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Article Summary

Chandler, Timothy, and Peter Feuille. 1994. "Cities , Unions, and the Privatization of Sanitation Services." Journal of Labor Research 15 (1): 53-71.

Using extensive municipal survey data, Chandler and Feuille analyze the relationship between unionization and government decisions to contract for sanitation services within the conceptual framework of industrial relations. The authors conclude that the existence of a union neither increases nor decreases the probability of privatization with any statistical certainty.

Chandler and Feuille bring three theoretical assumptions to their study: 1) that political and economic environmental forces lead to choices by management, labor, and government which affect the industrial relations system; 2) that management must lead in the effort to change the system because unions and government have been slow to respond to economic and political changes; 3) that the values and beliefs of key decision-makers play a crucial role in determining decisions.

The authors are particularly interested in discerning the impact of privatization on votes, which are of course a primary concern to politicians and a constraint in municipal decision-making. They assume that the decision to contract sanitation services is directly related to gains or losses in votes, and develop a function which relates votes with changes in the cost to consumers (C), political rents received by various interest groups, such as political patronage jobs (P), and the change in the quality or effectiveness of government services (E). The authors conclude that the existence of a union neither increases nor decreases the probability of privatization. However, the nature of the relationship between municipal management and any union has a great impact on the decision-making process regarding privatization.

Chandler and Feuille theorize that the municipality will decide to contract the service if the political support for contracting exceeds that for retaining public production. They further separate the decision making process into two steps: 1) considering the impact on votes of contracting the service, and 2) making the decision to contract the service. City officials may wish to publicly contemplate privatization to indicate to voters a desire to cut costs, but the decision may be more driven by interest groups such as public sanitation unions or private sanitation contractors. The authors thus separate the decision-making process to evaluate the determinants of privatization of the service reaching the public agenda versus the determinants of the policy decision to privatize. Chandler and Feuille develop two additional functions for these two steps. Consideration of the option (CONSIDER) is a function of the perceived political popularity as measured by votes, whereas deciding to contract (CONTOUT) is a separate function of considering the option in relation to C, P, and E.

The authors use this model to test the impacts on taxpayer and voter support of privatization in light of three hypotheses drawn from the literature regarding the impacts of privatization on costs, labor, and quality. First, contracting results in cost savings (Savas, Stevens). Second, contracting is perceived to adversely impact public employees. Third, there is no evidence that contracting either increases or decreases the quality of service (Morley, Stevens). The authors model municipal fiscal health and union/management relations into the CONSIDER and CONTOUT functions by introducing additional variables such as per capita municipal debt, local tax revenues, the maximum hourly wage of public sanitation workers minus the local average wage in manufacturing, and a measure of the nature of the relationship between the sanitation union and public management.

To test this model, Chandler and Feuille have reduced their data sample size to 740 municipalities from the 1,541 respondents to their 1989 survey analyzed in their article "Municipal Unions and Privatization" published in the January/February 1991 issue of the Public Administration Review. It appears that they have drawn this sample of 740 from the larger data group to better reflect regional and city size categories of the population.

The data thus modeled indicate that municipal officials respond to both financial pressures and the interests of unions when making privatization decisions. Cities experiencing financial stress are more likely to contract for the service, since there is more voter political support of that decision in those cases. Unions alone do not increase or decrease the likelihood that a service will be contracted to a private firm. Rather, the relations between the union and management are the significant factor in the decision-making process. Cities in which there is a cooperative relationship are less likely to implement privatization than are non-union cities. However, cities with an adversarial relationship with the union are more likely to privatize sanitation service. The data do not indicate that municipal decisions to contract are simply a managerial response to difficult union relationships, but are the result of a number of complex political and fiscal variables.