Analysis: Examining Senate Bill 5

Absent a shocking turn of events, Ohioans will be asked this November to vote on keeping or repealing Senate Bill 5 – the measure passed this spring that sharply curtails the collective bargaining rights of public employees.  Opponents of the bill are currently gathering signatures and all evidence indicates that they will be successful.

Political divisions will drive some voters

Some voters will base their decision on pure politics.  Public employee unions give a great deal of money and organizational help to candidates, most (but not all) of whom are Democrats.  Of the top 10 political donor organizations in the last election cycle, the only two that even lean toward Democrats were public employee unions.

So people who believe that Democrats winning elections is good and important in itself will probably vote to repeal SB 5; people who believe that Republicans winning elections is good and important in itself will probably vote to keep it.  The political effect of the bill will inevitably color the arguments each side makes about its economic effect.  Any honest discussion of the merits of the bill needs to acknowledge this fact about the politics of the bill.

Specifics of the bill

On the actual merits of the bill, each side raises competing arguments based on both fairness and  economic effect.   It can seem at times that the two sides are talking past each other, but in fact the fairness and economic arguments are inter-related. 

For example, one argument in favor of SB 5 is that it will save the taxpayers money.  Partly this is because of some specific provisions in the bill – for example require state employees to pay more for retirement.  Partly this is because of projected savings that result from public employers dictating terms rather than negotiating the terms with public employees.  Opponents of SB 5 respond in part that it is unfair to deprive state employees of the right to negotiate the terms of their employment. 

The right to negotiate is not merely argument unto itself; it also undercuts the cost savings argument.  In the current economic climate public employee unions had been making wage and benefit concessions to save money, and therefore jobs.  Many of the cost savings attributed to SB 5 would have been gained absent the bill simply by negotiating those savings rather than dictating them.

This isn't to say that SB 5 would save no money.  Certainly an employer who can unilaterally decide terms of employment will strike a better deal than one whose employees can negotiate.  But a full discussion of the fiscal effects of the bill must include discussion of what savings can be gained by negotiating them.

The fairness argument

Proponents of SB 5 raise their own fairness argument – that public employees receive higher pay and better benefits than private sector workers.  Just this week Gov. John Kasich argued the unfairness of state worker compensation in light of the “shabby” benefits he supposes a Bob Evans waitress gets.

This argument compares workers who are not comparable.  Public employee positions tend on average to require more formal education (teachers, government lawyers) or specialized skills and experience (police and firemen, for example) and include fewer low-skill, low- wage jobs.  Comparing the compensation of an average public employee to that of an average private employee is comparing apples to apples -- plus plums, plus cherries, plus grapes. 

Labor advocates argue that their efforts benefit all workers.  Some studies suggest that in areas with larger concentrations of union members salaries are higher for both union and non-union workers.  To use the Governor's example, if government workers in a labor market receive good benefits, Bob Evans has to compete for workers by offering comparatively less shabby compensation.  

The precise effect of the bill will be infinitely debatable –  the complexity of labor markets makes it impossible to definitively predict such things.  But the campaign will at the least provide employment for small armies of political consultants.  As they make their arguments, the voters will need to drill beneath the surface rhetoric to reach their decisions.