Calculating Public Employee Benefit Overhead
A post published last October, “Public Employee Compensation” estimated the average state and local employee in California makes about $100K per year. This post attracted a great deal of comments and discussion, including identifying some minor errors in the calculations. These errors were offsetting, however, and the findings generated in that report are now distilled in this post. Not only the data compiled, but the methodology, may hopefully be of value to interested citizens who wish to independently assess how much their local public servants are actually costing the taxpayers in total compensation when the true value of their benefits are included.
Determining a credible estimate for the average base pay of California’s state and local employees is fairly straightforward. Here is the basis of those calculations – using only full-time workers this time: As of March 2008 there were 1,245,734 full-time workers employed by local government agencies, mostly cities and counties, in California, and their payroll for the month of March 2008 was 7,070,297,612 (ref. http://www2.census.gov/govs/apes/08locca.txt ). This equates to 5,652 per month, or 67,818 per year. During the same period there were 338,725 full-time workers employed by the state of California, and their payroll for the month of March 2008 was 2,002,723,495 (ref. http://www2.census.gov/govs/apes/08stca.txt ). This equates to 5,913 per month, or 70,950 per year. Using the state of California’s own payroll data, data that is 2.5 years old and therefore assumes zero increases to compensation, in aggregate, the state and local government workers have an average base salary of $68,488 per year. Assuming the COLAs over the last 2.5 years added at least a paltry $12 to this average, we can round the average base salary of a state or local government worker in California up to $68,500 per year.
Calculating the costs of benefits overhead is not nearly as straightforward as estimating base pay, but it is possible to look at the various benefits granted on average, make conservative assumptions, and develop a number that is probably fairly accurate. With that in mind, here are the overhead assumptions for a total overhead benefits estimate for state/local public employees in California of 56% over base pay:
33% for the retirement pension: This is based a total retirement pension contribution of, on average, 38%. How that number is arrived at is discussed in the post “Sustainable Pension Fund Returns,” and elsewhere, with the assumption made that the average public employee contribution through payroll withholding is 5% (that is changing fast, by the way, but probably still holds true for 2010). Please note that a 38% average pension fund contribution is not what is typically being contributed today, on average, but is what needs to be contributed for California’s state and local employee pension funds to remain solvent according to their current benefit formulas, and is probably a very conservative assumption.
4% for future retirement health benefits: This is a very conservative assumption. In many agencies I think this figure currently (again based on what needs to be contributed under current benefit formulas, not what is being contributed) averages more than twice that.
12% for all current benefits such as health insurance, dental and vision plans, long-term care, long-term disability, tuition reimbursements, car allowances, interest-free loans, and much more: Allocating 12% for this, which would only be $7,200 per year (or $600 per month) for the average full-time state/local worker is almost certainly lower than reality.
7% for extra vacation compared to a private sector worker: In an apples-to-apples comparison of public vs. private sector total compensation, you have to normalize for the greater number of days off enjoyed by public sector workers. If everyone worked five days per week, every week of the year, they would work 2,080 hours per year. If you assume the private sector worker – on average – gets 20 paid days off (including paid holidays) per year, and I think the average is lower than that, and if you assume the public sector worker gets 35 paid days (including paid holidays, personal time, “comp” time, etc.) off per year, and I think the average is higher than that, you will compare 1,920 hours of work per year for the private sector worker, which exceeds the 1,800 hours of work per year for the public sector worker by 6.7%. This is an entirely valid calculation of overhead in an apples-to-apples comparison of public vs. private sector because within the gigantic agencies of the state and local governments in California, when one person is getting paid time off, another person is required to fill that position – or a work project is extended proportionately. That is to say, this is a real and tangible additional cost.
