Network News

X My Profile
View More Activity
Posted at 10:00 AM ET, 02/22/2011

Public employee unions vs. the rest of us

By Jennifer Rubin

Many liberals still profess confusion about the distinction between collective bargaining in the public sector and that in the private sector. Really, it's not that hard, unless the intention is to ignore the obvious differences between public employee unions (which negotiate against friendly politicians to whom the unions give huge campaign donations) and private unions (which negotiate at arm's length against employers that don't enjoy a monopoly in the market). David Brooks provides a helpful guide to the perplexed:

In Wisconsin and elsewhere, state-union relations are structurally out of whack.

That's because public sector unions and private sector unions are very different creatures. Private sector unions push against the interests of shareholders and management; public sector unions push against the interests of taxpayers. Private sector union members know that their employers could go out of business, so they have an incentive to mitigate their demands; public sector union members work for state monopolies and have no such interest.

Private sectors unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with. Through gigantic campaign contributions and overall clout, they have enormous influence over who gets elected to bargain with them, especially in state and local races.

There isn't much doubt, as Richard Cohen explains, that this imbalance has resulted in some grotesque outcomes. He writes:

In New York City, the No. 2 guy in the fire department retired on a pension worth $242,000 a year. In New York State, a single official holding two jobs and one pension took in $641,000. A lieutenant with the Port Authority police retired with an annual pension of $196,767, and 738 of the city's teachers, principals and such have pensions worth more than $100,000 a year. Their former employer, it goes almost without saying, is steamed. Their former employer is me.

These examples of pension obesity were culled from the local newspapers, which never fail to shock with revelations of how good life is for those who once worked for the city, the state or any one of several public agencies. In some cases, retirement came a mere 20 or so years after first reporting to HR and, if you were lucky enough to fake a disability - oh, my aching back! - the sky is virtually the limit. Fully one-third of all New York City cops who retired during a recent 17-month period did so on disability. They have dangerous jobs, we all know - but not nearly as dangerous as Long Island Rail Road workers. Almost all of them retired on disability. All aboard!

Is it any wonder that even private-sector union members have had it with their public union comrades?

Last night I spoke with Diana Furchtgott-Roth, a senior fellow at Hudson Institute who heads the Center for Employment Policy. She explained that the extent of the unfunded liabilities is huge, but actually uncertain. She told me, "Unfunded pension liabilities are estimated at $2 trillion or $3 trillion. But no one really knows because pensions depend on salaries at retirement and numbers of public sector workers. Both can change." Moreover, she observed that the problem isn't simply the extent of the liabilities, but what it means for residents whose taxes are going up and whose services are being pared back to pay for extraordinary benefits and salaries for public employee unions.

On this point, Tim Cavanaugh has a superb analysis in Reason Magazine of the degree to which California's indebtedness to public-employee unions has crowded out the progressive agenda of a liberal governor and an overwhelmingly liberal legislature. He explains:

[Orange County Supervisor John] Moorlach alludes to a striking feature of the current pension reform movement: It is a revolt led by the supporters of big government. At every level, Californians want assertive government. Republican farmers demand cheap water and more than $2 billion a year in subsidies. Unionized TV and movie productions command incentives such as $500 million in tax credits. In popular referenda during the last five years, California voters have voted themselves nearly $100 billion in bonded debt. The acceptable question is no longer whether to spend but what to spend it on.

This is why the most aggressive lobbying for pension reform is coming not from fiscal conservatives but from progressives, who see the logarithmic cascade of pension liability as a threat to public parks, environmental programs, and rail transit.

There is no doubt that public employees have successfully gamed the system. As Andrew Biggs of the American Enterprise Institute has found, public-employee unions have done much better than their private sector counterparts. Biggs writes:

Is the overpaid federal worker really just a myth? Not according to academic research. Economists have studied federal pay since the 1970s, and their methods and conclusions differ markedly from those of the government. Economists use statistical techniques that account for differences in workers' age, education, experience, gender, race, marital status and other characteristics.

