The Agenda

On Public Unions and Choice Architecture

Steve Malanga raises an important point:

The battles  in Wisconsin and Ohio are not merely over collective bargaining and benefits, but also over who has to pay union dues. Proposals in both states  would  bar unions from requiring non-members covered by union contracts to pay dues. This is an especially contentious issue because in some places where legislation allows workers to choose not to pay some portion of union dues, the opt out rate can be quite high.

How high?

In California, for instance, workers who object to being in the union must pay dues to finance collective bargaining, but they can opt out of paying any portion of their dues that go to other union activities, like political campaigns. During  a 2005 initiative battle that would have widened that right, the Sacramento Bee reported that 37,000 of the 175,000 state administrative workers covered by union contracts were already electing to opt out of full union dues, even though they had to pay dues first and then go to the union to request a refund.

Having briefly belonged to a labor union myself, I found this number shockingly high. Then again, I have a hard time returning clothes that don’t fit, among other things.

This raises an interesting question about what Thaler and Sunstein call “choice architecture” in Nudge. We set default options in public policy all the time, and this can prove very consequential. Many have called for opt-out rather than opt-in universal 401(k)s to encourage more retirement savings.

What we have now is a kind of opt-in universal tool for channeling the growth of the public sector workforce into the growth of private pressure groups that lobby for above-market total compensation for workers with the means and cultural capital to pass civil service exams. 

Viewed through this lens, one wonders if a public-spirited choice architect would embrace this particular strategy.