These add up to 56%. Additional corroboration for this number is found in a study produced by the union supported organization CERA entitled “The Truth about Public Employees in California: They are Neither Overpaid nor Overcompensated” where they calculate an average overhead cost for California’s state and local workers of 36% total compensation. That is, they claim 36% of total compensation is benefits overhead, and 64% is actual pay. 36% of total compensation equates to a 56% overhead rate, i.e., [ 1 / (1 – .36) ] = .56. The Berkeley researchers, who did not do a back-of-the-envelope analysis, which is what this is, but rather did a very comprehensive study, had no motivation to overstate the benefits overhead paid to public employees. I believe the actual overhead is probably much higher than 56%, because I doubt the Berkeley researchers used a number nearly as high as 33% for the necessary pension fund contribution, because the conventional wisdom still adheres to higher rates of investment fund returns than I believe are actually out there over the next 20-30 years. Therefore they are valuing these other variables at even higher percentages than I do, since they get the same overall number.
When you apply a 56% overhead rate to an average base salary of $68,500, you arrive at a total compensation estimate for the average state or local government worker in California of $106,860 per year. As also explored in the earlier post, “Public Employee Compensation,” the average private sector worker’s total compensation in California is estimated at $57,000 per year – probably well under that, since the data sets used did not include self-employed individuals. Readers are invited to challenge these calculations, the underlying assumptions, or the source data.
It is important to emphasize that the disparity between public sector and private sector total rates of compensation in California may point to an overall problem – that many public employees receive compensation that greatly exceeds market rates – but this realization should not detract from the fact that many public employees are either underpaid, or receive rates of pay that are certainly not excessive. There are solutions that would go a long way towards solving these problems, such as implementing pay and benefit cuts that target the most highly compensated, most overpaid strata of the public workforce, or streamlining top-heavy bureaucracies and cutting costs from the top down instead of from the bottom up, or, gasp, making pay-cuts more palatable to public employees by reinventing the regulatory environment to actually lower the cost of living in California.
* * *
* * *
Edward Ring is a contributing editor and senior fellow with the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, Forbes, and other media outlets.
To help support more content and policy analysis like this, please click here.
In California, there is a sense of a financial panic, as Governor Schwarzenegger called an emergency session of the State Legislature to address a $25 billion budget deficit. Two months earlier, the Governor signed his 2010-11 State Budget with a fantasy $1.3 billion reserve, confident he would wrangle another $7 billion from Washington D.C. With Federal bailout money now obviously gone, the Governor demanded $7 billion of immediate spending cuts. Legislative leaders scoffed at cuts and demanding spending increases.
Conspicuously absent from President Obama’s budget compromise was an extension of the Build America Bonds (BABS) expiring on December 31st. States with deadbeat credit ratings, like California and Illinois, have been able to continue to live on borrowed money because the Obama Administration in April of 2009 passed legislation that allowed state and local governments to receive a cash rebate of 35% from the U.S. Treasury on their borrowings. More importantly, California and Illinois, who have the same credit rating as Ireland and Portugal, had been able to borrow without relying on their own credit rating.
Back in October, I spoke at the annual Bloomberg State and City Conference in New York about the impending risk of municipal default for California causing a national wave of devastating municipal bond losses. At the time, I was scorned as a typical Orange County Right Wing alarmist. One confident panel member declared that The Center for Budget and Policy Priorities, an influential liberal think tank, estimated state government tax receipts would increase by 5% in 2011 and allow states to “only” need to borrow $140 billion to cover budget deficits. I reminded her there has not been a 5% annual growth in state tax revenue in more than a decade. Since the Bloomberg Conference, the value of California bonds have collapsed by over 20% and interest costs have soared by 50% as bondholder panic selling has begun.
Your data for base salary conveniently ignore a 14.7% cut in pay due to the furloughs. Instead you throw in a non-existent Cola, which however how small is absolute nonsense.
“12% for all current benefits such as health insurance, dental and vision plans, long-term care, long-term disability, tuition reimbursements, car allowances, interest-free loans, and much more:”
Any long term care a State Employee gets was paid for by himself. State employees only get tuition reinbursements for required training that pays the costs of the class, there is no profit here. We don’t get car allowances or interest free loans. And what is the much more?
