Today, the U.S. Supreme Court will hear arguments (Janus v. AFSCME) about whether public sector unions can collect fees from government workers who opt out of the union. There is some evidence that the current court is prepared to rule against the unions, overturning a 1977 opinion that concluded unions could collect some fees from workers who opt out of full membership. If the court does rule against unions, it will be easier for state and local governments to deal with their rising pension costs.

Twenty two states currently allow public sector unions to collect agency fees, which are fees levied on everyone covered by a union contract, even if the person opts out of full membership. The agency fees are supposed to cover the costs of bargaining only and are not to be used for any political purposes.

Unions insist that agency fees are necessary to prevent free riding i.e. to prevent workers who benefit from the union contract to avoid paying some of the costs incurred in the bargaining process. But not all covered workers benefit from union contracts.

For example, union contracts often tie promotions and other benefits to seniority, or time on the job. This means that less-senior workers are often denied promotions even if they are more productive and deserving than their more-senior counterparts. There are other examples of workers who are harmed by union contracts, making the free-riding argument weak at best.

Along with the free riding argument, the 1977 Abood vs. Detroit Board of Education case that sanctioned agency fees hinged on the idea that union activities could be divided into bargaining functions and political functions. Mandating that workers contribute to political causes they don’t support is obviously unconstitutional, so it was only by splitting union activities up that mandatory agency fees survived. But distinguishing between bargaining activities and political activities doesn’t make much sense.

From an economic perspective, anything a public sector union bargains over is inherently political. Resources are scarce, which means if something is used for one thing it can’t be used for another. If a teachers’ union successfully bargains for higher wages, those tax dollars can’t be used for roads, police, fire protection, or other public goods and services. The same argument can be made for police unions or firefighter unions that successfully negotiate higher wages.

The scarcity of tax dollars means that any benefit won by a union either takes resources away from another unit of government or requires higher taxes. Since the allocation of scarce taxpayer money and the levying of taxes are inherently political decisions, it’s hard to see how any union activity isn’t political in nature.

Furthermore, union bargaining may impact the pay structure of municipal employees in ways that taxpayers may not support. For example, there’s evidence that teachers unions tend to discourage bonuses tied to student test scores. To the extent voters prefer such bonuses, this is another example of union bargaining affecting a political decision.

There’s also more direct evidence showing that state laws that mandate collective bargaining act as a subsidy for the political activities of unions by making it easier for them to mobilize their members, which boosts political participation. The authors conclude that public employee unions would likely have less political power without mandatory collective bargaining laws.

The case has financial implications as well. Rising employee pension costs are a concern for many state and local governments. One study finds that state and local pension contributions would have to more than double to pay promised benefits. Without policy changes, the authors estimate that taxes would need to increase by $1,385 per household and pension contributions would eventually consume 14% of state and local revenue.

There’s substantial evidence that public sector unions contribute to state and local pension problems by increasing the total compensation of government workers and thus the overall costs of government provided goods and services.

If the Supreme Court overturns the Abood decision, it should be easier for state and local governments to lower costs and get their financial situations under control. This is not only important for taxpayers, but also government workers, who deserve real benefits that taxpayers can afford rather than the pie-in-the-sky promises they’re currently getting.

The arguments for maintaining mandatory agency fees are weak, but that doesn’t mean the Supreme Court will rule against unions. But if it does, state and local governments will have a great opportunity to get their finances in order.