Public Employee Unions Can’t Win This Way

“It isn’t lost on us that the one commonality in Wisconsin, San Diego and San Jose is that we were considerably outspent.  You have politicians conspiring with corporations to take away pensions from workers.” Steven Kreisberg, director of collective bargaining at the American Federation of State, County and Municipal Employees. quoted in a New York Times article.

Mr. Kreisberg is correct (except for one word*) but the generous pension and retiree health benefits that unions have historically won for their members through political influence are now obviously unaffordable** and cannot be sustained by buying more political favors and deluding more voters.  There is a better way – maybe the only way – and it involves a radical change of course.

I believe that, because of the pliability of your typical voter, if AFSCME had pumped $40 million into the Wisconsin recall race Scott Walker would have been defeated.  However, I also believe that AFSCME did not have $40 million to pump into that race and, going forward, all unions will have trouble collecting dues and attracting members.

If public employee unions want to maintain benefits that they have won for their members they must recognize that most taxpayers, having been lied to about the cost of those deferred benefits, can’t afford to pay for them.  They need to come over to the side of taxpayers and, rather than fighting within a corrupt system, demand total overhaul.

Few taxpayers would begrudge a teacher or policeman getting a fair pension after decades of service but most would begrudge political consultants getting million-dollar paydays for providing advice that usually involves more debt.

A campaign finance system with returns of 100-1 to campaign donors can’t be beaten and public employee unions, with diminishing resources, won’t be able to compete within it.

.

.

.

* It’s not primarily corporations that conspired with politicians.  Corporate taxes pay a much smaller percentage of these public employee benefits than both income and property taxes.  Besides, on the local level it’s usually law firms and individual contractors, not necessarily corporations, using pay-to-play loopholes who would be fighting to maintain their gravy trains at the expense of public employee benefits.

** They were always unaffordable but only now, after the actuarial games have been played out and these plans are going bankrupt, is it obvious to even NASRA members.

25 responses to this post.

  1. Posted by Anonymous on June 7, 2012 at 12:12 pm

    John, I made substantially less money when I worked for the government than I would have if I had worked in the private sector. If i made one million dollars working in the public sector over my lifetime, I would have easily made 1.4 million in the private sector. This is a fact and not an exaggeration. I always kept track of what someone in the private sector was making over the years. The reason I worked for the public sector was for the security of pension and benefits. If the government has no choice but to take away my beneifts and reduce my pension, then I made a very poor decision believing that less salary would get me a pension and benefits. If things are indeed to be made even and my pension and benefits reduced to the private level, why not now pay me the same money I would have made in the private sector which would have been an extra 400,000 dollars easily. Hard to believe isnt it? But it is very true. When somebody works for the private sector it is up to them to save or invest the money that they made. When you work for the government and they pay you substantially less money with the promise of a pension and benefits you are relying on the government to use that money for what it was promised to do. I guess you could say anyone who trust the government deserves what the get.

    Reply

    • I don’t buy that public sector salaries are lower since there are few identical jobs to compare and for some where comparison is possible (e.g. elementary school teacher) the public sector has much higher salaries, at least when you look at Public school vs. Catholic school salaries here in NJ. Tag on benefits and it’s no contest. However, the problem with including benefits in the compensation of public workers is that, in most states these days, it’s becoming obvious that those benefits aren’t guaranteed.

      Also the public sector is much more unionized so a janitor job in the public sector (again with benefits) normally nets much more than in the private sector and has more security.

      Then there’s the anecdotal evidence. How many public employees are quitting their jobs to enter this private sector?

      Reply

      • Posted by Anonymous on June 7, 2012 at 3:54 pm

        With some luck, may not have to wait long for that answer. Once the economy really recovers, many publics will leave for the rising tide of the private sector. Who wants to stay on a sinking ship in a job where you feel reviled? Of course, you will lose the best and brightest, leaving the government that much dumber.

        Reply

        • Posted by Tough Love on June 7, 2012 at 4:08 pm

          Quoting, ….”Of course, you will lose the best and brightest”

          I gesss it’s all relative …………… LOL

          Reply

      • Posted by Anonymous on June 7, 2012 at 9:50 pm

        John, I was speaking about myself and I am telling you I made at least 40 percent less than the public sector my entire career with the state. I started at 5 dollars per hours while my counterparts in the public sector made at least 11 dollars per hour. Thirty years later my final salary was almost 17 dollars per hour while my counter parts were getting at least 24 dollars per hour and more. Even if you choose not to believe me John those are the facts and in my case I dont feel my pension should be reduced because of what I have just stated. Do you think 1300 dollars per month after 30 years of service should be reduced?

