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A More Perfect Union?

Demonstrators shouting in the streets. Chaos in the government. Politicians leaving the capitol. No, this isn’t the Middle East. I’m talking about Wisconsin and Governor Scott Walker’s proposal to reduce the bargaining power of public employee unions.

When politicians attack “special interest groups,” we tend to think of greedy corporate fat cats, small business owners, and various types of wealthy investors all jockeying to get the best possible deal from the government on grants, loans, regulations, and taxes.

Surprisingly, the largest special interest group of all is none of these. It is those who work for the government and the unions that represent them. No single interest group gives more to politicians than their public unions.

According to the January 8, 2011, issue of The Economist, not exactly a conservative publication, over the past 30 years private union membership fell from 44% to 15% while public union membership increased from 11% to 36%. There are now more US workers in unions in the public sector than in the private sector, even though the private workforce is five times larger than the public.

As a result, The Economist notes, public sector jobs are a “haven of security and stability. The result is a paradox. The typical public worker is better off than the people he is supposed to serve and the gap has widened significantly over the past decade. In America, pay and benefits have grown twice as fast in the public sector as they have in the private sector.”

According to an August 13, 2010, article in USA Today that cited statistics from the Bureau of Economic Analysis, federal compensation is up 36.9% from 2000, adjusted for inflation, compared with an increase of just 8.8% for private workers.

Federal civil servants’ average wages are 60% higher than those of their private counterparts, and their benefits are 300% greater. In 2009 the average public sector worker earned $50,462 in wages with benefits worth $10,589. A non-military civil servant working for the federal government earned $81,258 with $41,791 in benefits. Additionally, many public workers, including state and local employees, can retire in their mid-50’s on close to full pay.

In general, lower-level public workers are paid more than their private sector counterparts, while higher-level public workers are usually paid much less than their peers in the private sector.

Only recently have workers in the private sector awoken to the disparity that has developed in private and public sector wages. It’s not surprising that private sector workers are losing sympathy for their public sector counterparts and are beginning to call for serious cuts in public sector wages and benefits.

One of the largest debts that governments have rung up over the great spending spree of the past 20 years is in public pensions. The Economist estimates that states alone have close to $5 trillion in unfunded pension liabilities.

One area of possible reform in public wages would be to bring public sector jobs into parity with the private sector. Yet changing courses will not be easy. Many left-of-center political parties in most developed countries are largely backed by public unions. In England, the Labor Party gets 80% of its funding from public-sector unions. In the US, teachers alone accounted for one-tenth of the delegates to the Democratic convention in 2008.

Major corporations have routinely slashed promised pension benefits because of financial woes (Delta and United come to mind). Yet even mentioning the possibility of freezing or reducing public benefits brings people worldwide out of their seats and into the streets. The uproar in Wisconsin may be only the first sign of things to come.

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9 Responses to A More Perfect Union?

  1. Scott February 28, 2011 at 8:43 am #

    Rick,
    Thanks for researching and preventing the facts. I was enlightened to Union/Government pay scales last year. My son Travis was part of a crew building a greenhouse on the sight of a High School in a Las Vegas suburb. The job was a “prevailing wage” project that paid $65 per hour / $97.50 overtime compared to $12 per hour in the private sector. As a father I was glad to see my son benefit, but as a tax payer and small business owner I was angered at the thought that this is commonplace and only a small tip of the iceberg of Government spending practices,with my tax dollars. It’s know wonder were in such a financial mess.
    Scott

  2. Scott February 28, 2011 at 8:49 am #

    Rick,
    Spell check can’t read my mind (what mind). I hope you will forgive me. I meant to say “presenting the facts”, not “preventing the facts” in my reply. Guess I don’t proof read well when my blood pressure is elevated!
    Scott

  3. T February 28, 2011 at 9:05 am #

    Rick, I’m disappointed in you. Judging by the links you post on Twitter you read a lot of Faux News and WSJ opinion pieces neither of which will give you an accurate picture of what exactly is going on in Wisconsin.

    Glad you did the math on how middle class public servants are making “too much”. Except for one thing, the unions and Democrats have agreed to the pay and pension cuts necessary to balance the state’s budget.

    The Governor of Wisconsin refuses accept anything short of stripping all unions (EXCEPT the police, firefighters and highway patrol unions) of collective bargaining rights. Why not the police, firefighters and highway patrol unions?… because they voted for him last election and the rest did not. That right there is what the people of Wisconsin are protesting. The attempt to dismantle political organizations that oppose your style of thinking.

