The Great Recession’s Institutional Change in the Public Employment Relationship

Interest in public sector employee benefits and compensation has resurfaced due to the economic downturn spurring a wave of actions that may threaten a once secure future of millions of public workers. The purpose of this article is to explore the ramifications of compensation and benefit changes on the fiscal health of state and local governments. This article reviews the evolution of labor relations in the public sector, recent institutional changes in employment and compensation, and implications on the fiscal health of state and local governments and their employees. The authors argue that these changes or threat of such changes, including restructuring collective rights, unionization, union dues collection, and the issues that can be bargained, are shifting the playing field for public sector employees and employers. Not since the passage of the right to unionization and collective bargaining in the 1960s have such major changes been on the horizon. These institutional changes will have longstanding effects including cost of government, types of workers attracted to government and even type and quality of services provided. Given also that employee compensation typically represents a major portion of the overall cost of state and local governments, it is not unexpected that political officials will continue to seek to rethink the employment relationship in order to ensure the fiscal health of their governments and those who serve in the public sector.