Overly Compensated Public Workers are a Liability to States
The Economist recently ran a piece about public sector unions titled, “Welcome to the real world.” With the subtitle of, “For decades, America’s public-sector workers have been coddled and spoiled,” echoing what the Alliance for Worker Freedom has been saying since its inception.
The Economist correctly identifies how difficult it is to curb overly compensated public sector workers’ paychecks.
“Democrats in particular have little incentive to anger workers, who are often their electoral foot-soldiers, and neither party wants to prod them to strike, since they hold monopolies.”
Scared to confront unions, politicians signed off on bloated union contracts, even though many are unsustainable and are bankrupting their state or municipality. A recent study by www.workerscompensation.com illustrates wage disparities between private and public sector workers.
“Total employer compensation costs for private industry workers averaged $27.49 per hour worked in September 2009. State and local government employers spent an average of $39.83 per hour worked for total employee compensation in September 2009.”
Union’s power manifests itself in inflated wages, a non-contestable point when compensation comparisons are made. The Economist points to the, now, famous case study of what can happen if public worker wages remain unchecked:
“Last year Vallejo, in California’s San Francisco Bay Area, sank into bankruptcy under the weight of its labour costs. In California itself, the unfunded liabilities of retirement programmes are expected to exceed $100 billion through 2015. One local blog tracks coddled public-sector pensioners: a former police chief in Newport Beach scrapes by on $221,554.56 a year.”
Fearing their cities will go the way of Vallejo, many Mayors and leaders are challenging unions head on. The Economist continues:
“This is a very exciting time for permanent change,” argues Steve Goldsmith, a former mayor of Indianapolis and now a professor at Harvard’s Kennedy School. In the 1990s he forced unions to bid against the private sector to deliver services, competition that saved the city $230m over five years. Now, he contends, more cities may try to change the way they operate. Philadelphia is studying how to deliver services more efficiently. In Detroit, Mr Bing is urging unions to take furloughs and reduce health costs for new hires, among other concessions. The real work, however, will come later. The staff of Mr Bing’s Operations Restructuring project are pondering how to transform the way Detroit is run.”
It is unfair to burden Americans with union contracts. With nearly every state operating over its allocated budget ,governors and mayors will be forced to cut costs- public sector workers should be the first place they look.