And once again California pays about 19% into Calpers, the same as they did in 1969. You are adding in compensation for future catastrophic events based on assumptions that the last twenty years including the current fiscal meltdown show have not happened. Calpers has exceeded their goal of 7.75% per annum for the last twenty years.
In fact the last 78 years haven’t shown them on average not meeting their goals either, including the great depression.
That is at least a 35% error in your numbers already.
Charles-
Ed wants public workers to have that 100k comp figure and by jove, he’ll get it!
He already cut out all the non full time workers, seasonals, substitutes, add-ons and adjuncts.
I guess all those hard working folks are magically
private sector workers in his mind.
Forget about the furloughs, he doesn’t care.
All CA public workers MUST make 100k in his mind.
Charles: You have a valid point about the furloughs, but let’s also agree that when people take a pay cut via a furlough, they also don’t work the time. So their actual rate of pay is unaffected.
Oz: I realize I’ve been a bit persistent on this, but to your point – we didn’t include part-time, temporary or self-employed individuals in the private sector pool either, and if we had, it would have undoubtedly lowered that average as well. Apples & apples. That $100K+ number looks pretty valid to me, unless we assume the inflation-adjusted return on the pension fund investments make a dramatic and sustained recovery to bubble era rates. I just don’t see that happening.
We would probably agree that the system is not kind in either sector to those who haven’t landed a full-time job with benefits.
Editor,
You continually ignore facts. No one 40 years ago jumped into State employment hoping to cheat the system. The private system cheated the private employee pure and simple. There is nothing “unfair” about public employees sticking with the system they joined employment 40 years ago. Private employees have been cheated by their system.
That is where the unfairness comes in. Go after them.
And don’t tell me you have a special right to complain because State Employees are paid by taxes. I pay every single persons wages in the private sector every time I buy a loaf of bread or a car or anything else.
Yes, I have a choice to buy loaves of bread and cars. You have a choice whom you elect. California has been doing a poor job of that. Why don’t you complain about bullet trains and welfare or illegals freely taking out money instead?
Editor?
Please reply. What is wrong with what you agreed to 40 years ago? Why does anyone have the right to take that away? What is unfair with an agreement?
And you also, Tough Love. What agreement or contract you have entered into in the last forty years do you want to tear up? The ones to your disadvantage but not the ones to your advantage?
You have had 40 years to complain, why have you waited until now? Is it because for the first 35 years you had the advantage?Are you willing to give me the 35 years of salary that was 35% under market? That is 1.62M with 3% interest over and above inflation.
Give me that and quit complaining.
“Charles: You have a valid point about the furloughs, but let’s also agree that when people take a pay cut via a furlough, they also don’t work the time. So their actual rate of pay is unaffected.”
So if you take a private worker and have them work four hours a week for a 9/10ths pay cut their hourly pay is not affected either? So no big deal. Let them eat cake.
And of course a person who works 100 hours a week at minimum wage earns more than $1000 per week, putting them in the middle class.
Charles: Nothing in these posts or comments are meant to suggest you, or anyone else, “cheated” the system. I’ve also tried to frequently note that the challenges we face keeping these systems solvent should not be equated with blaming anyone in the system. I do think that what the system has evolved into is unfair to taxpayers, and unrealistically generous to public employees. The question right here is what expectations you (and other workers) had when you started careers with the state over twenty years ago. You state you anticipated getting a 2.0% pension when you started work in 1969. This may be true, but if so it would be unusual. Most non-safety pension formulas didn’t go up to 2.0% until the late 1990′s or afterward. Even if it is correct that you began your career with a 2.0% annual pension accrual – that is not representative of most public sector workers – you then state your salary was 35% below market rates until a few years ago. This means your expectation in 1969 was to get 2.0% of a final salary that would have been 35% lower than it actually was. So you have been pleasantly surprised and have a pension that is 35% greater than you expected. And in a more representative case, you would have started your job in 1969 with a pension formula of – for example – 1.2% of salary. This would mean you would have actually expected a final pay of 45 years times 1.2% times $58,500 (65% of $90,000), which equals $31,590 per year. Even under the assumptions you are making, you should be getting 45 years times 2.0% times $58,500, which is $52,650. Either of these would be far more sustainable and equitable amounts.