        Reply

        • There aren’t really comparable jobs because of the nature of the private and public sector. There’s the freedom/security tradeoff. And even if salaries are lower for a particular public sector job there are vacation/sick days, defined benefit pensions, retiree health care, and until recently more job security that inflated the value of compensation for public employees.

          The other consideration is that salaries vary within the private sector as well. Usually it has to do with job performance and market factors. So whereas you may be comparing your $17/hr to a private sector worker getting $24/hr, there could be people at other companies doing a similar job and getting $12/hr for it. It’s the nature of a free market.

          Reply

          • Posted by Anonymous on June 7, 2012 at 10:57 pm

            How can you claim that there are defined benefits and health care, when for years you have been telling us there is no way they can continue to exist because the money is not there? I guess they exist when you want them to exist to suit your argument.

          • Even if the pensions are cut by 50% (a likely scenario by 2017) they’re still better than the 401(k)s that private sector employees have been duped into. And retiree health care in the private sector – where?

    • Posted by Tough Love on June 7, 2012 at 12:44 pm

      Depending on the period of years in which you worker, and perhaps the occupation, public sector pay MAY have been lower (on average). If you worker from 1950-1980, I’d say yes for most of that period, if that period was 1960-1990, I’s say yes for perhaps 2/3 of it …and so on. “Cash pay” on average has been quite close for the past 20 years. Also, Gov’t BLS stats suggest that certain high level occupations (doctors, lawyers) pay less in the Public Sector while virtually all Blue Collar jobs pay more.

      So yes …. perhaps there is justification for SOME DEGREE of greater pension to equalize for lower cash pay. However, today’s Public Sector workers (with few exceptions) do not earn less in cash pay and are therefore not entitled to greater pensions. And human nature makes people compare to the highest salaries out there. I’ve seen comments from Public Sector IT professionals who seem to think the pay level at Google and such are what they should be comparing to. I really doubt that. No offense to Public Sector IT professionals, but the mindset of anyone who goes into Public Sector employment is hardly the entrepreneurial spirit Google looks for when hiring.

      Reply

    • Posted by MJ on June 7, 2012 at 5:19 pm

      First of all I doubt that you made that much less than any private worker. Furthermore, no offense but publics are not necessarily the best or the brightest. IMHO most are those who would never make it in the private sector where employees are expected to produce something. When you factor in the early retirement age, taxpayer funded benefits for which most of you paid nothing and million dollar pensions over the course of one’s retirement—it is obvious why things are in a state of turmoil. It is much harsher to string publics along than it would be to make the necessary corrections immediately so that all have a chance to adjust–after the whining and gnashing of teeth that is.

      Reply

  2. Again, the real winner Tuesday was reality. Wisconsin private sector workers took a huge hit over the last decade, and worry that unchecked state and local government growth and increased taxes will finish them off. For example on pensions alone the average Wisconsin household will have to pay more than $1,500 in additional taxes every year for 30 years to fund false promises and receive absolutely no government services in return. For a lot of average households suffering lost jobs, reduced pay, benefit cuts and no retirement security, that combined with built-in tax increases could be enough to sink them. Republicans and Democrats are unwise to read more into the Wisconsin results. If Republicans think this is part of some massive anti-union/government wave, they may be in for a shock. The bigger shock is in store for Democrats who delude themselves it was just some vote-buying propaganda campaign. The problems average families face are real, and the side that comes up with real solutions will prevail. Most Wisconsin voters think Scott Walker may be doing that. One thing they know for sure is that while they are not fundamentally anti-government, they certainly cannot afford government as usual.
    http://www.statebudgetsolutions.org/blog/detail/commentary-fiscal-reality-wins-a-victory-in-wisconsin

    Reply

  3. Posted by Tough Love on June 7, 2012 at 12:28 pm

    Quoting … “Few taxpayers would begrudge a teacher or policeman getting a fair pension after decades of service but most would begrudge political consultants getting million-dollar paydays for providing advice that usually involves more debt.”

    The nonsense and ripoff by those with political connections (the consultants above) is obvious. And, of course, nobody “would begrudge a teacher or policeman getting a fair pension after decades of service” ….. by there is going to be a BIG fight over what’s “fair”. I know the #s , 2nd only to you because you do this for a living (while I’m only peripherally involved).

    Today, if we take a Private Sector worker and a Public Sector worker retiring with the SAME pay, the SAME years of service, and the SAME age at retirement. the lump sum value at retirement of the Public Sector worker’s pension will range from AT LEAST 2.5x to 5+x greater (for safety workers) than their Private Sector counterparts.

