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Mass Exodus of Public Union Fee Payers After High Court Ruling

April 5, 2019, 8:10 PM

Two major public sector unions lost nearly 210,000 agency fee payers combined in 2018, according to recently filed reports showing the impact of a U.S. Supreme Court decision that prohibits forcing nonmembers to pay for collective bargaining and other nonpolitical expenses.

The American Federation of State, County and Municipal Employees saw a 98 percent drop from the prior year, leaving 2,200 agency fee payers. The Service Employees International Union lost 94 percent of their agency fee payers, reducing the number of agency fee payers to 5,800.

The disclosure reports filed with the Labor Department last week provide an early snapshot of ramifications of the high court’s June 2018 ruling in Janus v. AFSCME, which said mandatory agency fees in the public sector violate nonmembers’ First Amendment rights. Agency fees typically amount to 75 to 85 percent of full union dues.

The two main public teachers unions similarly lost their fee payers following the ruling, according to government reports and union representatives.

While the immediate and near total exodus of fee payers from public sector unions was expected, the long-term impact of the Janus decision will likely be measured in how many members quit. The ruling allows public employees in unionized workplaces to benefit from collective bargaining without paying anything.

“Most agency fee payers left,” said Patrick Wright, vice president for legal affairs at the Mackinac Center for Public Policy, a conservative advocacy group. “The big question going forward is how many full members are going to join them.”

The Mackinac Center is one of several conservative groups running campaigns urging public employees to consider dropping out of their unions.

The early returns show little change in AFSCME and SEIU membership numbers. AFSCME gained by more than 9,000 non-retired members in 2018, about a 1 percent gain over the previous year. The SEIU lost nearly 4,500 non-retired members, which represents a 0.3 percent drop.

Members Chose to ‘Stick With Their Union’

An SEIU spokesman said in an email that the disclosure report show “members are sticking together despite anti-worker extremists spending millions to divide us.” AFSCME President Lee Saunders said in a press release that “overwhelming numbers” of members chose to “stick with their union.”

The relatively small changes in AFSCME and SEIU’s membership in the immediate aftermath of Janus reflect the robust internal organizing campaigns in public sector unions, said Jeffrey Keefe, a researcher at the left-leaning Economic Policy Institute who consults with unions. But some unions may redirect resources away from internal organizing over the next few years, he said.

Unionization rates among teachers are about 24 percent lower in states with collective bargaining that prohibit mandatory agency fees under their so-called right-to-work laws, compared to rates in states that allowed such fees before Janus, Keefe said.

Teachers Unions

The National Education Association and the American Federation of Teachers submitted their disclosure forms to the Labor Department last year, but they cover less time since Janus was decided. While AFSCME and SEIU collect data for each calendar year, NEA uses a September to August schedule and AFT uses a July to June schedule.

The NEA, which had nearly 88,000 agency fee payers in its 2017 report, left that section blank in its latest report because of the Janus ruling, an NEA spokesman said. The report showed that the union’s non-retired membership grew by more than 13,000.

The AFT’s reporting period for its 2018 submission closed days after Janus was decided, but a union spokesman told Bloomberg Law that it lost 84,600 agency fee payers as a result of the ruling. Nevertheless, the AFT added 100,000 members from February 2018 to February 2019, more than offsetting the departure of fee payers, the spokesman said.

Dollars and Cents

The reports are less clear about the financial impact of Janus than its effect on agency fee payers.

The SEIU, for example, reported an $8.6 million gain in revenue from fees and dues despite losing members and fee payers, but accounting lags result in 2017 funds getting reported for 2018. AFSCME reported a $4.2 million drop in revenue from fees and dues.

Outside of funds taken in, public sector unions have had to dish money out to defend against a slew of Janus-related lawsuits seeking fee refunds, and challenging unions’ power to represent nonmembers and their ability to limit when former members stop paying dues.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Simon Nadel at snadel@bloomberglaw.com; Terence Hyland at thyland@bloomberglaw.com