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Outrage: Government Workers Earn Up to $18,000 More Than Private Sector Counterparts

By    |   Tuesday, 01 March 2011 02:03 PM

Buoyed by the efforts of reform-minded GOP governors in states like Wisconsin and New Jersey, free-market advocates are blasting the cushy pay packages of unionized public workers who in some states earn as much as $18,000 more than their private counterparts — with ironclad protections from being fired or laid off.

That outrage was stoked further Tuesday by a report showing that that public-sector employees in labor-battleground Wisconsin and 40 other states receive much higher total compensation than do people working in the private sector.

Tim Phillips, the president of Americans for Prosperity, a conservative organization airing radio and television ads supporting Wisconsin GOP Gov. Scott Walker’s bid to rein in union power there, tells Newsmax that unions and the politicians whose campaigns they finance have created “a privileged class in many respects.”

“Twenty years ago, the deal was, ‘Hey, in the public sector, you may get maybe a little bit less salary, but we’re going to take care of you on the pension-benefit side very generously, and you’ll get job security,’” Phillips tells Newsmax.

“These days, over the last 10 or 12 years, they get job security, pay, and pensions and benefits. They get all three, and it’s driven their salaries far beyond what the private sector gets.”

Walker is scheduled to unveil a major budget proposal at 4 p.m. Eastern time today. Republicans are bracing for a Democratic and media backlash, because Walker’s budget takes steps to close a $3.6 billion deficit.

Walker had hoped that his “budget-repair bill” would be enacted before the budget roll-out, so that state and local officials would have flexible tools at their disposal to minimize layoffs. But Wisconsin Democratic senators fled to Illinois to block an effort to vote on the legislation.

Union leaders say they’re willing to make concessions in order to preserve their collective-bargaining privilege. Walker’s proposals would limit public-worker negotiations to base salary, but pension benefits and health insurance contributions would be excluded.

The USAToday analysis published Tuesday, which is based on Bureau of Economic Analysis data, shows that public-employees in Wisconsin earn about $2,000 more in salary and benefits than their private-sector counterparts.

The largest pay gap in the 50 states occurs in Nevada, where government workers earn nearly $18,000 more a year than private-sector employees. The biggest increase is in cash-strapped California, where public-employee compensation soared a whopping 28 percent above the rate of inflation from 2000 to 2009.

Other major state disparities underwritten by taxpayers: Rhode Island (public workers earn an average of $69,284, which is $17,603 more than the private-sector average); Vermont (average salary of $51,503, and $5,811 more than the private sector); Hawaii ($59,595, or $12,243 more than the private sector); Florida ($58,749, which is $9,099 more than the private sector; South Carolina ($52,591, a difference of $7,590); and Michigan ($58,801, a pay gap compared with the private sector of $6,436).

American Enterprise Institute scholar Andrew G. Biggs has written that the actual disparity is much greater, however, because Bureau of Labor Statistics indicate that a public-sector worker only has about a 6 percent chance of losing their job in any given year.

That contrasts to a private-sector job loss rate of 20 percent per annum. So the cost of finding new employment is much higher for private sector workers, on a per-capita basis.

On Monday, President Barack Obama warned the nation’s governors not to “vilify” or “denigrate” public-union workers — a remark that drew tough retorts from Walker and New Jersey Gov. Chris Christie.

And Phillips says, “This isn’t about denigrating anyone, it’s not about harming anyone. It’s about trying to protect the fiscal sanity and the economic prosperity of our nation and our states. And it is about fairness.

“Taxpayers in the private sector should not have to pay for benefits and wages that are way beyond what they get in the private sector,” says Phillips, whose organization is planning a series of bus excursions into the districts of Wisconsin Democratic senators who fled the state rather than vote on Walker’s budget reform bill. “So that’s why I think you’re seeing this push for change.”

Manhattan Institute senior fellow and author Steven Malanga tells Newsmax that the wages given to public-sector employees in recent years often are higher than the marketplace requires in order to attract competent employees.

For example, he maintains there are 72 applicants for every job opening in the New York City Sanitation Department.

“Walker’s recognition is that public employees are already well compensated, and we have to slow the growth if we are to achieve balance in the long term in this new fiscal reality,” Malanga tells Newsmax. “And the way to do that is to have the same flexibility in Wisconsin government that the federal government has — because the president doesn’t operate under collective bargaining rules in the federal government — and the same flexibility that CEOs have.”

Union leaders maintain that Republicans are trying to exploit the fiscal crises many states face in order to hurt the unions, which provide massive contributions to the coffers of Democratic candidates. But Republicans and some conservative economists say unbridled public-sector unions create an inherent conflict of interest that works to the taxpayers’ detriment.

“The reason collective bargaining does not work in the public sector is because, as the unions themselves admit, they have the opportunity to elect their own bosses . . . in the public sector, increasingly, you have people sitting on the same side of the table,” Malanga says.

Malanga adds that public-sector unions are the No. 1 sources of funds advocating for higher taxes around the country. Those taxes are used to defray the higher cost of the public-sector salaries revealed in the USAToday analysis.

“It’s worse that it even seems,” Malanga says, “when you just look at salary increases over the past decade . . . New Jersey hasn’t made adequate contributions to cover its pension obligations in 17 straight years. Illinois has not collected enough tax revenue to finance all of its bills, including its pensions, in more than a decade. We’re just not paying for that stuff.”

Phillips adds that much of the increased compensation comes in pensions and other benefits, because these are not as immediately obvious to the public.

“That’s why you see this explosion over the last decade or decade and a half,” he said. “The bill comes due later, right? . . . It’s hard to spot for the public, and the bill often comes due years down the road when you’re out of office and your political career is over.”

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Buoyed by the efforts of reform-minded GOP governors in states like Wisconsin and New Jersey, free-market advocates are blasting the cushy pay packages of unionized public workers who in some states earn as much as $18,000 more than their private counterparts with...
Tuesday, 01 March 2011 02:03 PM
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