Negotiating the Future: A New Approach to Labor Relations in the Public Sector

Barry Bluestone Dean, School of Public Policy and Urban Affairs

NLC State Managers Conference Custer State Park, South Dakota July 28, 2011

The Glory Days of the UAW   



1960s: UAW had 1.5 million members Its economic clout helped provide excellent wages and benefits … building America’s Middle Class Equally important, the UAW was one the most respected progressive forces in the nation fighting for universal health care, civil rights, workforce training, and fighting against poverty Because of its progressive stance, it enjoyed widespread popular support

Traditional Workplace Contract … first negotiated by UAW with GM in 1946 AIF/COLA Wage Formula  “Fringe” Benefits  Seniority Protection  Grievance Machinery  Work Rules/Job Classifications  Union Security Clause  Management Rights Clause 

Traditional Contract Worked Wonders in the Post-War Period   



AIF-COLA Wage Formula provided massive dose of consumer demand Fringe Benefits provided great security Seniority, grievance machinery, work rules, union shop did the same -- gave sense of security as well

And so, American workers went out and spent their incomes generating record GDP growth rates … and a full generation of prosperity ensued

Today …. The UAW has fewer than 355,000 members  Its economic and political clout is a shadow of what it once was  Much of its decline is due to the extraordinary blunders made by management  Nevertheless, the union was partly to blame 

Failures of the UAW It failed to press the auto companies to build high quality, innovative vehicles that could compete with imports  Often it insisted on work rules that undermined efficiency and compromised the industry’s competitiveness  It did not listen to its customers … those who buy cars, trucks, and vans  Toyota, Honda, Nissan came to dominate the industry … and the domestic industry went into decline and then bankruptcy 

Until quite recently, the UAW looked like it was doing fine The explosion in competition began as a trickle, but it was generally ignored  The industry and the union were so arrogant that both felt their privileged status would last forever  They sure were wrong! 

The Union Movement Today The UAW was hardly alone  Today, less than 14% of U.S. workers are union members, down from 35% … and only 7.2% in the private sector  With the union movement’s membership so low, private unions have lost much of their power to protect their own members … and the nation is losing a major force for progressive change 

Could the same thing happen to Public Sector Unions?

Troubling signs ahead State and local governments facing massive fiscal deficits  Many parents, particularly in city schools, feel their kids are not getting the education they need  Progressives and Democratic lawmakers, not reactionaries, are now in the forefront of the charter school movement … to free school systems from the unions they see as barriers to school reform 

Current deficits are only the tip of the iceberg in Many States 

The cost of state government services is spiraling out of control



Given the rising cost of debt service, public employee pensions, and Medicaid, states are facing a massive long-term “Structural Deficit” that will destroy public services

New Collective Bargaining Environment 

Municipal officials often feel they have no choice but to demand relief from public service workers or cities and towns will go bankrupt



As the public begins to recognize how well public sector workers are doing relative to other workers, and how bad the national and state economies are doing, they will increasingly side with municipal officials and against public sector unions



Some may cheer the demise of public sector unions, but many former supporters will sit on the sidelines and not come to their rescue

This poses a serious challenge for public sector labor relations How will state and local governments survive the structural crisis without taking on their unions?  Can state and local governments continue to fund public services offered by union workers?  Will taxpayers be willing to continue to support public services even if this means more taxes? 

How Do We Solve the Structural Deficit?  

Reform inefficient government bureaucracies and government programs Public sector union reforms  Work rules and job classifications  Pension & medical insurance reform



Raise more tax revenue  Sales tax, gasoline tax, income tax



Regionalize public services

“Enterprise Compact”     

Joint Productivity Targets AIF/COLA for Basic Pay & Benefits Gain-sharing for meeting joint effectiveness and quality standards Peer Review Evaluation JOINT ACTION between union and public sector management to continuously improve service

20th Century Legacy Labor Relations seen as adversarial process  Detailed workers rights spelled out in hundreds of pages of contract language covering job classifications and work rules  Management rights contract clause that provides for management prerogatives over everything not written down in the contract 

The Result  

  

Precedent rules regardless of changing economic environment Dense web of rules governs labor relations, creating inflexibility and discouraging innovation Enterprise seen as competing interests rather than joint interests Lower efficiency and effectiveness in offering public services Anti-government animus growing among taxpayers

Illinois Priority One “To effect excellence and equity in public education”  “Accountability (appropriate accountability) is important”  “Money is helpful when spent properly”  “Schools are engines of change in communities”  “Success is common, but not widely distributed” 

Components of New Agreement •

Expanded use of interest-based bargaining (IBB) in contract negotiations as a substitute for traditional adversarial negotiations.

•

Mutual agreement among the parties on protocols and fixed timetables for negotiations, facilitation, and resolution of contract negotiations.

•

Consideration of broader, regional or perhaps even statewide collective bargaining for setting wage and benefit levels based on clear criteria and standards that emerge out of a new state-wide compact.

Components of New Agreement •

Development of day-to-day shared responsibility among principals, teachers, and their union representatives at each school site for continuous, problem-solving joint decision-making.

•

Creation of forums at the district level for engaging superintendents, school committee members, parents, and union leaders in the task of building a shared vision for educational innovation and leading, monitoring, sustaining, and communicating the results of innovation efforts to all interested stakeholders.

Interest-Based Bargaining Begin not with demands, but with clear statement of each party’s interests  Joint analysis of data to evaluate causes of any problems  Establish alternative methods for solving problems  Continuous problem solving rather than detailed contract 

Specific Approach in Public Schools •

Replace the existing set of detailed work rules and job classifications in contracts with a system of continuous problem solving through a joint decision-making committee comprised of the principal, teachers, and a union representative in each school to agree to changes in operating procedures as issues arise.

•

A system of teacher evaluation based on a combination of teacher peer review, assessment by principals, and student performance criteria.

•

Consideration of “Peer Assistance and Review” (PAR) processes for implementing the new teacher evaluation procedures and linking the new system to the interrelated issues of professional development; compensation and performance-based pay practices; and transfer, assignment, dismissal, and promotion policies.

Steps Toward Implementing New Approach •

Creation of a state-wide “Academy” to train parties in interest-based bargaining (IBB) and on-going problem solving and to facilitate negotiations and on-going innovation efforts where requested by a local district.

•

Creation of a broadly representative multi-stakeholder oversight commission to monitor and review progress toward educational improvements and to recommend changes in policies as needed to build and sustain a 21st century labor management relations system.

The Challenge Municipal Leaders and Public Employee Unions now have the chance to lead state and local government in reforms that will rebuild public trust and support for public services  We need to build that Grand New Bargain for the nation, for our communities, for our families, and for our children 