The 401st Blow :: Thoughts On Media

The Misalignment of Union Leadership

Posted in Law, Policy by Noah Harlan on November 23, 2010

The City of Newark announced today that they are going to have to lay off 167 police officers effective next Tuesday because of the misaligned incentives of union leaders and their membership. This is another case study in why the modern union is a dysfunctional beast. Let’s look at the winners and losers in this situation to understand why:

Who loses in this situation?

The citizens of the City of Newark lose because there will be fewer officers on their streets.

The officers who are losing their jobs lose because they won’t have jobs going into the holidays and the new year.

The officers who remain on the job are losing because with fewer fellow officers their workload will expand. The crime rate will go up and there will be fewer officers to cover an increasingly difficult situation.

So the citizens, the laid off officers, and the remaining officers all lose – So who wins?

The union leaders win and here’s why.

The city of Newark offered a complex, but reasonable set of compromises (read: pay cuts) that would be spread around the police force as a whole. Mayor Booker asked for the leadership to put the proposal to a vote of the members. The leadership of the Newark Fraternal Order of Police refused to let their membership vote on the proposal and save the jobs of their fellow officers. Why?

Well it’s rather simple: The leadership wants to keep their jobs safe, not the people they represent, and thus their incentives are not aligned with the union’s membership. When faced with the choice between some pain for everyone or extreme pain for a few, the leadership will always choose the latter. From the leadership’s perspective they have no incentive to keep officers employed. Once fired, an officer will soon fall out of the union (payment of dues will be prohibitive and he or she will likely move on), and once out of the union that fired officer won’t vote against the leadership that sacrificed them because they won’t have a vote. If the leadership refuses compromise but loses membership, they can say to the remaining members “I saved your job, I saved your benefits, I saved your wage,” whereas if they agree to broad compromises in the interest of the city, the department, and their members, they run the risk of members being disgruntled at the compromise and voting them out of their jobs.

The Newark Fraternal Order of Police leadership failed their membership today and everyone, except those leaders, will lose.

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