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Right-Wingers Using Public Employees as 21st-Century Welfare Queens

The image of the overpaid public sector worker with fat retirement benefits offers a compelling storyline for the Right. But it's a complete fabrication.
 
 
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The nation’s public employees educate our kids, fight our fires, make sure our food isn’t tainted with toxic crap, provide services to the neediest and perform a thousand other vital tasks the private sector has no incentive to do. They earn less, on average, than their private-sector counterparts with similar qualifications. None become billionaires.

But the government doesn’t engage in the kind of ruthless and relentless union-busting that corporate America has employed to make it virtually impossible for private sector workers to organize. That explains, in part, why public workers toil in the last sector of the U.S. economy where employees enjoy some job security, decent health care and the prospect of a dignified retirement.

Now, the corporate Right has public sector workers in its cross-hairs. A viral email making the rounds in Tea Party circles sums up the charge, describing a dark conspiracy among “stinking, filthy libs” to use masses of sallow government bureaucrats to undermine America’s “capitalistic, independent, rugged individualists and entrepreneurs”:

[Government workers] are supported 100% by the American taxpayers employed in the private profit producing sector [sic]. None of the gov. offices produce one red cent in profit--they are all parasites. Every 100 gainfully employed American tax payers supports 6.5 gov. employees 100% [sic].

Jonathan Cohn, writing in the New Republic, calls public employees, “the new welfare queens,” an easy target for the Right’s politics of resentment. And the comparison is apt. Just as there were no doubt a few welfare recipients gaming the system and living the high-life, a very small number of public sector employees -- mostly the cops and firefighters to whom politicos don’t dare say no -- have won lavish retirement packages. That small group of rather specialized workers is being held up as an example of both the perfidy of “big government” and the unbridled greed of public-sector unions.

It’s a classic example of analysis-by-anecdote. The Sacramento Bee publishes a list of the highest paid state workers in California. It’s a source of great outrage, with some state Highway Patrol commanders making over a quarter million dollars per year, and it feeds into the simple-to-digest narrative that public employees in the Golden State are ridiculously overcompensated. But those senior Highway Patrol officers aren’t typical, and the narrative isn’t true; a recent study by the University of California’s Center on Wage and Employment dynamics found that California’s state workers make 7 percent less in wages than similar workers in the private sector, but their benefits are a bit better (PDF). The researchers concluded there is "no significant difference" between the two groups when both wages and benefits are factored in.

Economist Dean Baker notes that the average pension for a public employee was $22,000 a year in 2007, and adds that because many aren’t eligible for Social Security, those pensions (and whatever employees may have socked away over the course of their careers) are the only thing standing between them and the breadline. According to Baker, “the idea that we have a whole class of public employees enjoying plush retirements is nonsense that can be readily dismissed with a quick look at the data.” He dismisses the Right’s latest attack as nothing more than “a sleazy case of scapegoating that is intended to divert people's attention from the real villains in this economy.”

Here’s the kernel of truth on which that “sleazy case of scapegoating” is built: Federal employees make, on average, 20 percent more in wages than their private sector counterparts, according to the Bureau of Labor Statistics. Economist John Schmitt also found that state and local employees earn about 13 percent more. Both enjoy greater average retirement and health benefits than private sector workers.

But this is a comparison of apples and oranges. Public sector workers have, on average, more experience and higher levels of education than their counterparts in the private sector (they are twice as likely to have a college degree). Schmitt found that when one controls for those factors -- comparing apples to apples -- state and local employees earn almost 4 percent less than their brethren in corporate America. (Even accounting for their greater benefits, state and local employees still make less in total compensation than they would doing the same work in the private sector.) And according to National Treasury Employees Union president Colleen Kelley, federal employees take home 26 percent less than those doing comparable work in private companies.

But that tells only part of the story. For federal workers, the (unadjusted) pay gap is growing. According to USA Today, they “have been awarded bigger average pay and benefit increases than private employees for nine years in a row. The compensation gap between federal and private workers has doubled in the past decade.”

What they don’t tell you is the primary reason for the growing disparity: a much higher rate of union membership. Last year, more working people belonged to a union in the public sector (7.9 million) than in the private (7.4 million), despite the fact that corporate America employs five times the number of wage-earners. 37 percent of government workers belong to a union, compared with just 7 percent of private-sector employees.

Whether in the public or private sector, union workers earn, on average, 20 percent more than their non-unionized counterparts. They also have richer retirement and health benefits -- the “union compensation premium” rises to almost 30 percent when you include those bennies.

More workers bargaining collectively leads to a flatter pay scale. In the federal government, the top earners make about 10 times what the lowest paid workers get. In 1980, at the dawn of the Reagan era, when twice as many Americans belonged to a union as do today, the ratio of top- to bottom-earners in Fortune 500 companies stood at 41 to 1. By 2007, at the height of the new Gilded Age, it had risen to an obscene level, with Fortune 500 companies’ biggest earners making, on average, 411 times what their lowest paid employees were taking home.

