Are public workers overpaid?

On another thread, Robert writes:

People who are paid a market wage are (naturally) somewhat resentful of people who can deploy political power to extract an above-market wage, at the expense of the people being paid market wages.

If that’s so, isn’t it odd that the only income group that favors Walker’s plan to eliminate public unions’ bargaining rights are the rich? Why are the rich, in particular, so resentful? According to Gallop:

* Among those who make less than $24,000 annually, 74 percent oppose the proposal, versus only 14 percent who favor it.

* Among those who make $24,000 to $59,000, 63 percent oppose the proposal, versus only 33 percent who favor it.

* Among those who make $60,000 to $89,000, 53 percent oppose the proposal, versus only 41 percent who favor it.

* Among those who make $90,000 and up, 50 percent favor the proposal, versus 47 percent who oppose it.

Another major predictor of support for Walker’s anti-union plan is political party; Republicans favor it, Democrats and Independents oppose it. So why are Republicans, in particular, so resentful?

I don’t think the actual pattern of resentment — in which working-class people are the least likely to agree with Walker’s anti-union plan, and anti-union sentiment seems pretty partisan1 — is a good match for Robert’s theory of what’s going on.

Plus, Robert assumes — without any links or facts to justify this — that public sector workers are overpaid. But using a bog-standard2 method of measurement, public employees are actually underpaid compared to private sector workers (see here, here, and here, for example).

Unsuprisingly, conservatives have responded to the evidence by bringing in new and innovative measurements, different from how economists have measured these things for decades, and — what a coincidence! — these new measurements just happen to show that public sector workers are overpaid.

For example, conservatives now hype unadjusted wage averages (apparently if a government lawyer gets paid more than a private sector ticket-taker, that’s an injustice?), or suggest we shouldn’t bother looking at how otherwise similar workers are paid, and instead only consider quit rates.

But none of these alternative measures are convincing. You can’t just compare raw average wages, for example, unless you think it’s unjust for a private sector ticket-taker to be paid less than an Attorney General. For quit rates to be an accurate measure, we’d need to separate the wage effect on quit rates from selection effects (public sector jobs may attract people who are less money-driven, more risk-adverse, etc) and from different career path effects (different kinds of promotion ladders, pensions vs 401ks, etc). Quit paths are advertised as a way of avoiding the apple/orange problem, but really they just bring up different apple/orange problems.

I think the evidence is stronger on the “they’re underpaid” side, especially for government workers with higher degrees. Comparing similar workers isn’t a perfect method, but it’s the best method economists have yet come up with.

That said, the best measure we have still has some uncertainty. Because no economic measure can 100% avoid the apples-to-oranges problem. So if conservatives want to argue that we don’t know for sure that public sector workers are underpaid, I’d have to agree with them.

But of course, that’s not what conservatives are doing. For the most part, conservatives are doing what Robert did — assuming that government workers are overpaid, without stating any evidence. Color me unconvinced.

  1. I’m not denying that there are individual exceptions, of course []
  2. Where does the expression come from? Are all bogs very standardized? []
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79 Responses to Are public workers overpaid?

  1. 1
    Robert says:

    Wage is a lot more than just the paycheck you receive. A teacher who gets paid $30k a year in a state school with tenure and a five-year contract (and with a perhaps unspoken but widely understood promise of lifetime employment if that is desired) has a higher effective wage than a private-sector teacher who gets paid $31k a year with no tenure and the understanding that he can and will be let go the moment he is thought to be surplus to requirements.

    Those noncash wages are difficult to quantify, but very important to the economic decisions being made. (If they aren’t important, then unions have been lying about the benefits they get for their members, since a great deal of those benefits come in the form of noncash but contractual/semi-contractual understandings. I don’t think they’re lying; I think those factors are very important.)

    In addition, one of the largest components of compensation, particularly for public-sector workers with sweetheart deals, is retirement and pension programs, which as far as I am aware, most studies don’t attempt to translate into current wage equivalency. If the $30k public teacher is also getting a pension that they aren’t having to pay for, the $31k private teacher (who funds her own pathetic 401(k) and pays Social Security tax to boot) falls even farther behind, although the study will show little difference in their nominal incomes.

    (To the people about to write frothing comments about how the public-sector teacher is paying Social Security too – they may or they may not be. Many public-sector workers, sometimes even those without a union, get to opt out of Social Security and instead pay (or not) into a private pension system that only government workers have access to. I know this because I was the beneficiary of such a system here in Colorado when I was a government worker, and it was a sweet deal. In Colorado it’s run by a nonprofit corporation called PERA; other states often have similarly-named programs.)

