News & Events

Union leaders face a tall order (MS)

BARRY BLUESTONE (“A future for public unions?’’) has put his finger on a major challenge that union leaders face: how to engage the big financial problems that municipalities face. However, he failed to complete the sentence: and not be voted out of office.

Persuading most union members to accept no wage increases or to freeze scheduled increases is not easy, even when the quid pro quo may be fewer layoffs. Given seniority, most workers would not be affected by projected reductions in the workforce. What’s more, pensions for many public employees are geared to final salaries.

Or take the criticism leveled at unions for not agreeing to shift healthcare to the money-saving state Group Insurance Commission plan. What is not mentioned is that much of the membership would lose the flexibility to be treated anywhere in the country with indemnity plans.

These members are vocal. In this case, the majority do not want to impose a loss on a minority of members, many of whom are approaching retirement. Like all political institutions (witness federal healthcare reform), unions are not efficient at reshaping the rules of the game.

Bluestone is right to raise the specter of bankruptcy and the saga of the auto industry. He could have mentioned other industries, such as trucking, steel, and airlines, where the gains that unions worked so hard to put in place were dismantled after many companies ended up in bankruptcy court. Will the same scenario play out for municipalities? Only time will tell.

Robert B. McKersie
The writer is professor emeritus of industrial relations at the Sloan School of Management at MIT.