As I have already stated, it I had the $1.6M I would have had in cash by investing at only 3% over inflation on the 35% the State didn’t pay me, I wouldn’t need their retirement.
And once again California pays about 19% into Calpers, the same as they did in 1969.
=============================
CalTurds is also underfunded by $500 BILLION today, which they were NOT in 1969, so your bogus claim that the pension costs are the same is as bogus as the rest of your whopper claims.
The private system cheated the private employee pure and simple. There is nothing “unfair” about public employees sticking with the system they joined employment 40 years ago
=====================
There is nothing fair-or legal- about billions of dollars gifted out in retroactive pension increases either.
Rex The Wonder Dog!
December 12, 2010 at 3:47 am
And once again California pays about 19% into Calpers, the same as they did in 1969.
=============================
CalTurds is also underfunded by $500 BILLION today, which they were NOT in 1969, so your bogus claim that the pension costs are the same is as bogus as the rest of your whopper claims.
Sorry Rex, that study was based on a discount rate the same as treasury bills and was funded to come to that conclusion.
No whopper claims here, just based on the last 78 years of Calpers. There is no logical reason to support your $500B underfunding except to believe the economy will never improve. As I have said before, where were all the alarmists 20, 30 or 40 years ago? And where will they be 10 or 20 years from now?
https://civicfinance.org/2010/03/15/the-razors-edge-inflation-vs-deflation/
http://seekingalpha.com/article/208482-rethinking-the-inflation-vs-deflation-debate
Sorry, I don’t understand all the graphs and guesses. I do know that now household, company, state or country can go on spending more than they earn without consequences. Whether inflationary or deflationary the end of result of any spending binge is a spending hangover.
Editor,
Please peruse this.
http://www.calwatchdog.com/2010/12/10/ppic-polls-loaded-pro-tax-questions/
I worked at a muni for 40 years, the final fifteen years as a supervisor. My base pay was $50,400 at the time of my retirement. There were the high paid managers at levels above me and many other workers who were paid below my scale. How do you come up with figures that the average public employee makes $100,000? I never lived in that splendor where I worked.
See Saw
The editor is not dealing with your salary. He is making suppositions about the total cost to your employer which are based on his own suppositions.
I am quite sure that with the necessary assumptions I could show that your gross compensation is anywhere between $75K and $150K. It is just a matter of picking the discount rates and multipliers I want. Kind of like proving Global Warming with Playstation programs. GIGO. Garbage in, Garbage out.
Charles: You’re going to have to do better than that. If you or SeeSaw intend to challenge these numbers with any credibility, you’ll have to show me where my assumptions or my data are flawed. This post contains most of the information you need to do that. One of the biggest assumptions I make, not discussed in detail here, but discussed in great detail on several earlier posts, is that the public employee pension funds are not going to be able to earn the returns over the next 20+ years (adjusted for inflation, i.e., real returns) that they have in over the past 20+ years. Changing the real rate of return assumption from 4.75%, which is CalPERS official rate for projections, down to 3.0%, which I think is more realistic and may still be too high, nearly doubles the required annual pension fund contributions.
Now if you think there are problems with that assumption, or any other ones, you are invited to explain your reasons. Otherwise, simply claiming these calculations are all garbage serves no useful purpose.
Charles
December 11, 2010 at 4:52 am
“And of course a person who works 100 hours a week at minimum wage earns more than $1000 per week, putting them in the middle class.”
– Name one state/local worker who works 100 hours a week?? Name one state/local worker who works 100 hours in 2 weeks?? This is by far your worst argument out of the bunch…
Charles
December 11, 2010 at 9:09 pm
“As I have already stated, it I had the $1.6M I would have had in cash by investing at only 3% over inflation on the 35% the State didn’t pay me, I wouldn’t need their retirement.”
– Eureka!! A state worker just admitted that he would do better with his own defined contribution plan!! We can get rid of the defined benefit plan that the private sector ditched years ago.
