Thursday, January 27, 2011

Public Sector Unionization - It IS the States Problem

Saw this from the Bureau of Labor Statistics and thought it warranted a post.  Keep in mind that the public sector is grappling with massively underfunded pensions and OPEB and has to face some hard budget choices.  Now many say that the unions will continue to help their employer out by giving concessions in contract talks.  I ask:  why?  Who is negotiating from a position of strength?

Union membership declines in 2010

In 2010, the union membership rate—the percent of wage and salary workers who were members of a union—was 11.9 percent, down from 12.3 percent a year earlier; the number of wage and salary workers belonging to unions declined by 612,000 to 14.7 million. In 1983, the first year for which comparable union data are available, the union membership rate was 20.1 percent, and there were 17.7 million union workers.


In 2010, 7.6 million public sector employees belonged to a union, compared with 7.1 million union workers in the private sector. The union membership rate for public sector workers (36.2 percent) was substantially higher than the rate for private sector workers (6.9 percent).
Within the public sector, local government workers had the highest union membership rate (4.7 million members, or a rate of 42.3 percent). This group includes workers in heavily unionized occupations, such as teachers, police officers, and fire fighters.
Private sector industries with high unionization rates included transportation and utilities (1.1 million members, or a rate of 21.8 percent), telecommunications (167,000 members, or a rate of 15.8 percent), and construction (801,000 members, or a rate of 13.1 percent).

Now the question I have to ask is with the union being so deep in states and municipalities, what are the chances there will be meaningful concessions.  Perhaps people should recall one of the main reasons GM and Chrysler went into bankruptcy - the gain negotiating power with the unions.

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About Me

A student of the markets that has held portfolio management, analysis and trading positions for over 15 years.