    If we accept most “cash pay” studies that there is little difference in Public/Private Sector cash pay, then there is no justification for ANY greater pensions. So while as a Taxpayer, I believe FAIR is no better than what the typical Private Sector worker gets, because these Public Sector workers have gotten used to so much for so long, do you think they will agree to accept pensions 20% to 40% of what they get today ?

    Additionally, I believe that that reduction should apply to future service accrual of CURRENT (not just new) workers ….. because we need to stop digging this hole deeper, and because that’s “FAIR”.

    This will not by easy.

    Reply

  4. Posted by Anonymous on June 7, 2012 at 12:49 pm

    The main problem is that every public employee or retirees did not get the same pay over their career especially those who are already retired and have been retired for years. So to say that all public workers have received the same pay is erroneous. That being the case how can you everyone be lumped into the same category. I believe that what makes government so absolutely ineffective and crude. In a world which is so technologically advanced why is there no room for solutions with according to specific individual situation. Is it that difficult to accomplish? Politicians will on the other hand set forth legislation in such a way as to purposely make it complicated but the results are usually simple and ineffective.

    Reply

  5. Posted by Anonymous on June 7, 2012 at 1:02 pm

    Another issue which is never addressed iin reference to public employees are mandatory paycheck deductions which the employees cannot opt out of. There are union dues which are mandatory. Even if you are not a full union member you must pay 75 percent of the union dues. There are life insurance premiums which are mandatory. Pension contributions are mandatory. There is no opting out of any of these. When you work a private sector job, it is your decision if you wish to pay these fees or make more money in your paycheck. Over a life time these deductions add up to a good amount of money.

    Reply

    • Posted by Tough Love on June 7, 2012 at 1:11 pm

      Considering that the typical Public Sector employee’s pension contribution (INCLUDING all the investment income earned during his/her career) RARELY accumulates to a sum at retirement sufficient to purchase more than 10-20% of the “promised” pension, having to make that contribution hardly seems like a hardship to me.

      Reply

    • There are unions in the private sector (for now) and employees in them have similar issues. And many of those multiemployer plans they’re in are funded worse then public plans, as hard as that may be to believe, and though they have PBGC protections it’s at lower limits. Again, a trade-off for a sense of security, whether it’s real or not.

      Reply

    • Posted by briandin on June 7, 2012 at 2:19 pm

      “Another issue which is never addressed iin reference to public employees are mandatory paycheck deductions which the employees cannot opt out of. There are union dues which are mandatory.”

      The quintessential “mandatory deduction” for private sector workers is/are social security withholding and FICA. Both are hollow promises which the government is free to amend/alter and in fact will as the ponzi scheme underlying these programs collapses.

      We are all in the same boat. There is nothing unique to the public sector except that up until now they were able to bribe the politicians with their union political contributions. The country might have been able to skate by with a bloated public sector and a bloated welfare/entitlement sector, but not both. Not enough people to pull the cart anymore. It will get much worse.

      Reply

  6. Posted by Javagold on June 7, 2012 at 1:51 pm

    You must be a real fool to give your vote today for a promised IOU tomorrow.

    Reply

    • It’s done 100% of the time through the electoral process we’re stuck with.

      Within a system where a precondition of getting on most ballots is taking bribes there is a definite hierarchy as to who gets their IOUs honored.

      Reply

  7. Posted by Anonymous on June 7, 2012 at 2:12 pm

    politicians prayer: May the majority of voters remain uniformed fools

    Reply

  8. Posted by Anonymous on June 7, 2012 at 6:11 pm

    Congress should go next – 401k’s for our elected representatives.

    Reply

    • Posted by Tough Love on June 7, 2012 at 7:00 pm

      Excellent idea …. for ALL new employees and for FUTURE service of CURRENT employees.

      Reply

  9. Posted by Anonymous on June 7, 2012 at 10:13 pm

    Jus declare Bankruptcy, PLEASE !!!

    Reply

  10. Posted by Sally Palmer on July 1, 2012 at 11:57 am

    How curious that no one mentions that today we Americans (especially well-off Americans) actually pay taxes at a lower rate than at any time in the last 50+ years……. Yes, there have been some abuses of public pensions, but most of these attacks on public sector workers are just the latest attempt to divert attention from ongoing and deepening middle class misery while the rules are rewritten to serve the rich and powerful. Six to eight years ago the Los Angeles Police Department had huge billboards along the LA freeways in its struggle to try to recruit potential police officers. Many school districts around the state had trouble filling their classrooms with teachers. When construction tanked and real estate fell into an abyss, suddenly there were plenty of interested applicants! There are many current public sector workers who will flee to the better pay and working conditions of the private sector as soon as the economy allows them to do so. People, you get what you pay for, most of the time!

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: