"That is not to say that the state workers make too much or too little. It is to say that journalists as a class are fundamentally getting the facts wrong by not understanding compensation. Simplistic coverage has also resulted in numerous reports that Wisconsin state workers make more than workers in Wisconsin' s private business sector. This is true only if you compare walnuts to tuna fish. State governments (indeed almost all governments) tend to hire people with college educations, including advanced degrees. Overall, private employers in all states tend to hire people with less education. More education means more pay because there is more skill required. America has roughly the same number of food preparers, who can be high school dropouts, as registered nurses, who require a college education. But the nurses make on average $66,500, compared to just $18,100 for the food service workers. The food service workers collectively made less than $50 billion, while the registered nurses made almost $172 billion in 2009, my analysis of the official data shows. Business and government hire both food service workers and registered nurses, but you are much more likely to work for the government as a registered nurse than as a food preparation worker. When you control for the education required to be a prosecutor or nurse, government workers get total compensation that is less than those in the corporate sector. This may reflect the fact that fewer and fewer private sector workers are in unions, about 7 percent at last count. As economic theory predicts, as fewer workers can bargain collectively the overall wage level falls. Effectively wiping out public employee unions would only add to downward pressure on wages, standard economic theory shows. On the other hand, unionized state workers run a much smaller risk of going through bouts of joblessness, an economic benefit. Numerous studies indicate that public workers, including those in Wisconsin, make about 5 percent less than private sector workers when you control for education. But what is the lifetime cost, and risk, of episodic joblessness among comparable private sector workers? Is that cost equal to 5 percent or so of lifetime earnings, which would even out the differential? I have yet to read an analysis of that issue by an academic economist, much less a journalist, so I do not know the truth of that question." David Cay Johnston http://tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8EDJYS?OpenDocument
Complete Red Herring. The comparisons noted in the OP's thread article are complete journalistic subterfuge. The focus of the Wisconsin debate, and indeed the primary focus of the Wisconsin legislature, is regarding the public school teacher's union. Wisconsin public school teachers make CONSIDERABLY more salary and benefits compared to their peers in private schools. ALOT. I know this first hand. Average MPS Teacher Compensation Tops $100k/year [Milwaukee, Wisconsin] MacIver News Service â For the first time in history, the average annual compensation for a teacher in the Milwaukee Public School system will exceed $100,000. MPS teachers get paid alot of money for nine months of work per year and a chance to retire in their 50's. Must be nice. Apparently, these platinum pay and benefits packages don't translate into student performance: Milwaukee students rank below average on national science test Assessment compares high-minority, high-poverty urban districts By Erin Richards of the Journal Sentinel Feb. 24, 2011 | "Among 17 urban school districts that participated in a national science assessment in 2009, Milwaukee students in fourth and eighth grades scored below the average performance of their respective peers attending public schools in other large cities, according to a new report. On the National Assessment of Educational Progress, also called the Nation's Report Card, Milwaukee's fourth-graders ranked 11th out of 17 urban districts based on the percentage of its children who scored at or above a basic level of science achievement."
My understanding is that there is skew in the data so it makes for some confused arguments. Government workers are underpaid: True Government workers are overpaid: True At the bottom of the scale lets take a janitor as an example. A government janitor receives significantly more total compensation than a private-sector janitor. At the top of the scale lets take a scientist as an example. A government scientist receives significantly less total compensation than a private-sector scientist. This doesn't account for job security which is difficult to quantify but probably everyone agrees that it is worth something.
I don't know the details about Wisconsin, but in California the unions are bankrupting the state and all the major cities. For example, within four years the city of Los Angeles is going to have to spend over 30% of its total budget just on city employee pension costs and retirement benefits. Other major cities in California, and the state itself are in the same boat. The word "unsustainable" is an understatement. Here are the numbers in black and white (and a lot of red ink) as published by the state:http://www.lhc.ca.gov/studies/204/Report204.pdf Los Angeles Times article: http://www.latimes.com/news/opinion/editorials/la-ed-pensions-20110226,0,7405680.story
Unions are not the cause of the shortfall, decline in revenues are the problem. The GOP is not spending any time on the solution...which is how to increase revenues. More union busting nonsense. Underfunded liabilities are the union's fault? Nope. It is/was mismanagement of the revenue stream, poor calculations going into the future of revenues, increasing costs, Wall Street losing billions that put the pension funds under water, etc. I don't hear anyone on the right wing side blaming the pension fund managers for this problem... A hard working so and so, is laid off not for poor workmanship, but because the business can longer afford to pay him due to the business not making enough money. Business is down. The laid off worker's retirement fund is the cause of the company not making enough money to pay the worker? It is so silly...that only illogical blame the "union" crowd buys into this crapola. CA is broke for many reasons...not the union workers. You want to blame someone for not running the government properly? Fine, start with blaming the term of Arnold, then blame Grey Davis, then go all the way back to Reagan if you want. It all boils down to poor planning, and it is not the job of the unions to plan for the liabilities that cities or states accepted. The solutions though is increasing revenues while cutting costs where they can be cut. I think you and I both would agree that the cost of providing health care, welfare, and other related costs to illegals has been a major reason for our budget problems. I'm not saying it is an easy, but a deal was made with the union, and the deal needs to be honored. It is not just states and cities that are worried about unfunded pensions...it is also an issue for the private sector that mismanaged pension funds...don't pretend this is a public sector issue alone. It is not the fault that the unions got the better end of the deal when the deal was made. Can you imagine being short a stock, and the other side comes up and says, it is your fault the stock went down and I am losing money, and won't honor your short position accordingly?
If you read the report, it says that even without the economic crash, the promises made to the unions couldn't have been kept. The reason is that the unions gave millions to the politicians to win the elections, then the politicians gave the unions massive pensions in exchange. There was no financial planning involved. It was a political payoff, pure and simple. The current unfunded pension liability is now somewhere between $250-350B, depending on whose numbers you look at. And there's no possible way that Los Angeles or any other cities can pay 30% of their total revenues just to support city retirees. Taxes are already sky high and business are fleeing the city. There are only two possible solutions: (a) bankruptcy or; (b) lay off 50% of the the city's current employees. My guess is that they'll opt for bankruptcy and retirement benefits will be cut. There isn't any other alternative short of shutting down half the Los Angeles city school district.
Oh my. Are there similar issues in red states? Yes. Those states had GOP controlled cities and state governments. So, it is happening everywhere. In cities like San Diego, which is right wing, there are problems. In Orange country, the same. Who is to blame for making bad deals? The union made them do it. Sure...in a fantasy world. Revenue projections were wrong, that's the bottom line. If LA cut all money to illegals, that would be a nice start, and stop blaming the unions for the bad deal that was made. Look, this only became a major issue recently, the GOP did not run on "Bust the union" platform in the recent elections. You forgot another solution...massive inflation. That is always a way to cure the ills of the debtor...but that would hurt the wealthy and the bond holders...so that's not going to happen.