    Tax cuts for the rich and pay+pension cuts for the middle class public sector workers. Go REPUBLICANS!

  4. Rick Kahler February 28, 2011 at 10:47 am #

    T,

    Sorry to disappoint, but we will have to agree to disagree.

    Indeed, the public unions in Wisconsin have agreed to the pension and benefit cuts necessary. You may want to check your sources as I understand that pay cuts are not a part of the package, that’s according to the Huffington Post, “Walker’s proposal would double the amount state employees pay for health insurance and increase contributions to their pension funds.

    Also, the bill doesn’t strip all unions of collective bargaining rights. It does take away the collective bargaining rights as they relate to benefits, not pay, of the public unions, except the police, highway patrol, and fire fighters. I agree the governor’s reason for excluding them appeared inconsistent and many believe they should be treated equally to the other public unions and their collective barganing rights on benefits ended.

    Likewise, to get a handle on our out of control spending in this country states need to seriously consider making their public unions similar to federal public unions and deny them any collective bargaining rights. This is a point on which I agree with FDR, that public unions have an inherent conflict of interest when allowed to have collective bargaining rights.

    Finally, the fact remains that public workers earn substantially more than their private counterparts. That is well researched and documented. The benefit reductions requested of them won’t in anyway get Wisconsin State earners to parity with the private sector, they will still be earning more than private workers.

    Source: http://www.huffingtonpost.com/2011/02/21/wisconsin-protests-_n_826246.html

  5. john February 28, 2011 at 1:40 pm #

    Rick
    My experience and observations in the federal goverment(40 years) do not match your research. In my area of expertise most jobs in the federal sector pay 30-100% less then the private sector.High level jobs in the private sector are often 100-300% higher in pay and benefits than similar jobs in the private sector. The bonuses in the private sector often match or exceed the yearly salary.

    I do find federal,state and local government to be bloated with to many employees, particularly at the higher levels. I feel that most agencies can take a 33% reduction in employees (with half of that reduction being taken at the higher salary levels) without any loss of service. Government has a tendency to become top heavy.

    I am not a supporter of lowering government salaries.Pay a competitive wage to attract the best employees and insist on a lean organization. Across the board wage cuts are a cop out.Good managers will find the fat.

  6. john February 28, 2011 at 1:49 pm #

    Whoops…The third sentence should read: High level jobs in the private sector are often 100-300% higher in pay and benefits than similar jobs in the federal government sector.

  7. Rick Kahler February 28, 2011 at 2:50 pm #

    John,

    I can’t argue with your experience, but I can give you a site for the research from the Bureau of Economic Analysis.

    http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm

  8. T February 28, 2011 at 3:37 pm #

    Rick, I agree to disagree. My apologies, you are correct on pay not being a part of the cuts to balance the budget. But I do take issue with this statement:

    “It’s not surprising that private sector workers are losing sympathy for their public sector counterparts and are beginning to call for serious cuts in public sector wages and benefits.” – Rick Kahler

    According to a Feb 22nd USA TODAY/Gallup Poll quite the oppose is true:

    “Americans strongly oppose laws taking away the collective bargaining power of public employee unions, according to a new USA TODAY/Gallup Poll. The poll found 61% would oppose a law in their state similar to such a proposal in Wisconsin, compared with 33% who would favor such a law.”
    – Source: Poll: Americans favor union bargaining rights

    This isn’t the first time that Scott Walker has tried to manufacture a crisis in order to bust unions and attempt to save the state money. As Milwaukee County Executive in 2009 he unilaterally ordered the firing of 26 courthouse security guards and awarded the security contract to the private foreign security firm Wackenhut. Source: Milwauke Journal Sentinel Online

    “The County Board then overrode Walker’s decision, but he went ahead with the move anyway under justification of a budget “emergency.”
    Later, an independent arbitrator determined that no real “emergency” existed in the country, and ordered the reinstatement of the union security guards who were fired. With the ordered reinstatement, Walker’s move will end up costing the county about half-a-million dollars.

    “Finally, and perhaps most damning, Wackenhut was subsequently involved in a scandal involving raunchy pictures taken of some of their personnel hired by the State Department in Afghanistan. In Milwaukee County Wackenhut ended up hiring a man with a criminal record as the security chief in charge of the county courthouse.” – ABC.GO.COM

    Given Scott Walker’s track record I can only imagine how this one turns out.

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