And on another note if you look at pension systems at an 8% discount rate they’re still underfunded. And even if the economy grows exponentially over the next 20 years the increase in average life expectancy, health care costs and retired workers is going to dwarf any lucrative returns. And sorry no state/local worker makes 35% less then the same job in the private sector. Maybe 35 years ago that was true, but not anymore, collective bargaining has increased state/local payrolls for years.
John said
“Name one state/local worker who works 100 hours a week?? Name one state/local worker who works 100 hours in 2 weeks?? This is by far your worst argument out of the bunch”
You missed the point. Ed was using salary figures from before the 15% cut in salary to make his points, then tried to validate his numbers because the employees hours were cut 15%. Trying to say per hour earnings are the same as salary doesn’t work.
“12% for all current benefits such as health insurance, dental and vision plans, long-term care, long-term disability, tuition reimbursements, car allowances, interest-free loans, and much more:”
Any long term care a State Employee gets was paid for by himself. State employees only get tuition reinbursements for required training that pays the costs of the class, there is no profit here. We don’t get car allowances or interest free loans. And what is the much more?
Please answer.
Also, if these are not assumptions why did the work assume, assuming or assumption keep appearing (10 times) in your original calc’s?
Charles: 12% for current benefits equates to $7,200 per year at the average base rate of pay, which is $600 per month. We’ve evaluated labor agreements for public safety employees where just the health insurance is guaranteed up to $1,200 per month or more. You tell me – do you think the average public sector – state and local average – job in California provides benefits in excess of $600 per month? I do. We can split hairs over this forever, because there are too many agencies, too many job descriptions, too many variables to ever come to complete agreement. Maybe your agency didn’t offer long-term disability, but the public education system offers this coverage, as do most public safety jobs, and together they account for about 60% of the jobs in the public sector. Interest free or subsidized low-rate loans to local public employees for home purchases are common in California. Car allowances are common as well. As for the comment “much more,” there are a lot of benefits that may be particular to one profession or another – the point is we are assuming that ALL of these current benefits, whatever they may be, only average $600 per month for state/local employees in California. I am quite comfortable that this is a conservative assumption.
I was talking about California State employees, not local. I know very little about local if anything. Please do not include what I was not discussing with what I was discussing.
I don’t want to hear about Bell, CA either. I never worked for them.
Obviously there are excesses there. In fact I think Highway Patrol and other safety employees are a little over the wall on pensions. I never worked for them either, although I sometimes wish I had. But I don’t think I would be up to the world they live in, although I am grateful they are there.
That doesn’t change the fact that I certainly do not get some of the things you speak of.
No pension spiking
No interest free loans
No car allowance
No “much other” whatever that is.
I looked at my last paycheck and there is nowhere near the 56% payroll cost to the State you claim. Cut that in half.
And if your pensions calculations were true you would have to take away the US Constitution Amendment on Contracts to change pensions already earned. If contracts are null and void what kind of a world do you want to live in? Utter chaos? You cannot strike down contracts as you pick and choose. By the Constitution it is all or nothing.
Charles: These discussions are regarding AVERAGES for state and local employees. They are not about your particular situation. And the 56% overhead applies to current workers, not retirees on pensions. Most of the 56% overhead is the annual funding requirement for the eventual pension, which is funded while someone is working. Of course you aren’t going to see that level of overhead if you’re retired.
“Charles: These discussions are regarding AVERAGES for state and local employees. They are not about your particular situation. And the 56% overhead applies to current workers, not retirees on pensions. Most of the 56% overhead is the annual funding requirement for the eventual pension, which is funded while someone is working. Of course you aren’t going to see that level of overhead if you’re retired.”
Surely you know I was not confusing overhead on retirement with OH on actively working persons. There is no SS or retirement deductions or some other costs on retirement.
And you won’t see that kind of retirement funding far into the future until it happens if ever. And that would assume a recession going on for a decade or more which has never happened yet, not even in 1929 and the ’30s.
