Collective Bargaining Reform could Save R.I. $252 million per year

Collective Bargaining CostsExcessive Government Worker Compensation Doubles the State Budget Shortfall, Reform would Disrupt the Union-Policymaker quid pro quo.

A study released this week by the Goldwater Institute details the crippling financial impact of public-sector unionization. The study projects that a ban on collective bargaining and contracts could save Ocean State taxpayers $252 million per year in excessive government worker compensation. These savings are more than double the estimated state budget shortfall currently facing Rhode Island.

The Goldwater study cites information from the U.S. Bureau of Labor Statistics that shows, on average, state employee wages are 44% higher than private sector wages. Further, the study shows that unionized state employees nationwide earn 42% more than state employees that don’t belong to a union. Following the Virginia model, the first state to ban collective bargaining and collectively bargained contracts for government workers, savings for taxpayers nationwide could reach over $49 billion annually, and $252 million in Rhode Island alone.

“The ever-increasing total cost of employment for unionized government labor – annual compensation plus benefits – is a cost item we simply we may not be able to afford. The recent state pension reform crisis, along with our municipal pension disasters, make it clear that Ocean State taxpayers have been squeezed dry by public-sector unions”, said Mike Stenhouse, CEO of The Rhode Island Center for Freedom and Prosperity. “This study reinforces what Franklin Roosevelt told us more than 70 years ago – that the concept of public-sector unions is ‘unthinkable and intolerable’. It is disturbing that the very money taken from the pockets of working Rhode Islanders is used to reinforce the political power of many unions, which gives them added influence so that they can fleece even more money from taxpayers. If policymakers seek to address the long-term structural deficits in our budget, this is one area that must now be considered before we cut into social services.”

“The citizens of Rhode Island have always expressed a strong desire to help the least-fortunate among us; but do government workers fall in that category?” Stenhouse questioned. “With the threat of tax increases and cuts to our social safety net, the idea of paying bloated union wages and benefits is especially poignant. It’s time to face the facts: public-sector unions drain precious resources away from Rhode Island’s sick, elderly, and poor. We’re at the point where we cannot continue our current spending levels; as a state, we’re going to have to prioritize. Difficult decisions must be made; the possibilities from this study add compelling information to the debate.”

More than money is at stake, according to Nick Dranius from the Goldwater Institute, who went on to say that “collective bargaining for public unions is particularly problematic because government sector unions help elect their employers, and their employers often return the favor by raising taxes to pay for the benefits the unions then demand. A ban on government sector collective bargaining helps disrupt this all-too-common quid pro quo. To solve this problem, more than a ban on collective bargaining and collectively bargained contracts is needed. Statesmen must restore and enforce the ideal that the American form of government is a public trust. Reform should be rooted in a legal framework that underscores government officers and employees are public servants, who owe undivided loyalty to the public.”

The study also notes a study from the Kennedy School at Harvard University, showing an increase in interest costs to states with high public-sector union membership:

“The study’s authors note that union strength in a particular level of government…can indicate to bond markets that those governments may not be able to overcome the political pressure to implement budget-conscious measures when necessary.  “Those states with a more heavily unionized government sector tended to have higher borrowing costs relative to other states with a less unionized government sector.”

 The full study is available here:


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