The coming showdown with public employees
Few in the media have drawn the lines between the increasing dots in our national financial meltdown. The raw numbers are being reported; the obvious conclusions have not been drawn. I take no pleasure in what I am concluding; nevertheless, here are the data. Judge whether my conclusions are warranted.
California leads the nation in budget toxicity. The state’s generous public employee pension system is the biggest of the black holes in that state’s descent into bankruptcy.
Elsewhere, a majority of states face unimaginable billions of dollars in unfunded liabilities created mostly by their public employee retirement obligations, which includes healthcare.
Local governments’ pension problems dwarf those of the states, simply because there are nearly three times as many of them.
This from a U.S. Census Bureau report just one week ago:
“The nation’s 89,526 state and local governments employed 16.6 million full-time equivalent employees in 2009, statistically unchanged from 2008, according to government employment data released by the U.S. Census Bureau. Part-time employees numbered 4.7 million, not statistically different from 2008.
“Local governments accounted for 12.2 million full-time equivalent employees, and state governments had 4.4 million. (Local governments include counties, cities, townships, special districts and school districts.)”
Did you follow those numbers? Our country has 16.6 million people employed by nearly 90,000 state and local governments — and EVERY ONE OF THEM HAS A PUBLICLY-FUNDED, TAXPAYER-PAID pension plan. That of course does NOT include federal-level workers.
And we think Social Security is in trouble.
By the way, despite the nation’s effective unemployment and under-employment rate of 18 percent, did you notice that the number of public employees in 2009 was “statistically unchanged” from the previous year, 2008, when the financial tsunami hit us?
What that means is that while the private sector was getting slaughtered in firings and layoffs, the public sector was cruising along with almost no decrease in numbers, mostly complaining about a few furlough days and minor increases in their healthcare contributions.
And just to warm every private-sector heart, USA Today reported recently that federal employees are just about the only people besides investment bankers who are profiting during the Great Recession.
“Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.
“Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.
“Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.
“These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.
“USA Today reported that average compensation for federal employees has risen 36.9 percent since 2000. Those numbers were adjusted for inflation.”
Let’s do the math. Private sector pay of $60,046, plus benefits of $9,882 equals $69,928. A federal worker gets $67,691 plus $40,785 in benefits: That equals $108,476 per average federal employee.
That is $38,548 MORE for the average federal worker doing the exact equivalent job as the private sector worker. No wonder the federal government is the only growth business these days.
The history is that once in our distant past “public servants” were paid less than private sector workers. To make public jobs more attractive even with lower wages, governments sweetened the pot with cushy benefits, most without the public workers taking a payroll hit — things like medical, dental and eye-care coverage for employees and dependents and defined benefit pension plans.
Additionally, public workers have come to enjoy — indeed, expect — job security far beyond what the private sector possesses. Compare how hard it is to fire an incompetent government employee versus how the private sector handles a sub-par worker. Government work has become the only “jobs for life” that still exist.
Then two things happened, mostly within the past 20 years: a relentless drive for parity with private sector workers and unionization of the public workforce.
First, public sector workers began getting raises every year — they call them “COLA” for cost of living increases. (When’s the last time an employee of a small business got a COLA raise — any raise?) Every couple of years, from deep in the bowels of most local and state government bureaucracies there would arise an agenda item that created a “salary study commission” or group. Every time (imagine that!) the bureaucrats would find a compelling reason to recommend to the governing body that “adjustments” upward needed to be made to public salaries in order to keep the public jobs “competitive.”
First the bureaucrats sought “competitiveness” with private sector “equivalent” jobs. Later, as it became obvious that the public sector was outrunning the private sector, the focus shifted to “competitiveness” with neighboring governments, since only the government sector offered such sweet deals.
In other words, the prevailing argument for more, more, more was based not on worries that a public employee would leave government work for a private sector job, but rather on concerns about that worker being lured to another, even more lucrative taxpayer-funded job with another government entity.
And then came the unions. For 2009, the latest year available, the U.S. Bureau of Labor Statistics reports the following as of January 2010:
“In 2009, the union membership rate — the percent of wage and salary workers who were members of a union — was 12.3 percent, essentially unchanged from 12.4 percent a year earlier, the U.S. Bureau of Labor Statistics reported.”
“The number of wage and salary workers belonging to unions declined by 771,000 to 15.3 million, largely reflecting the overall drop in employment due to the recession.
“More public sector employees (7.9 million) belonged to a union than did private sector employees (7.4 million), despite there being five times more wage and salary workers in the private sector.
“Workers in education, training, and library occupations had the highest unionization rate at 38.1 percent.
“In 2009 ... union membership rate for public sector workers (37.4 percent) was substantially higher than the rate for private industry workers (7.2 percent). Within the public sector, local government workers had the highest union membership rate, 43.3 percent. This group includes workers in heavily unionized occupations, such as teachers, police officers, and fire fighters.”
Let’s process that: Four out of every 10 local government workers across this nation have union shop stewards and a built-in adversarial relationship with management and the ones who pay the bills — the taxpayers. And leading the pack of publicly-paid workers who expect and demand never-ending raises, better benefits and lifetime job security are “teachers, police officers and fire fighters.”
Now, who pays for all these government workers? (Yes, government workers pay income taxes, so they are paying back into their own pockets at most 30 percent of their costs. Private sector workers — including the unemployed — pay the rest.)
Do you begin to see the problem?
I’ve given you enough data to chew on for this episode (and please note that this very recent data is quoted verbatim from two federal government agencies, at a time when the executive branch is under the control of Democrats, not exactly sworn enemies of government workers or unions).
Now, four conclusions, one prediction and one possible interim solution.
Conclusion 1: Public workers’ salaries, benefits and pension plans are unsustainable at their current levels as the nation heads into a deficit-burdened future.
Conclusion 2: Government workers — at all levels, but especially at the federal level — are not feeling the pain the rest of us in the private sector feel. They will not feel our pain until reductions in force (RIFs) of public sector workers begin to match the private sector unemployment numbers.
Conclusion 3: Most local, state and federal government elected officials currently in office have neither the vision nor the guts to face the reality of the above conclusions and take the necessary steps to correct the blatant inequities between the public and the private sectors.
Conclusion 4: Something akin to a revolution will be necessary to bring government employment in line with the new financial realities.
Prediction: A growing backlash of taxpayers against public sector workers is beginning and will grow to proportions not now imaginable by many taxpayers nor by ALL government workers. Showdown time is looming, and it ain’t gonna be pretty.
One caveat: Yes, our armed forces members are part of the federal workforce. Of all people on the planet, our warriors most deserve every penny paid to them. I hope the coming revolt against public sector excesses manages to avoid lumping our front-line service men and women in with the rest.
One possible interim solution: A five-year freeze on the salaries, wages and benefits of ALL government employees (except military) at all levels — federal, state and local.
How likely is that? (Most small business employees, I suspect, are going through the fourth consecutive year of small or no raises — the ones who still have jobs — so we already feel the pain of that interim solution.)
Remember that “hopey, changey thing”? Count on it: Change is coming.