Those studies generally have found a federal pay premium in the range of 10 percent to 20 percent, according to the 1999 Handbook of Labor Economics. A private sector worker earning $50,000 per year, for example, might receive $55,000 to $60,000 per year as a federal employee. The largest premiums are for lower-skilled employees, with smaller benefits as education increases. Interestingly, foreign studies also have found pay premiums for their government employees, suggesting government's weaker budget constraints allow public sector pay to rise above market levels. . . .

In addition, feds quit their jobs at much lower rates than private sector workers, implying that civil service positions offer better compensation, job security and benefits. These retention rates persist even with the federal retirement program's shift away from a defined benefit pension structure, which was believed to account for low quit rates.

In sum, one must try really hard to ignore the distinctions between public and private unions. It is those disparities that produce disproportionately rich salaries and benefits for public-sector employees and that burden state budgets. You would think that more politicians and pundits on the left, who have so many creative ideas for spending the taxpayers' money, would recognize that it's their agenda as well as the country's political health that is imperiled by the public employee union racket.

By Jennifer Rubin  | February 22, 2011; 10:00 AM ET
Categories:  economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: What options do we have on Libya?
Next: Maybe putting a KKK founder on license plates IS a rotten idea

Comments

The fact is it is not just unions that stand to lose, it is all middle class wage earners... What your analysis leaves out is the fact than in Wis. public employee salaries make up only 6% of the states budget, a budget btw, which was projected to run a 'surplus' this year before Gov. Walker pushed thru millions in tax breaks specifically to 'created' a deficit.you also fail to point out a well known fact that salaries for middle class have stagnated over the last two decades, while income for the wealthiest earners has skyrocketed - see Janet L. Yellen, President and CEO, Federal Reserve Bank, who says "...from 1973 to 2005... real hourly wages of those in the 90th percentile—where most people have college or advanced degrees—rose by 30 percent or more... among this top 10 percent, the growth was heavily concentrated at the very tip of the top 1 percent...at the 50th percentile and below—where many people have at most a high school diploma—real wages rose by only 5 to 10 percent" The squeeze is NOT just public employee unions - it is ALL hourly wage earners, see Walmart, where you can't even defend yourself from an gunman and not be fired - the last bastion of workers rights is public sector unions, not by choice - corporations would love to see unions vanish, simply because with them out of the picture their would be NO Political Action Committees left which can stand up the the many front organizations now funneling millions of dollars to their GOP candidates, period.

As corporations have sought to negate unions over the last 25 years, so have the salaries of middle class workers been hamstrung as well - we are quickly turning in the Brazil of North America.

Posted by: paulserrano | February 22, 2011 10:40 AM | Report abuse

That was a very nice article with a lot of details and reasons why there are adverse effects when public sector unions become too powerful.

It is important for state and local governments to offer compensation which helps ensure competent employees will be attracted to and stay in the public sector. Recognition must also be given to the fact that public sector unions may not not necessarily push for policies that ensure competent employees among its ranks but merely exist for the sake of growing the union itself and simply seeking more leverage and power.

Posted by: Fitz157 | February 22, 2011 10:41 AM | Report abuse

...further, the income gap between the richest and poorest Americans grew last year to its largest margin ever.

The top-earning 20 percent of Americans – those making more than $100,000 each year – received 49.4 percent of all income generated - compared with the 3.4 percent made by the bottom 20 percent of earners.

That's a ratio of 14.5 to 1 btw, was an increase from 13.6 in 2008 and nearly DOUBLE a low of 7.69 in 1968, and it's just going to get worse without a change in our tax system.

Posted by: paulserrano | February 22, 2011 10:48 AM | Report abuse

paulserrano said:

What your analysis leaves out is the fact than in Wis. public employee salaries make up only 6% of the states budget,
************************

The conflicts in Wisconsin aren't over salaries, it's over benefits.

Posted by: Fitz157 | February 22, 2011 11:01 AM | Report abuse

Most Americans don't have a clue what America was like before the union movement. The Koch brothers and their friends are waging total war against working people. If they win, our kids and grandkids can look forward to the tender mercies of billionaires, strikebreakers, and lifetimes of poverty and abuse. It has fallen to our generation to fight. We are in a war, and we are under attack. The sooner we all realize that the better.
I will not play the Koch's divide-and-rule games. I will not allow anyone to turn me against other working people.

Posted by: privacy5 | February 22, 2011 11:02 AM | Report abuse

Why are public employees any different than any other special interest? The Supreme Court said other groups get to donate as much as they want to politicians... why can't the unions? I hate partisans with their uneven arguments. What is good for the goose is good for the gander. You want to cut their pay and benefits? Negotiate them down. The idea that the public employees have any more sway than the Chamber of Commerce is silly.

Posted by: baldinho | February 22, 2011 11:10 AM | Report abuse

"The Koch brothers and their friends are waging total war against working people."

yea right. and scott walker is hitler/mussonlini/stalin/mubarak.

Posted by: engdre | February 22, 2011 11:12 AM | Report abuse

The US is quickly becoming a two class country, lower class and union class
Bobby G
Williams, AZ

Posted by: BobGrinnell | February 22, 2011 11:17 AM | Report abuse

"...further, the income gap between the richest and poorest Americans grew last year to its largest margin ever.

The top-earning 20 percent of Americans – those making more than $100,000 each year – received 49.4 percent of all income generated - compared with the 3.4 percent made by the bottom 20 percent of earners.

That's a ratio of 14.5 to 1 btw, was an increase from 13.6 in 2008 and nearly DOUBLE a low of 7.69 in 1968, and it's just going to get worse without a change in our tax system.

Posted by: paulserrano"

So what. The Left loves this red herring bogeyman. The dreaded "gap" between rich and poor gets ever wider! Somebody call someone!!!

If the rich are getting richer, good for them. I hope they get richer still.

Some evil rich person gets their salary increased by $100 and at the same time a trampled upon poor person gets their salary increased, but only by $10 - presto!!! The "gap" between rich and poor has widened by $90!

There's absolutely no context here. If a "poor" person's salary and life has improved over the years, that doesn't matter because some rich person's life has improved *even more*! How unfair! This is the type of Marxist thinking that for whatever reason assumes that there is constantly a defined amount of money out there and it must be divided evenly amongst the masses. Preferably by liberal politicians.

Posted by: RitchieEmmons | February 22, 2011 11:28 AM | Report abuse

"Most Americans don't have a clue what America was like before the union movement. The Koch brothers and their friends are waging total war against working people. If they win, our kids and grandkids can look forward to the tender mercies of billionaires, strikebreakers, and lifetimes of poverty and abuse. It has fallen to our generation to fight. We are in a war, and we are under attack. The sooner we all realize that the better.
I will not play the Koch's divide-and-rule games. I will not allow anyone to turn me against other working people.

Posted by: privacy5"

Comrade privacy5, Should we fight this war with mere conventional weapons, or should we break out the chemical gas and the nukes?

Posted by: RitchieEmmons | February 22, 2011 11:31 AM | Report abuse

"Why are public employees any different than any other special interest? The Supreme Court said other groups get to donate as much as they want to politicians... why can't the unions? I hate partisans with their uneven arguments. What is good for the goose is good for the gander. You want to cut their pay and benefits? Negotiate them down. The idea that the public employees have any more sway than the Chamber of Commerce is silly.

Posted by: baldinho"

You don't like partisans with their uneven arguments? How about partisans with their strawman arguments? I don't think even the staunchest conservative is saying that unions can't donate their money to whoever they want. Can you name a single person out there that has suggested that unions shouldn't be able to donate their money as they wish?

Posted by: RitchieEmmons | February 22, 2011 11:35 AM | Report abuse

Richie: You seem to be some sort of shill for big corporations. You seem to think it's OK that big business can get huge tax breaks, often letting them pay no tax at all, while the average working man gets no breaks. You seem to think that the hard work of the working man should all flow upward to their corporate benefactors.

Claiming that public employee unions are somehow the 'enemy of all of us' is ridiculous. Maybe some of them have more perks than you like, but they're not sucking money out of every aspect of American life like big business is. If the wealth of our nation is increasing (and it is), then why aren't more of us sharing in it?

This is not about 'wealth redistribution' -- although that's been happening on a grand scale -- it's about fairness. Big business in Wisconsin gets millions of dollars in tax breaks and middle-class civil servants are supposed to foot that bill? I don't THINK so.

More to the point, however; the unions have already made the financial concessions asked of them. The sticking point in all this is that they're threatened with having their collective bargaining rights removed. This is a far more profound problem; this is what they're protesting against -- the loss of their rights.

Posted by: bimplebean | February 22, 2011 12:14 PM | Report abuse

Both union and private sector employees are fighting for the crumbs left over from the very rich. This is why the Republicans destroy surpluses (Bill Clinton) with tax cuts for the very wealthy (G.W. Bush). It's why they keep saying "we're broke" on tv.

Any dollar you have is a dollar they should have, and they are going to darn sure squeeze you until they get it. Public or private. So keep voting Republican, geniuses.

Posted by: danw1 | February 22, 2011 12:24 PM | Report abuse

The top-earning 20 percent of Americans – those making more than $100,000 each year – received 49.4 percent of all income generated - compared with the 3.4 percent made by the bottom 20 percent of earners

Posted by: paulserrano | February 22, 2011 10:48 AM
------------------

Considering the top earning 10% pays 71% of all federal income taxes and the top earning 25% pays 86% of all federal income taxes, while the bottom 50% pays only 3%, that sounds about right. And I agree, tax reform is certainly needed.

Posted by: paco33 | February 22, 2011 12:25 PM | Report abuse

bimplebean, This is getting amusing.

First is the liberal propensity for the false correlation. I am opposed to public employee unions, therefore I am a "shill" for big corporations (presumably because they got a tax break in WI). I am indeed opposed to public unions. The only thing in business that I would "shill" for is a low form of taxation and minimal regulations, no matter how big the business is. And no favoratism for those companies that are politically connected (like those 700+ companies that have been granted waivers to opt out of Obamacare).

Second, the liberal propensity to make preposterous accusations. Big business is "sucking money out of every aspect of American life?" Does it not occur to you that business (big and small) is what actually *creates* the money that makes the economy go, and provides us all with our wages? Including your cherished and unionized public sector working man. More over, those public employees in WI and across the entire nation contribute exactly $0 to the economy.

Third, the liberal propensity to parse words so that they sound so wonderful and soothing (like racial quotas being called "affirmative action"). "This is not about 'wealth redistribution' -- although that's been happening on a grand scale -- it's about fairness." The liberal concept of "fairness" is ALWAYS about wealth redistribution. How does one define "fairness?" I define it as permitting the private sector to be able to do the best it can for itself and without an overbearing set of regulations or predatory politicians pressuring that private sector to bend to their political will. The govt should provide legal protections and little else. Your idea of "fairness" is that money earned by the private sector being taken by the govt so that the politicians and bureucrats can decide where or to whom that money should go. Shockingly, it usually goes to political favorites.

Fouth, the liberal propensity to automatically assume that a business tax break is not only some sort of moral affront, but that it automatically means that the state is out that money (never mind that it was never the state's money in the first place). The concept of a lower and broader tax base actually bringing *more* money into state coffers is lost on the Left. That a low business tax will attract businesses to that state and those businesses will create more jobs (and taxpayers) is also lost on the Left.

The Left has a tendency to think of virtually everything in political terms first and foremost. It's about political power and social control more than anything else, but they can't admit to that. Therefore, out comes the pretzel logic, the false accusations and the strawmen to try to justify their ideological stance. Unfortunately for the Left, the rest of the country isn't as apathetic about it like it used to be.

Posted by: RitchieEmmons | February 22, 2011 2:23 PM | Report abuse

What do you do if you're an average working man working for a big business -- steal away to the the can and wait for your head to explode?

Posted by: aardunza | February 22, 2011 4:18 PM | Report abuse

If you are a superstar(surgeon, lawyer, etc) you are better off in private. However on if you are a run of the mill laywer, IT person, accountant it is much better to work 30 years with no layoff, get a raise every year, accrue pension and realize you will get to 100K or better in time. Only 4% of the population makes 100K anyway so what do you have to lose? Your pension will make you far better off than your private sector person. If you are a low end worker you are far better off in the govt- we have not had a secretary where i work(private) in 20 years but there are still many in govt offices.

Posted by: olderbutwiser | February 22, 2011 5:03 PM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2011 The Washington Post Company