Trying to Predict the Impact of Janus

The Illinois Economic Policy Institute has released a study on the anticipated impact of Janus v AFSCME, based on the widely-held assumption that the Supreme Court will hold that agency fees are unconstitutional. The report—entitled “After Janus: The Impending effects on Public Sector Workers from a Decision Against Fair Share”—can be found here. The report attempts to predict the impact of Janus by examining the statistical differences in union membership and hourly wages between states with “right-to-work” (RTW) laws and states without RTW laws.

According to the report, as of March 2018, 27 states have RTW laws and 23 states have collective bargaining laws that require “fair share” or “agency” fees.  More than half of all state and local government union members live in just six states: California, New York, New Jersey, Illinois, Ohio, and Pennsylvania. Nationally, California alone accounts for almost 20% of all state and local government union members.

Among the conclusions of the report are:

  • Union membership is expected to decrease by 8.2% nationwide. In California, union membership is expected to decrease by 8.9%.
  • Average hourly pay is expected to decrease by 3.6% both nationally and in California. This translates into a reduction of approximately $2,079 per worker in California.

Comments:

  1. A Sacramento Bee article discussing this report described the Illinois Economic Policy Institute as a “left-leaning think tank.” So you have to consider the findings in the report in light of that potential bias.
  2. But with respect to the predicted decrease in union membership of 8.9%, that’s lower than the number I had in my head. In California, it’s not at all uncommon for public sector unions to have agency fee payers constitute 25%-50% of a bargaining unit. On top of that, there are undoubtedly some individuals who became union members only because they would have to pay agency fees anyway. Without agency fees, some of these individuals might drop their membership. So if public sector union membership only declines by 8.9% in California, I actually think that’s a better good result for the unions. I think it could be a lot worse than that.
  3. As for the predicted decrease in wages, it’s clear when you read the report that the “decrease” is really a “wage gap” between RTW states and non-RTW states. So it’s not that public employee salaries are going to go down necessarily; rather, salaries won’t go up as much as they would might otherwise without the Janus decision.
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