    Teachers in Wisconsin, to pull a totally random example out of my hat, pay effectively zero towards their pension and health care benefits. Their health care benefit is calculated in the studies because it’s easy to add in, and probably the state contribution to their pension may also be added in – but they aren’t adding in the future value of the pension. Which in Wisconsin is half-pay starting at age 57 after 30 years of service; reports of average teacher pay in WI is pretty variable but I’ve seen figures between $45k and $55k, so let’s call it $50k. A $25k pension for 20 years is $500,000 – a wage premium of about $16,667 per year for the prior years of service, which the teacher receives at no cost to themselves whatsoever. Our $31k private teacher’s higher pay starts to look a little less valuable. And of course, the teacher retiring at age 57 isn’t getting “average pay” – they’re getting paid at the top of the scale, in the low six figures. That wage premium is more like $30,000 a year for the people who reach retirement age.

    I am not saying that teachers don’t deserve this money; they may well. But a private-sector teacher who does not have a union buying and selling state representatives on their behalf *doesn’t get it*. If they want a five-figure pension – particularly a gold-plated lifetime one that is politically-guaranteed rather than paid for with capital investment in a difficult market – they have to pay out the wazoo to get it. Annuities cost a lot of money.

    Regardless of all that, however, my fundamental point was not that public sector union members are “overpaid”, a difficult-to-pin-down concept, but that there is resentment among non-unionized workers that the union workers receive extra compensation – which I will admit I was sloppy in characterizing simply as “wages” – through the application of political pressure. This was in response to the first panel of Jen’s cartoon, which attested to this resentment and that I was agreeing did exist, while saying that the other forms of resentment she asserted were nonexistent in actual practice. There are no people complaining that their limbs don’t get chopped off because of the damn unions; there are people complaining that union workers are getting a sweeter deal than they are, and the complainants are carrying the bill.

    A few years ago, I was making a hell of a lot more money than you were. But I don’t think you had the slightest resentment of my income (or would have, if you had known it), because my income comes 100% from services I provide on the market at a market rate. A few years from now (if not sooner) I expect you will be making a hell of a lot more money than I will be via your million-selling graphic novel series, and I will not resent that in the slightest.

    But if a few years ago I was making my money because the powerful and politically-connected Freelance Writers Union had made sweetheart deals to funnel business in my direction on the taxpayer’s nickel, and if right now you were selling millions of copies of Hereville because the powerful and politically-connected Graphic Novelists Union had made sweetheart deals requiring every American schoolchild to buy a copy, there would be resentment galore.

    I have to say I find it amusing that you are resistant to this concept, because it is a concept that the economic left (accurately and fairly) deploys in arguments against corporate capitalism – that the politically-connected are getting a better deal than the rest of us, and often at direct taxpayer expense, and that there is and ought to be resentment on the part of the marks.

    There is resentment on the part of the marks in states with unionized public-sector workers.

  2. 2
    redBeard says:

    ..that the politically-connected are getting a better deal than the rest of us..

    Good comment. What do you feel about corporate special interest groups that probably get legislation passed that benefits them at the expense of taxpayers and/or other business groups? Here, for example, is what is proposed by the WI legislature:

    (I’m going to try a blockquote HTML tag here, we’ll see if it works….

    16.896 Sale or contractual operation of state−owned heating, cooling, and power plants…with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state.

    While I do believe concessions must be made by the public unions, I’m sorry, Gov. Walker and the WI legislature are seriously overreaching with their various actions.

  3. 3
    Kevin Moore says:

    …there are people complaining that union workers are getting a sweeter deal than they are, and the complainants are carrying the bill.

    IOW – public employees are receiving payment – in wages and benefits – that they negotiated fairly for. The complainants should have the right to organize and bargain collectively to receive comparable wages and benefits. It’s not the unions’ fault that non-unionized employees are so poorly compensated for their hard work. It lies with the employers who use their political and economic leverage with anti-union and anti-labor politicians to craft laws that restrict the abilities of workers to organize. Then they turn around and use the vast megaphone of the corporate media to constantly drum the line that unions are ruining the country in one form or another. Hence, the resentment. Pit workers against each other, like crabs in a bucket, as a friend of mine observed the other day.

  4. 4
    Kevin Moore says:

    Just read this on a friend’s FB wall, and thought it relevant to the discussion:

    A public employee, a member of the Tea Party, and a CEO sit at a table with a dozen cookies on a plate. The CEO reaches across, takes 11 of the cookies, looks at the tea partier and says, “Watch out for that Union Guy: He wants a piece of your cookie.”

  5. 5
    Elusis says:

    And of course, the teacher retiring at age 57 isn’t getting “average pay” – they’re getting paid at the top of the scale, in the low six figures.

    What.

    (Child of two public school teachers, both of whom worked 25+ years in the system, neither of whom ever made anywhere even in shouting distance of six figures.)

  6. 6
    james says:

    I’m a bit confused. What’s the feminist line on wage determination? I thought it was equal pay for equal work, but I think I might have it wrong as we have people arguing:

    I think the evidence is stronger on the “they’re underpaid” side, especially for government workers with higher degrees. Comparing similar workers isn’t a perfect method, but it’s the best method economists have yet come up with.

    This looks to me like equal pay for equal human capital.

    IOW – public employees are receiving payment – in wages and benefits – that they negotiated fairly for. The complainants should have the right to organize and bargain collectively to receive comparable wages and benefits.

    This looks to me like equal pay for equal market positioning.

    Now, I’m not dogmatic, there are perfectly good arguments doing both of these. But if you’ve a qualified nurse doing a nursing role, and a qualified secretary and a qualified nurse doing a nursing role the standard advice is to ignore this. Work evaluation manuals are very clear that you grade the job, not the person performing it. Similarly if you’ve two people who commute to a job from different market areas, one from a city where there are lots of jobs and one from a rural area where there aren’t many, they have to be paid the same for doing the same job. You can’t pay one of them more because they have other options.

  7. 7
    Robert says:

    What do you feel about corporate special interest groups that probably get legislation passed that benefits them at the expense of taxpayers and/or other business groups?

    I think they suck. Corporate welfare is theft. Fuck all of those guys.

    (Child of two public school teachers, both of whom worked 25+ years in the system, neither of whom ever made anywhere even in shouting distance of six figures.)

    So your parents who started work what, 30+ years ago, didn’t end their careers with salaries comparable to what someone starting out in Wisconsin nowadays would make going forward 30 years into the future?

  8. 8
    Ampersand says:

    In addition, one of the largest components of compensation, particularly for public-sector workers with sweetheart deals, is retirement and pension programs, which as far as I am aware, most studies don’t attempt to translate into current wage equivalency.

    Two of the three studies I linked to account for benefits including pensions and health insurance.

    Teachers in Wisconsin, to pull a totally random example out of my hat, pay effectively zero towards their pension and health care benefits. [...] a wage premium of about $16,667 per year for the prior years of service, which the teacher receives at no cost to themselves whatsoever.

    You might as well say “teachers pay effectively zero towards the money in their paychecks, and receive it at no cost to themselves whatsoever.”

    Retirement and health benefits are part of compensation, and — like all workers whose employers put in for their retirement and health benefits — the teachers paid for it by receiving lower paychecks then they would have if they weren’t getting pension and health care benefits.

    (You’re also wrong because teachers pay taxes, so can’t be said to be paying “nothing whatsoever” in that sense either, but that’s a trivial mistake compared to ignoring that benefits are part of how workers are paid for work, not something they get in return for nothing.)

    Regardless of all that, however, my fundamental point was not that public sector union members are “overpaid”, a difficult-to-pin-down concept, but that there is resentment among non-unionized workers that the union workers receive extra compensation – which I will admit I was sloppy in characterizing simply as “wages” – through the application of political pressure.

    This makes no sense.

    1) You can’t simultaneously deny claiming they’re “overpaid,” but argue that they “receive extra compensation.” Pay is another word for compensation; if you’re claiming they receive extra compensation, then you’re claiming they’re overpaid.

    2) What political pressure? They negotiate, just like other unions do.

    * * *

    You’re correct that I don’t resent that you make more money than me (if you did a few years ago, you probably still do today — my income hasn’t gone up much). (Unless your earnings have dropped a lot, in which case, sorry to hear that man, that sucks.) But I also don’t resent that most public employees make a lot more than me, so I’m not a good example for your argument.

    I think that Republicans, who value money above everything else and hate government for reasons of partisanship and because of anti-government ideology, are primed to resent public employees. It’s also easier to argue for ever-lower taxes if the states renege on their agreements after-the-fact and pay less than they owe; Republicans are eager to not pay people what was agreed on for their work and thus keep a little more money for themselves. But that’s free riding. (Of course, if the US was suggesting treating millionaires and corporations like that, Republicans would be aghast.) That’s why — despite years of anti-union and anti-government propaganda from Republicans and Fox News — most ordinary workers don’t favor Walker’s cheat-the-worker policies.

    That’s the bottom line; Republicans want to cheat workers. They’ve done the work, and now Republicans like Walker want to pay them less than what was agreed upon for the work. That’s cheating, plain and simple.

    You haven’t established, in any way, that public worker salaries are inflated by political power, more than any unionized worker. It’s an article of faith among Republicans, but as I’ve pointed out, the available evidence doesn’t support hte claim that public workers are being paid more than comparable private sector workers (and they might be being paid less).

    It’s not true that most ordinary workers resent public workers — at least, not enough to be on Walker’s side — and it’s not true that public workers are being overpaid. Which is to say, nothing you’ve based your arguments here on is true.