Which is exactly the point I am making. State misc. employees should not be included in these figures with local and safety employees who receive 35% to 100% more than what State Misc. receive and can’t spike or any of the other things you and the MSM keep hammering on.
Of course we will receive more than our deductions plus interest in retirement. That was always the accepted contract.
If you want some really good ideas for balancing California’s budget I will put up a URL for it.
http://www.calwatchdog.com/2010/12/10/ppic-polls-loaded-pro-tax-questions/
I sent this to tough love and others but no answers.
Take a look yourself.
Thanks.
I am sure you don’t have lots of time but until we are talking about State Misc. employees we are still comparing apple pies to peanuts.
How do you get around the United States Constitution Article One Section 1 Clause 1?
Charles: You’re wearing me out! I am thrilled you find this forum compelling enough to relentlessly post comments, but I don’t have the time to respond to every one. Apparently you see this issue in a very personal manner. Lots of people do. Refresh my memory and explain the relevance of U.S. Constitution Article One, Section One, Clause One? And please note I will be traveling tomorrow and may not be able to respond immediately.
Two other thoughts – I did read the Cal Watchdog commentary and found it quite interesting with a lot of good ideas. I may post something devoted to the topic. Thank you for the referral.
Your point about narrowing the comparisons to State Misc. employees is valid in the context of evaluating whether or not that segment of the state and local workforce is over-compensated or under-compensated, or whatever. But as taxpayers we are funding ALL state and local workers. In order to start somewhere, it is helpful to look at the overall averages, always recognizing there are going to be certain segments of the state and local government workforce who are below the average as well as those above the average.
LOL, now Sir Charles is a Constitutional Law Professor!
BTW, the state can renege on ANY promise they have made to you-including pensions- and there is not a thing you or anyone else can do about it-go read the 11th Amendment.
Rex
I never said I was a Constitutional Law Professor. But I can read.
Amendment 11 – Judicial Limits. Ratified 2/7/1795.
11th Amendment (your suggested proof)
“The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”
The Eleventh Amendment (Amendment XI) to the United States Constitution, which was passed by the Congress on March 4, 1794 and was ratified on February 7, 1795, deals with each state’s sovereign immunity from being sued in federal court by someone of another state or country.
Which has nothing to do with the question instant.
I will refer you again to the US Constitution Article One Section Ten Clause One.
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
Notice ”or Law impairing the Obligation of Contracts”
“BTW, the state can renege on ANY promise they have made”
The US Constitution says precisely the opposite of your statement. It says with no ambiguity NO State can pass a “Law impairing the Obligation of Contracts”
If this was not true we as a society would be on a cash and carry basis. Hmm. Maybe that would be a good idea.
Editor,
December 13, 2010 at 10:04 pm
“Charles: You’re wearing me out!”
I don’t mean to. Thank you for answering me. I appreciate it. I will try to leave out nitpicking over numbers not of significant importance.
” I did read the Cal Watchdog commentary and found it quite interesting with a lot of good ideas.”
Thank you. I would say that pensions are in fact luxury goods, but so are a lot of other things. According to the writer of the above referenced article (backed by the LAO) we could eliminate 90% of the deficit in California by eliminating redundant jobs. Even if not entirely true I am sure there is a lot to be found there.
Calpers uses at the moment about $4B per year of the State Treasury out of a deficit of $25.4. Significant and still not small potatoes.
“Refresh my memory and explain the relevance of U.S. Constitution Article One, Section One, Clause One?”
Sorry, it is Article One, Section TEN, Clause One
Oops squared. Again my apologies.
You said you would be away for a while and to expect immediate answers. I hope it is for a well deserve vacation and you return refreshed.
Best Wishes
Charles
Wages in California’s private sector increased 32.73% in nominal terms for the 10 year period 2000 – 2009. Inflation during this period was a modest 25.4%. Therefore, California Private Sector Wages increased 7.33% in REAL terms for the 10 year period ending 2009.
Wages for California Civil Service Employees increased only 6.9% in nominal terms for the 10 year period 2000 – 2009. After adjusting for inflation, California Civil Service Employees lost (18.5%) of their REAL wages for the 10 year period ending 2009.
