The Loop

Janus vs AFSCME: Impact On Union-Sponsored Benefits

Filed under: Benefits

Traditionally, labor unions have required non-union members to pay a membership fee that was used not only to represent their best interests in negotiating wages and benefits, but also to support politicians who could further advance the labor union agenda. Despite the inherent advantages of union representation, some workers took offense to their wages being garnished to support legislative policies that could ultimately increase their taxes. So they took their complaint to court.

That lawsuit culminated in a 2018 decision by the Supreme Court of the United States (SCOTUS) that negated mandatory payment of membership dues by non-union members. In Mark Janus v. American Federation of State, County and Municipal Employees (AFSCME), the court ruled that fees involuntarily paid for political advocacy is a violation of a non-union member's First Amendment right. In other words, union fees automatically deducted from a non-member's wages without his expressed opt-in consent was unconstitutional. The 5–4 SCOTUS decision applied to all public sector union workers nationwide, including teachers, police officers, firefighters, and state, county and city workers.

A key reason for the Supreme Court's decision is political in nature. Because collective bargaining agreements that raise wages or enhance paid benefits can increase city and state budgets, they in turn can lead to higher taxes. Fiscally conservative voters tend to frown upon higher taxes, and do not feel they should be forced to monetarily support that politically charged policy position.

Private Sector Rules Unchanged
Note that the Janus decision applies only to public labor unions. Those that operate in the private sector are still governed by the Taft–Hartley Act of 1947, which mandates that when a representative labor union negotiates a pay raise for its members, that increase also extends to non-union workers as well. Furthermore, those non-union workers may still be required to pay the labor union fee associated with compensating union benefits, although they do not have to pay regular member dues that help support the union's political activities.

The separation of fees on the private side is key in that public unions are considering a similar move to carve out fees they use for political activities and support.

Union Battleground
The two factions of the labor union battle – advocates versus dissidents – have spent the ¬¬better part of the past year actively engaged in campaigns to support their agendas.

Labor union critics have launched initiatives to inform non-union (and union) members that they no longer have to pay union dues to receive union representation. For political conservatives, this is a welcome change. However, there also may be some interest in union members who would happily benefit from the power of leveraged negotiations without having to pay for it.

On the other side of the coin, unions have reinforced efforts to both maintain current membership rolls and continue to solicit new hires to join union forces – to recover lost fees resulting from the Janus/AFSCME decision.

The results have been mixed. The Freedom Foundation reports that in the first year following the Janus decision, unions representing workers in California, Oregon and Washington have lost approximately $36 million in agency fees. By the end of 2018, union membership nationwide had dropped by 0.2 percentage points from the year prior – representing only 10.5 percent of wage and salary US workers.

However, despite the court's ruling, union membership remains steady or has actually increased in some places. Industry observers say this is largely due to recent legislative actions some states have taken to protect unions. For example, California, New Jersey, and Washington have passed legislation that prohibits public employers from discouraging union membership and guarantees labor leaders access to hiring orientation sessions to describe the advantages of union membership. In fact, New Jersey requires employers that break this law to reimburse unions for potentially lost dues.

New Jersey also narrowed the time frame in which government workers can withdraw from their union, and New York banned state agencies from sharing worker data for the purpose of persuading members to quit their unions.

Union-Sponsored Benefits
One reason unions have maintained strength in the wake of the Janus decision may be due to the strength of the job market in general. With today's competitive labor market and low unemployment rates, workers recognize that they have more leverage to negotiate better benefits when the power pendulum is swung in their direction. During more recessionary times, such as during the high-unemployment days of the 2007-2008 recession, workers had little opportunity to negotiate for higher pay or benefits; they were lucky to keep their jobs in the wake of mass layoffs.

Because of the ongoing strength in the job market, employers also are motivated to provide a higher level of benefits to retain a satisfied workforce – and are thus more willing to work with representative labor unions. The US Bureau of Labor Statistics reports that among full-time wage and salary workers, union members earn higher median weekly income than workers not represented by unions ($1,051 versus $860 in 2018).

Throughout history, union membership has traditionally yielded:

  • An overall average of 30% higher wages than non-union workers
  • Unionized public workers earn 10% to 14% higher wages than comparable non-union public workers
  • A higher share of job-related health coverage than non-union workers (92% vs 68%)
  • A higher likelihood of guaranteed pensions than non-union workers

In addition, union representation generally results in better work hours, workloads, and safer working environments. Moreover, employers generally benefit from higher morale and productivity when they provide better conditions for employment.

Ongoing Efforts
For now, there continues to be a plethora of state legislative and lawsuit activity playing out on the labor union battleground. Some states have passed laws that allow unions to withhold certain benefits, such as life insurance or legal representation in grievance proceedings, from non-union members. This move is designed to make union membership more attractive. Furthermore, some agencies have proposed that the government directly fund unions in order to separate collective bargaining from political activity.

Labor opponents have filed lawsuits in nearly all federal district courts to enable non-union members to retroactively recover agency fees they paid into unions before the Janus/AFSCME ruling. In addition, there are court filings designed to negate the labor union's power to exclusively represent public-sector workers at the bargaining table, which would permit individuals or groups of workers to negotiate directly with their employer.

In the future – and a primary issue in the 2020 presidential election – is the prospect of a Medicare-for-All or a government healthcare option. What happens there could significantly alter the scope of labor union negotiations on behalf of workers. Some unions, such as National Nurses United, support a universal option that expands healthcare coverage to more people. Others, such as the International Association of Fire Fighters, oppose eliminating employer-based coverage.

In the wake of the potential for fundamental change in the nation's healthcare insurance system, the Janus/AFSCME decision historically will have played a very minor role. But for now, it is a win for labor union opponents.

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