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eLABORate: Supreme Court Rules Against Public-Sector Union Non-Member Fees

June 27, 2018

This morning the United States Supreme Court ruled, on a 5-4 vote, public-sector workers who are not union members cannot be forced to pay fees to unions that cover the cost of collective bargaining. This decision overturned a 1977 Supreme Court precedent in Abood v. Detroit Board of Education, which stated “fair share” fees are constitutional. This decision will have a major impact on unions representing public-sector employees such as teachers and police.

In this case, Janus v. AFSCME, the Court held a union’s bargaining with local or state government is inherently political activity. Therefore, the fair share fees imposed on government workers who choose not to join the union representing them violates the workers’ First Amendment rights. The court ruled that forcing nonmembers to pay fair share fees to unions whose views they may oppose violates their rights to free speech and free association.

The effect this decision will have on public-sector unions is yet to be seen. Some people claim nonmembers will benefit from union work (bargaining, representation, etc.) without paying fair share fees that enable this work. This could lead to the demise of public-sector unions by introducing a free rider problem. The free rider problem would weaken unions by reducing their revenue and limiting their bargaining power. However, others claim this could be beneficial to unions, by forcing unions to compete for members. This will introduce competition, which is the foundation of America’s “free market.”

Lastly, others argue this decision could affect an important state government obligation problem. As of 2016, liabilities for post-employment benefits other than pensions to retired public workers totaled $1.1 trillion nationwide. Weakening unions could enable states to relieve some fiscal stress and allow states to avoid a looming fiscal crisis.

Whether this decision kills public-sector unions or aids competition among them, it will immediately affect a vital revenue stream for unions. This can be seen in Justice Samuel Alito’s statement:

We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members. But we must weigh these disadvantages against the considerable windfall that unions have received under Abood for the past 41 years.