Charles – these are interesting statistics. Would you mind putting the URL(s) up so we can review your sources?
Charles, why do you waste your time?
Because I do not believe in yellow sheet jornalishm.
Editor,
http://stateworker.wordpress.com/2010/08/22/state-workers-inflation-vs-cola-year-over-year/
Citations:
Bureau of Labor Statistics, http://www.bls.gov: Consumer Price Index; Wages; Productivity.
Bureau of Economic Analysis, http://www.bea.gov : State revenues and expenditures; Personal Incomes; State Employee data.
California State Controller’s Office, http://www.sco.ca.gov/ard_state_cash.html : California revenues and expenditures.
State Civil Service Rankings 2009, http://www.ccsce.com/PDF/Numbers-Dec09-Govt-Employees-Rank.pdf
Here is an interesting read, sorry it is so long.
The Shameful Attack on Public Employees
By Robert Reich|Jan 5, 2011, 8:49 PM|Author’s Website
In 1968, the sanitation workers of Memphis tried to form a union. The city resisted. The Rev. Martin Luther King, Jr. came to support them. That was where he lost his life. Eventually the sanitation workers got their union. And in subsequent years millions of public employees across the nation got similar protection.
But now the right is going after public employees.
It’s far more convenient to go after people who are doing the public’s work – sanitation workers, police officers, fire fighters, teachers, social workers, federal employees – to call them “faceless bureaucrats” and portray them as hooligans who are making off with your money and crippling federal and state budgets. The story fits better with the Republican’s Big Lie that our problems are due to a government that’s too big.
But the right’s argument is shot-through with bad data, twisted evidence, and unsupported assertions.
They say public employees earn far more than private-sector workers. That’s untrue when you take account of level of education. Matched by education, public sector workers actually earn less than their private-sector counterparts.
The Republican trick is to compare apples with oranges — the average wage of public employees with the average wage of all private-sector employees. But only 23 percent of private-sector employees have college degrees; 48 percent of government workers do. Teachers, social workers, public lawyers who bring companies to justice, government accountants who try to make sure money is spent as it should be – all need at least four years of college.
The solution is no less to slash public pensions than it is to slash private ones. It’s for all employers to fully fund their pension plans.
The final Republican canard is that bargaining rights for public employees have caused state deficits to explode. In fact there’s no relationship between states whose employees have bargaining rights and states with big deficits. Some states that deny their employees bargaining rights – Nevada, North Carolina, and Arizona, for example, are running giant deficits of over 30 percent of spending. Many that give employees bargaining rights — Massachusetts, New Mexico, and Montana — have small deficits of less than 10 percent.
Public employees should have the right to bargain for better wages and working conditions, just like all employees do. They shouldn’t have the right to strike if striking would imperil the public, but they should at least have a voice. They often know more about whether public programs are working, or how to make them work better, than political appointees who hold their offices for only a few years.
Their version of class warfare is to pit private-sector workers against public servants. They’d rather set average working people against one another – comparing one group’s modest incomes and benefits with another group’s modest incomes and benefits – than have Americans see that the top 1 percent is now raking in a bigger share of national income than at any time since 1928, and paying at a lower tax rate. And Republicans would rather you didn’t know they want to cut taxes on the rich even more.
Yet conservatives are now waging a vicious attack on public-sector unions. Abetted by the usual gang of suspects — Fox News, the editorial page of the Wall Street Journal, and right-wing radio — Republican governors and legislators have decided to go after people who work for the government. A few Democratic governors have joined them.
Public servants are convenient scapegoats. Republicans would rather deflect attention from corporate executive pay that continues to rise as corporate profits soar, even as corporations refuse to hire more workers. They don’t want stories about Wall Street bonuses, now higher than before taxpayers bailed out the Street. And they’d like to avoid a spotlight on the billions raked in by hedge-fund and private-equity managers whose income is treated as capital gains and subject to only a 15 percent tax, due to a loophole in the tax laws designed specifically for them.
