The Pew Charitable Trusts

Judging from the furor over collective bargaining that has roiled several Midwestern states this week, it would be easy to conclude that changes in union bargaining rights are rare events. In fact, though, states change their collective bargaining rules frequently, and often without much protest or even much dissent. 

When Indiana Governor Mitch Daniels took office in 2005, one of his first acts on the job was to issue an executive order rescinding collective bargaining rights for state workers. In contrast to the recent tumult in Wisconsin, Ohio and now Indiana, too, the unions were fairly quiet about it in 2005. No protests erupted outside the Capitol. No legislators fled the state to hold up Daniels' agenda. "It was a very quiet transition, to our surprise," recalls Daniel Hackler, Indiana's state personnel director. 

In many states, collective bargaining rights have been a fleeting thing that can easily come and go with changes in administration. In 12 states, collective bargaining for state employees doesn't exist at all. 

Today, with Republicans resurgent in state capitals, the tide is running against unions. Not long ago, however, it was the unions that seemed to have the advantage. The governors of Colorado and Kentucky issued executive orders in 2007 and 2008 that were designed to give state workers a greater voice in setting policies, although the result in both states fell short of collective bargaining. Washington State adopted collective bargaining for public workers for the first time in 2002. The rights have remained in place ever since. 

As a national debate over collective bargaining heats up, Indiana and Washington State represent case studies of states that have moved in opposite directions. Their experiences offer evidence to support the claims of both unions and their detractors. They're also a reminder that the rules of engagement between labor and management in the states varies widely according to how the rules are set up — and changed — over time. 

Management likes freedom

Indiana is not like Wisconsin or Ohio. Unlike in those states, collective bargaining rights have never been enshrined in statute in Indiana. Nor are they as deeply rooted in Indiana's history and political culture. 

Former Democratic Governor Evan Bayh gave state employees collective bargaining rights through an executive order in 1989. The Democratic governors who followed Bayh extended those rights. But the unions understood that rights given by the governors' office could just as easily be taken away by subsequent governors. 

When Daniels took them away from state worker unions in 2005, he justified the decision as necessary to implement a government reform agenda in a timely manner. In particular, he argued that the change would make it easier to create a separate agency to handle the state's scandal-ridden child welfare system. Daniels also said he wanted to compensate state employees based on performance, while making it easier to terminate known problem employees, such as child welfare workers who had been responsible for putting children at risk but could not be sanctioned because of union agreements. 

State Personnel Director Hackler says that the decision has played out largely as the administration hoped it would. In his view, the change actually benefited employees in many ways, such as increasing employee morale and helping decrease turnover. The average pay for state employees has increased. And high-performing employees can be rewarded with pay increases and even on-the-spot bonuses of up to $1,000 when they accomplish something exceptional. 

AFSCME, one of the leading public employee unions in Indiana, has a different take on the results. A fact sheet from the union points out economic indicators that have slipped in Indiana, relative to the rest of the country, since 2005, and also notes the high-profile failure of Indiana's attempt to outsource some social services functions. 

Brenda Pike, executive director of the Indiana State Teachers Association, says this is why teachers unions are fighting so hard now to hang on to their own bargaining rights in Indiana. "They have not been happy," she says of the state worker unions. "They have experienced things being done to them rather than with them." 

One fact is not in dispute: The state's total payroll has declined. Indiana had about 36,000 employees when Daniels took office but is now down to 29,000. Most of the decline has come through attrition. "We've been able to squeeze efficiencies out of what was not a very efficient system," Hackler says. "Everything was affected by collective bargaining at one point, because the unions bargained about just about everything." 

Union clout matters

Washington State's experience with collective bargaining shows that it comes with real benefits for state workers and real costs for the state budget. But it's also clear that it doesn't necessarily prevent a state from imposing austerity when a budget crisis hits. 

You can see that in the contract that the Washington Federation of State Employees (WFSE), Washington's largest state worker union, agreed to just last week. That contract included furloughs that will cut pay by 3 percent and raises the share of health care costs workers have to pay from 12 percent to 15 percent. 

Union officials began asking for bargaining power in 1989. They say they felt as though they were under assault from increasingly unsympathetic state legislators. Under law, they could only bargain on working condition issues, not pay and benefits. 

Their cause got a big boost in 1994 when then-Governor Mike Lowry, a Democrat, proposed coupling collective bargaining rights with civil service changes and broader latitude to contract out government services — at the time, state law forbid outsourcing work that was being done by state employees. This deal became known as the "three-legged stool." It was finally adopted in Olympia in 2002, after Democrats won control of the state Legislature. 

Karen Keiser, a labor-friendly state senator, says that one reason for the move was to make the relationship between management and state workers less contentious. In 2001, for example, state employees used rolling walkouts to gain leverage, even though strikes were illegal. "It's extremely important to have a voice that has parity at the table and is in place because they have legal standing to talk about issues," Keiser says. "We have a good, adult relationship with state employees." 

That relationship has served the workers well. Before collective bargaining, state workers rarely received cost-of-living raises. In 2004, workers won 4.8 percent cost-of-living raises over two years, despite the presence of a state budget shortfall. In 2006, with the economy booming, state workers enjoyed two-year raises as large as 25 percent. In September 2008, the week before Lehman Brothers collapsed, WFSE reached a two-year deal for 2 percent annual pay raises.

Governor Christine Gregoire pushed back against that raise, however — collective bargaining did not leave her without leverage. Gregoire argued that under the 2002 law, she was allowed to reject bargaining agreements that weren't "financially feasible." With the economy collapsing, the state's budget shortfall was getting worse and worse. The unions took the governor to court, but ultimately relented — the collective bargaining rules weren't strong enough to save the raise. Last year, when Gregoire began imposing furlough days, unions once again weren't able to block her. Under the contract WFSE members overwhelmingly ratified last week, the furloughs will continue for the next two years. 

Still, given the state's fiscal problems, WFSE spokesman Tim Welch says his members are content with the new deal. Gregoire initially proposed that workers pay 26 percent of their health costs, instead of the final 15 percent figure. Going forward, employees will be able to take furlough days when they please, instead of having them on designated days. "The value of collective bargaining," Welch says, "is that you're able to mitigate the economic damage." 

Critics of collective bargaining see an opportunity in the debate now unfolding in Midwestern capitals. State Senator Jim Honeyford, a Republican, introduced legislation this year to return the state workers to the limited bargaining power they had prior to 2002. He says he doesn't think employee compensation should be given priority in the budget ahead of state programs. Honeyford's legislation is dead, at least for now. 

Still, Welch says that even with Republicans in the minority, the unions' position isn't entirely secure. He fears that some Democrats will team up with Republicans to incrementally undermine the unions' bargaining power. "What we see in Wisconsin could very well happen here," Welch says. 

Others aren't so sure, given the clout of the unions. After the bargaining law went into effect, WFSE's membership quickly doubled. "It took 14 years to get collective bargaining," Eva Santos, director of the Washington Department of Personnel, told Stateline in a January interview. "And it will probably take twice that many to undo it."