Supreme Losses for Empire State Unions

Report: Supreme Court decision could cost NY govt. unions at least $110 million

U.S. Supreme Court building / Getty Images
January 10, 2018

The Supreme Court's handling of an upcoming forced dues case could cost labor unions in New York more than $100 million, according to a new report.

Three Illinois workers are asking the court to reconsider the 1977 Abood v. Detroit Board of Education, which allowed government agencies to require fee payments to labor unions as a condition of employment. The workers, who have won the backing of the Trump administration, 20 states, and numerous labor watchdogs, argue that these payments are tantamount to forced political advocacy, since the government unions affect budgetary decisions and other matters of public policy.

The Court deadlocked on Friedrichs v. California Teachers Association, a 2016 challenge to the standard, following the surprise death of Justice Antonin Scalia, but many court observers see Trump's appointment of Justice Neal Gorsuch breaking the tie in favor of the workers. That could spell major financial stress for government unions in New York State, which has the highest union membership rates in the country.

Nearly one-in-four workers belong to a labor organization in the state, including more than 1 million public sector workers. Nearly three-in-four government employees at the state and local level work under a collectively bargained contract—almost double the national average of 39 percent. These employees pay unions $862 million dues and other fees each year. The Empire Center for Public Policy, a pro-free market think tank, estimates unions stand to lose more than $110 million—nearly 13 percent of their total collections—as agency fee payers who pay partial dues would be able to fully opt out of making any payments to the unions.

"The compulsory payment of these fees would have to immediately stop in the wake of a ruling for the plaintiff in Janus," the report said.

The Janus case drew the attention of state Democrats. Gov. Andrew Cuomo said lawmakers must "stand shoulder-to-shoulder with our union brothers and sisters" during his 2018 State of the State address, regardless of the court ruling.

"We must do all in our power to protect collective bargaining, the right to organize, and preserve workers' rights," he said. "Let us all pledge that we stand shoulder to shoulder with our union brothers and sisters in this fight and we will not give up and we will protect union workers in the State of New York. We stand in solidarity and we will not lose."

Other states that have witnessed exoduses as full-paying dues members drop their payments. Reforms that ended forced dues systems in Michigan preceded 20 percent reductions in teachers union memberships, while Wisconsin saw a 51 percent decrease between 2011 and 2016. When California teacher Rebecca Friedrichs took her case to the Supreme Court, the state teachers union distributed a Powerpoint presentation titled, "Not if, but when," predicting that the court would eventually overturn Abood. The presentation predicted massive "membership loss … reduced staffing, pressure on CTA pension and benefits system [and] potential financial crisis in locals not positioned to survive loss of revenue."

The Empire Center expects to see similar steep drops in funding, which will also eat into the $43.2 million public sector unions spent on lobbying and the $53 million they spent on state and local elections between 2013 and 2016. The study found that the high cost of full dues payments may lead some workers dissatisfied with perks attributed to membership to resign.

"Formal membership comes with perks such as discounts on travel, insurance and other products, not to mention the ability to vote on union contracts. But if the court allows these employees to opt out of paying dues that for many exceed $1,000 a year, past experience in New York and elsewhere indicates many employees now paying dues may decide to pay nothing," the report says.

Published under: Supreme Court , Unions