Janus ruling could jar U.S. economy

A new study suggests it would cut wages, union membership, and economic vitality

A skeleton casts an ominous figure in a Chicago Teachers Union march. (One Illinois/Ted Cox)

A skeleton casts an ominous figure in a Chicago Teachers Union march. (One Illinois/Ted Cox)

By Ted Cox

An upcoming decision by the U.S. Supreme Court could have a dramatic adverse impact on union membership, wages, and the overall economy, according to a study released this week.

The study shows that ending so-called fair-share fees, paid by union members for collective bargaining, would affect 5 million public workers nationwide, including police officers, firefighters, teachers, and nurses, with their salaries reduced 3.6 percent on average, and could shrink the U.S. economy by $33 billion.

Because of the exponential ripple effect on the economy, big states would feel it the worst, foremost among them California, New York, and Illinois.

Illinois, in fact, is at the center of the case, Janus v. The American Federation of State, County, and Municipal Employees, Council 31. Although filed by Mark Janus, a child-support specialist in the state Department of Healthcare and Family Services, it has become the point of the spear in Gov. Bruce Rauner’s ongoing campaign to undercut the power of unions and their workers.

Thwarted in the General Assembly with his so-called Turnaround Agenda weakening workers’ rights and strengthening corporations, Rauner has instead placed his hopes on a favorable decision by the high court.

Both Rauner and Illinois Attorney General Lisa Madigan, who has taken a position against the case, attended oral arguments at the Supreme Court in Washington, D.C., in late February, when conservative justices signaled they were receptive to striking down a 41-year precedent on fair-share fees. A judgment was expected at the end of the court’s term next month.

According to the new study “After Janus: The Impending Effects on Public Sector Workers From a Decision Against Fair Share,” a ruling that workers do not have to pay such union fees would be cataclysmic.

The study projects that 5 million public employees would be affected nationwide. A decision that workers do not need to belong to a union in order to enjoy the benefits of collective bargaining agreements would cut unions by 726,000 members, or about 8.2 percent of the public union workforce, an estimated 88,000 of them teachers, or 5 percent of membership.

California would lose 189,000 union members, New York 136,000, and Illinois 49,000, according to estimates in the study.

Public union workers would see an estimated $1,810 drop in their annual salaries, or 3.6 percent. Teachers, who have led the union movement in Illinois in recent years, foremost at the Chicago Teachers Union, and who have won recent salary increases with demonstrations in states across the nation, would see their pay cut an estimated 5.4 percent.

The ripple effect is expected to remove at least $12 billion from the U.S. economy, and as much as $33 billion over time.

The study was conducted by the Illinois Economic Policy Institute, which has a partnership with One Illinois, and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign.

“There is a clear link between rates of public-sector unionization, wages, and the strength of America’s middle class,” said Frank Manzo IV, ILEPI’s policy director and co-author of the study. “The evidence unambiguously shows that so-called right-to-work regulations erode all three.”

The evidence unambiguously shows that so-called right-to-work regulations erode (unions, wages, and the middle class).
— Frank Manzo IV, policy director of the Illinois Economic Policy Institute

According to Manzo, 23 states, including Illinois, have laws in support of fair-share fees. Some 27 others have adopted so-called right-to-work laws undercutting fair-share fees, and they’re already feeling the effects.

“Those rules have already resulted in lower wages and weaker economies,” Manzo said, “so the data show that their expansion could have extremely negative consequences for workers and the nation as a whole.”

The study’s findings are extrapolated from the effects already documented in those right-to-work states.

An adverse ruling on union fees by the high court would set a national precedent.

“With public-school teachers marching on state capitols to address already low wages and difficult working conditions, it’s hard to overstate the potential impact of a Janus ruling that further weakens public-sector collective bargaining,” said University of Illinois Professor Robert Bruno, director of the Project for Middle Class Renewal and co-author of the study. “A decision that invalidates four decades of Supreme Court precedent on fair-share fees would not only erode the livelihoods of 5 million public-sector workers and shrink the economy, it would make it harder to recruit top talent to become teachers or perform other vital public services.”

The study also charges that an adverse ruling to unions would be inherently racist, in that it would “disproportionately impact African-American workers, who are more likely to work in state and local government and are more likely to be union members.”

“A Janus decision against fair-share fees would be the largest change to collective-bargaining rights in the United States in decades,” Manzo and Bruno write in their executive summary. “The decision would reduce unionization, lower public-sector worker earnings, and have negative impacts on the U.S. economy. The response to Janus will be critical to the long-run survival of the U.S. labor movement and the American middle class.”

The study was released Wednesday and was immediately picked up by The Wall Street Journal.