Above all, Republicans don’t want to have to justify continued tax cuts for the rich. As quietly as possible, they want to make them permanent.
Compare apples to apples and and you’d see that over the last fifteen years the pay of public sector workers has dropped relative to private-sector employees with the same level of education. Public sector workers now earn 11 percent less than comparable workers in the private sector, and local workers 12 percent less. (Even if you include health and retirement benefits, government employees still earn less than their private-sector counterparts with similar educations.)
Here’s another whopper. Republicans say public-sector pensions are crippling the nation. They say politicians have given in to the demands of public unions who want only to fatten their members’ retirement benefits without the public noticing. They charge that public-employee pensions obligations are out of control.
Some reforms do need to be made. Loopholes that allow public sector workers to “spike” their final salaries in order to get higher annuities must be closed. And no retired public employee should be allowed to “double dip,” collecting more than one public pension.
But these are the exceptions. Most public employees don’t have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year. Few would call that overly generous.
And most of that $19,000 isn’t even on taxpayers’ shoulders. While they’re working, most public employees contribute a portion of their salaries into their pension plans. Taxpayers are directly responsible for only about 14 percent of their retirement benefits. Remember also that many public workers aren’t covered by Social Security, so the government isn’t contributing 6.25 of their pay into the Social Security fund as private employers would.
There is cause for concern about unfunded public pension liabilities in future years. They’re way too big. But it’s much the same in the private sector. The main reason for underfunded pensions in both public and private sectors is investment losses that occurred during the Great Recession. Before then, public pension funds had an average of 86 percent of all the assets they needed to pay future benefits — better than many private pension plans.
Don’t get me wrong. When times are tough, public employees should have to make the same sacrifices as everyone else. And they are right now. Pay has been frozen for federal workers, and for many state workers across the country as well.
But isn’t it curious that when it comes to sacrifice, Republicans don’t include the richest people in America? To the contrary, they insist the rich should sacrifice even less, enjoying even larger tax cuts that expand public-sector deficits. That means fewer public services, and even more pressure on the wages and benefits of public employees.
It’s only average workers – both in the public and the private sectors – who are being called upon to sacrifice.
This is what the current Republican attack on public-sector workers is really all about.
The Shameful Attack on Public Employees
By Robert Reich|Jan 5, 2011, 8:49 PM|Author’s Website
===========
Thanks for the book long “cut-n-paste” post.
And yes, Robert Reich, public union flunkie extraordinaire, is the beacon of truth!
Please, you are just posting up the same old sorry union propaganda pieces you always have-not a grain of truth in them.
Not one grain of truth here at all? Amazing. Every last sentence is a lie?
Not one grain of truth here at all?
===========
Correct. The entire fable is very similar to the bogus claimx CalTurds puts out claiming the “average” public pension is $25K-but what CalTurds leaves out is that this included tens of thousands of people who only worked in the public sector for 5, 6 or 7 years, and they don’t tell you that the “average” public pension includes tens of thousands of emplouyees who retired in the 70’s and 80’s when salaries were one quarter what they are today.
All spin!
Rex is incapable of discourse. To him, USA Today automatically has more credibility than the New York Times. Anyone he disagrees with is by definition a corrupt idiot.
Does he actually believe that he has a corner on the truth, or does he just enjoy being dismissive?
Rex is incapable of discourse. To him, USA Today automatically has more credibility than the New York Times
==========================
Please Baby Einstein, the USA Today study was taken from the gov-the Bureau of Labor Statistics, or did you miss that part???? The NYT was an OP ED PIECE!!!!
“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. ”
Hey-like I have always said- don’t let the facts get in the way of a good public employee whopper.
The one thing that gives me great pleasure in life is to shoot down the public employee whoppers with hard, factual data they just can’t counter b/c it is the truth!
Does he actually believe that he has a corner on the truth, or does he just enjoy being dismissive?
================================
🙂
One thing you won’t get out of old Rex (but will from you and Sir Charles) is SPIN!