State Highway Employees, Local 1315, the U.S. Supreme Court discussed workers’ First Amendment right to join a union:

The First Amendment protects the right of an individual to speak freely, to advocate ideas, to associate with others, and to petition his government for redress of grievances. And it protects the right of associations to engage in advocacy on behalf of their members.[5]

In that same decision, however, the court clarified that the states are not obligated to engage in collective bargaining with public-sector unions — in other words, that public-sector unions have no First Amendment right to engage in collective bargaining:

The First Amendment right to associate and to advocate provides no guarantee that a speech will persuade or that advocacy will be effective. The public employee surely can associate and speak freely and petition openly, and he is protected by the First Amendment from retaliation for doing so. But the First Amendment does not impose any affirmative obligation on the government to listen, to respond or, in this context, to recognize the association and bargain with it.[6]

Thus, the decision whether to allow public-sector bargaining belongs to each state, and states can choose to permit no public-sector bargaining at all. A 2002 Government Accountability Office report indicates that at that time, 12 states did not permit public-sector bargaining; 12 allowed some public-sector bargaining; and 26, including Michigan, permitted most public-sector employees to engage in collective bargaining.[7]

As the U.S. Supreme Court has observed, there are reasons that state governments might wish to limit the power of public-sector unions. In the 1977 case Abood v. Detroit Board of Education, the U.S. Supreme Court discussed “the important and often-noted differences in the nature of collective bargaining in the public and private sectors.”[8] The court wrote:

A public employer, unlike his private counterpart, is not guided by the profit motive and constrained by the normal operation of the market. Municipal services are typically not priced, and where they are[,] they tend to be regarded as in some sense “essential” and therefore are often price-inelastic. Although a public employer, like a private one, will wish to keep costs down, he lacks an important discipline against agreeing to increases in labor costs that in a market system would require price increases. A public-sector union is correspondingly less concerned that high prices due to costly wage demands will decrease output and hence employment.[9]

In addition to escaping market discipline, public-sector unions face a government that is typically divided. The court observed:

The government officials making decisions as the public “employer” are less likely to act as a cohesive unit than are managers in private industry, in part because different levels of public authority [—] department managers, budgetary officials, and legislative bodies [—] are involved, and in part because each official may respond to a distinctive political constituency. And the ease of negotiating a final agreement with the union may be severely limited by statutory restrictions, by the need for the approval of a higher executive authority or a legislative body, or by the commitment of budgetary decisions of critical importance to others.[10]

And ultimately, the court noted, there is a third critical difference between public- and private-sector bargaining:

[D]ecisionmaking by a public employer is above all a political process. The officials who represent the public employer are ultimately responsible to the electorate, which for this purpose can be viewed as comprising three overlapping classes of voters [—] taxpayers, users of particular government services, and government employees. Through exercise of their political influence as part of the electorate, the employees have the opportunity to affect the decisions of government representatives who sit on the other side of the bargaining table.[11]

These disparities between bargaining in the private and public sectors led the court to conclude, “It is surely arguable, however, that permitting public employees to unionize and a union to bargain as their exclusive representative gives the employees more influence in the decisionmaking process than is possessed by employees similarly organized in the private sector.”[12] In other words, the court characterized public-sector collective bargaining as a legal privilege that gives government-employee unions systemic leverage that private-sector unions do not have.


* Most of this section has already been published by the Mackinac Center for Public Policy (Patrick J. Wright, “Public-Sector Bargaining Privileges Are Not Inalienable Rights,” (Mackinac Center for Public Policy, 2011), http://www.mackinac.org/14734 (accessed Sept. 25, 2012). The text appearing here is a lightly edited version of the earlier publication.