SCOTUS May Undermine Labor Unions Based on a Profound Misconception

Free riders choose to reap the rewards of a public good without paying their portion of the cost necessary to produce it.

It’s another very big year at the Supreme Court. After saving Obamacare and opening marriage laws to same-sex couples last June, the justices are set to resolve questions involving affirmative action, abortion, religious liberty, immigration, and voting rights over the next five months. But the most transformative decision may well come in Friedrichs v California Teachers Association, a case that threatens to unravel the way that public-sector unions in half of the country do business.

Twenty-some states have “agency shop” laws for their public employees whereby the government negotiates contracts with police officers, teachers, and firefighters via unions that represent all workers in these sectors. To make this situation viable, these states permit unions to charge “fair share fees” to workers who opt not to join their ranks. These fees support the collective bargaining unions undertake on behalf of union members and non-members alike. A 1977 Supreme Court decision blessed this arrangement, but allowed unions to collect fees from non-members only to support negotiations over wages, benefits, and workplace rules; any political campaigning or lobbying the union wishes to undertake, the Court held, may not be charged to non-members lest workers are compelled to pay for the dissemination of positions they reject.

In Friedrichs, 10 California teachers are contesting the distinction between collective bargaining and political activities. They are urging the Supreme Court to overturn the 1977 ruling and jettison all mandatory fees for non-members. Any time a union presses for smaller class sizes or higher teacher salaries, they say, it is taking a controversial position on a matter of public concern. No teacher who disagrees with those positions should be compelled to support them with their pocketbooks. It is a violation of their right to freedom of speech, the dissenting teachers say, to force them to pay these fees.  

There are reasonable arguments on both sides of this dispute (which I sketch in a pair of posts at The Economist), but one query during the January 11 oral hearing suggests that the Supreme Court may be ready to upend nearly four decades of mandatory “fair-share fees” based on a profound misconception about the collective action problem known as free ridership. "Free riders,” in short, are people who choose to reap the rewards of a public good without paying their portion of the cost necessary to produce it. A classic example is people who find ways to avoid paying taxes despite making liberal use of taxpayer-funded goods like roads, police protection, and public schools. Or think of polluters who breathe clean air and drink clean water made possible by everybody else who hews to environmental rules. Another example you might relate to: public-radio fans who never pledge to their local NPR station during the semi-annual fund drives. 

During the Friedrichs hearing, Edward DuMont, the lawyer for California, argued that mandatory fees enable “a workable system, both for our employees who overwhelmingly have shown they want collective bargaining, and for the ... school districts, or of-state agencies who ... have the practical problem of ­­reaching an agreement that will govern” public-sector workers. Here Chief Justice John Roberts chimed in:

CHIEF JUSTICE ROBERTS: If your employees have shown overwhelmingly that they want collective bargaining, then it seems to me the free­-rider concern that's been raised is ­­really insignificant.

Mr. DuMont had a persuasive rejoinder to the chief: “Because many people can want something in the sense they view it as very advantageous to themselves, but if they are given a choice, they would prefer to have it for free, rather than to pay for it. This is a classic collective action problem.” Indeed. Mr. DuMont continued: 

“So from the employer's point of view, when we're going to have collective bargaining, we want one union to deal with. We want that union to deal with all employees. And so we require it to represent all employees fairly, whether they supported the union or not. They might have supported the rival unions. They might be in favor of unionism, but they supported a different one. But once the majority has said this is our representative, then that is going to represent all employees. And it's important then, from the employer's point of view, that that representative be adequately funded and stably funded, so that they can work with us or work with the employer to reach actual progress.”

The error in Chief Justice Roberts’ naive argument against free-ridership is clear: He assumes that making fees voluntary will have little effect on union membership. After all, they overwhelmingly want collective bargaining! But if teachers could get higher wages and better benefits without paying their union a dime, it stands to reason that many would make the individually rational decision to do so. If you have a hard choice between paying your kid’s college tuition bill and paying an optional fee to your union, you may well find it tempting to take a little advantage of the union (hey, you could always rejoin next year!) and divert your resources toward your child’s future. It’s fine if one or two people do this. But if many do, the union loses the very funds it needs to do the work of collective bargaining and the whole enterprise implodes. This is just what has happened in states like Wisconsin and Michigan, where laws have radically undercut the power of labor unions. Five years after Wisconsin governor Scott Walker all but eliminated collective bargaining in his state, union membership has fallen precipitously and the labor movement has been “crippled,” according to one report.

There are, to be sure, teachers so committed to their union that they will pay into the union no matter what. Likewise, there are some teachers with ideological views that clash with those of the union that bargains for them. They may have principled reasons for not joining and for wishing to be free of required non-member dues. But for the majority of teachers, the economic bottom line is likely to prove most influential. The conservative justices may find it convenient to put their heads in the sand and speculate otherwise, but the implications of undoing a regime that has worked well for nearly four decades will not be mild. If mandatory fair-share fees are found to be unconstitutional, many will decide not to pay their fair share and the labor movement in America’s public sector will suffer mightily. 


Steven V. Mazie is Professor of Political Studies at Bard High School Early College-Manhattan and Supreme Court correspondent for The Economist. He holds an A.B. in Government from Harvard College and a Ph.D. in Political Science from the University of Michigan. He is author, most recently, of American Justice 2015: The Dramatic Tenth Term of the Roberts Court.

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Follow Steven Mazie on Twitter: @stevenmazie

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