UNIONS AND JOB SECURITY

Unions and Job Security

Unions and Job Security

Introduction

The question of how public sector employers adjust employment in periods of declining demand would not have been considered a serious issue until the last half of the 1970s. Employment at both the state and local levels grew at such a rapid and sustained pace before then that this issue arose only in a few isolated cases. This all changed with the 1974-75 recessions and the widespread adoption of tax and expenditure limitations such as Proposition 13 in California. Since 1975, government employment has declined as a share of total employment, and since 1980 it has stayed about constant in absolute terms. As a result, many governments have been forced to make hard decisions about how to trim their payrolls (Perry, 1979: 15).

This paper examines how public sector unions have been able to influence these decisions. Studies by Medoff (1979) and Blau and Kahn (1983) on the impact of unions on labor market adjustment in the private sector have found much higher temporary and indefinite layoff rates for union than for nonunion workers. There is mixed evidence on how unions affect permanent layoff rates. Freeman and Medoff (1984) report that permanent layoff rates calculated for 3-digit manufacturing industries between 1958 and 1971 and in 1981 show no difference between industries that are predominantly unionized and those that are not, but they also show that the May 1973-75 and 1977 Current Population Surveys (CPS) for manufacturing workers indicate lower permanent layoff rates for union members. Blau and Kahn find higher permanent layoff rates for union than nonunion workers in manufacturing in the National Longitudinal Survey (NLS) younger male cohort, but no union-nonunion difference for manufacturing workers in the NLS older male cohort. When they expand these samples to include all sectors except construction, they find unionism has no effect on the probability of permanent layoff for either younger or older males.

The postwar trend in unemployment rates for private and public sector workers and reports the first estimates of layoff rates for public sector workers. These results show that although there has been some convergence of the unemployment rates of these two groups, the odds of being on layoff remain much lower in the public sector. Among public sector workers, layoff probabilities are considerably lower for union members, a marked contrast to the pattern of higher layoff rates under unionism in the private sector.

Sections III and IV compare both the theoretical and institutional factors that influence employment adjustment decisions in the public and private sector and point out how the impact of unionism is likely to vary between the two sectors. The May 1973-75 and 1983 Current Population Surveys and the 1976-82 Panel Survey of Income Dynamics (PSID) are used in Sections V and VI to estimate public-private and union-nonunion differences in unemployment and layoff probabilities. Section VII examines the impact of public sector unions on Unemployment Insurance (UI) coverage for state and local government employees before such coverage became universal and ...