Again, that’s true of any group of workers with a higher unionization rate. Data from the Organization for Economic Cooperation and Development (OECD) -- the "rich countries' club" -- shows that "countries with high levels of union density or collective bargaining coverage are much more equal than countries with low union density.”

The OECD finds that gaps between higher-paid and lower-paid workers are lowest where union density is high, and bargaining is either centralized or closely coordinated. For example, the top 10% of male full-time workers earn at least 4.6 times as much as the bottom 10% in the U.S., compared to 3.7 times as much in Canada, 2.9 times as much in Germany, and just 2.3 times as much in Sweden. High union density also narrows pay gaps between women and men, and between younger and older workers. By narrowing pay gaps, unions counter poverty and make family incomes much more equal than would otherwise be the case.

According to economist Lawrence Mishel, “traditionally, the public sector has less gender and race discrimination than the private sector.” Mishel added that comparisons of the public and private workforces that control for race and gender differences “are essentially blessing whatever discrimination there is in the private sector and assuming the public sector should match that."

So the real “problem” with public sector employees, according to conservative economic beliefs, is that they can't be fired at will, they bargain collectively, and they have decent benefits and a more equitable distribution of income between the top earners and those toiling at the bottom. They also have smaller pay gaps between men and women and white workers and people of color and haven’t lost the guaranteed pensions that all but a handful of workers in the private sector have seen vanish over the past 30 years.

The Right has made great political progress getting Americans to ask the question: "How come that guy’s getting what I don’t have?" It’s the crux of the politics of grievance. Progressives need to get Americans to ask a different question: "What’s keeping me from getting what that guy has?" At least part of the answer is the Right’s decades-long assault on private sector workers’ ability to organize.

Privatization as Union-Busting

While the federal workforce has been relatively stable, even increasing in size slightly in the past year, state and local workers have been getting creamed in this recession. Fed Reserve Chairmen Ben Bernanke estimated that states and localities had laid off a quarter million workers since 2007. According to a Labor Department report, state and local governments beat every sector in terms of the number of workers laid off this summer. And, as the conservative Washington Times noted, “the troubles at the state and local levels promise to be a fixture for some time to come.”

With states and localities feeling an unprecedented budget crunch, the New York Times business section enthusiastically reported that a “class war” is breaking out over government pensions. “The haves,” wrote Ron Lieber, “are retirees who were once state or municipal workers” and now enjoy guaranteed pensions.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

As economist Paul Krugman notes, state and local employees’ pensions represent just 6 percent of non-federal public sector spending (and when combined with wages, their take still represents only around a third of state and local budgets). Krugman, like Dean Baker, concluded that the public pensions-scare is little more than “a phony issue.”

And there’s another aspect to the story that’s rarely analyzed in news reports of budget shortfalls: while local governments are slashing their payrolls, they’re also outsourcing many of the functions they once performed to private contractors. In some instances, the same employees get hired to work the same gigs for the contractors, but without the job security, health care and retirement benefits they once enjoyed, and without the union representation.

The New York Times reported this week that a Maryland software company that has expanded into managing libraries in Tennessee, California, Texas and Oregon, has grown “into the country’s fifth-largest library system.” Frank Pezzanite, a co-founder of the company, LSSI, was straightforward about the private company’s “advantage,” saying, “Pensions crushed General Motors, and it is crushing the governments in California.” According to the Times, “While the company says it rehires many of the municipal librarians, they must be content with a 401(k) retirement fund and no pension.”

Another article that appeared in the Times business section in July was even more exuberant in reporting that the town of Maywood, California, had fired all of the city’s employees and outsourced their jobs.

The school crossing guards were let go. Parking enforcement was contracted out, City Hall workers dismissed, street maintenance workers made redundant. The public safety duties of the Police Department were handed over to the Los Angeles County Sheriff’s Department.

The Times noted that despite the vaguely iterated concern of “critics,” the “sky [didn’t] fall.” But that’s a bit deceiving. Half of the city’s salaries went to law enforcement, which was “outsourced” to another municipal government. Of the "general enthusiasm” city residents supposedly displayed for the move, the Times noted “many of the nonpolice workers have been rehired on contract, so in some cases the faces encountered by the public remain the same. In other words, no one has noticed much going wrong because there was not much to notice in the first place…The five crossing guards, for instance, are doing the same work but are paid by a security company.” What the Times didn’t mention is that all of the city’s nonpolice workers are doing their usual jobs without the same security or retirement benefits -- it’s union-busting through the back door.

It’s also yet another example of class-warfare being waged from above. Americans working in the private sector have a choice: they can fall for the Right’s latest anecdotally driven welfare queens narrative and seethe in resentment as we run a footrace to the bottom, or they can ignore the distractions and fight to reverse the “Great Risk Shift.” They can push back against an increasingly savage elite that’s undermining their own economic security, or drag another group of workers down to join them on their perilous perch.

Only time will tell whether they’ll be sufficiently distracted by the Right’s images of city filing clerks driving Mercedes and drinking champagne to ignore their own economic interests yet again.

 
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