    [Edited to delete some unfair snark, which I apologize for.]

  9. 9
    Robert says:

    Two of the three studies I linked to account for benefits including pensions and health insurance.

    They account for the state contribution to the pension program (which is generally underestimated); they do not account for the payout from the pension program.

    You work for 30 years as a private sector teacher. Your total salary and benefits are $1,000,000. You retire on Social Security.

    You work for 30 years as a public-sector teacher. Your total salary and benefits (including contributions to the pension fund) are $900,000. You retire on Social Security plus your state pension, which totals $300,000 over the course of your remaining lifespan.

    The studies are counting the private-sector person’s compensation as $1M, and the public-sector person’s compensation as $900K. But that isn’t the full picture; the public-sector person’s actual compensation was $1.2M.

    1) You can’t simultaneously deny claiming they’re “overpaid,” but argue that they “receive extra compensation.” Pay is another word for compensation; if you’re claiming they receive extra compensation, then you’re claiming they’re overpaid.

    Overpaid is a reference to getting more pay than the value of the work. Someone can be getting extra compensation relative to someone else but not be overpaid; the someone else is being underpaid.

    2) What political pressure? They negotiate, just like other unions do.

    Really? Most private unions have entire wings of the state legislature willing to kite off to other states to avoid providing a quorum for votes that will negatively effect that union? Weird that private-sector unions are doing so poorly in the marketplace when they have that kind of political pull.

  10. 10
    Brandon Berg says:

    There’s only one way to tell whether government workers are overpaid, and it has nothing to do with comparisons to private-sector workers. Is the government having a hard time finding qualified applicants to fill open positions? It’s not paying enough. Is it getting many more qualified applicants than it can hire? It’s paying too much.

    In the absence of compelling evidence to the contrary (hand-wavy comparisons to private-sector workers are not), there should be a presumption that union members are overpaid, all things considered. The entire point of unions is to get workers better terms of employment than they would be able to get under free competition. Really, if they’re not overpaid, then what the hell have they been paying union dues for?

  11. 11
    Jake Squid says:

    The entire point of unions is to get workers better terms of employment than they would be able to get under free competition.

    Unions don’t exist in the world of free competition? Do corporations? Buying groups? Industry associations?

  12. 12
    RonF says:

    Are public workers overpaid?

    Get rid of the unions and see if their wages, the amount of money they have to pay towards their benefits and pensions and the amount of those pensions themselves go up or down. In other words, subject them to market forces. That will give you your answer.

    Elusis:

    (Child of two public school teachers, both of whom worked 25+ years in the system, neither of whom ever made anywhere even in shouting distance of six figures.)

    It depends on what school district you are in. My school district has quite a number of teachers making > $100,000 and plenty in the > $75,000 range. But that’s in a suburban school district that includes some affluent (and some not-so-affluent) communities.

    public employees are receiving payment – in wages and benefits – that they negotiated fairly for.

    I don’t think that’s true. I don’t consider the public union / politician negotiation process fair. When a private union negotiates with management it’s a competition essentially limited to the two entities and involving assets such as capital and money and the productivity of labor that the two must share and account for. A negotiation between a public union and politicians is essentially the two groups getting together, pointing at the taxpayer and saying “Let’s you and me beat him up.” The risk and reward issues for the public union and the politician are much different than they are for a private employer and their labor force.

  13. 13
    chingona says:

    The studies are counting the private-sector person’s compensation as $1M, and the public-sector person’s compensation as $900K. But that isn’t the full picture; the public-sector person’s actual compensation was $1.2M.

    That assumes that private sector workers never have retirement benefits, which isn’t true. By excluding the payout for the public-sector, they’re keeping it apples to apples. If they include the payout, the private sector worker is going to be some amount larger than $900K.

    It wasn’t that long ago that lots of private sector jobs had pensions (I’m supposed to get $8 a month for the one year that I worked at a company before they completely eliminated the pension, which I’m sure will buy me a stick of gum by the time I retire.) Even more recently, lots of private sector jobs contributed generously to employee 401 (k)s. It’s obviously a lot harder to measure the value of that in pay-out, but given the pension crises in so many states (but not, apparently, in Wisconsin), lots of private and public workers are not going to be seeing the pensions they were promised, either.

  14. 14
    RonF says:

    Chingona:

    In most private pension systems these days, the amount of the pension is based on the investment returns on the money put into it. They are “defined contribution”. In most public pension plans the amount of the pension is based on what the employee was paid, regardless of how much money was put into it. They are “defined benefit” plans.

    Additionally, if investment returns are insufficient to support the promised benefit the difference must be made up by the taxpayers. For example, here in Illinois I am told the level of funding of public pensions funds is based in part on presuming that the rate of return on invested funds will be 8%. When it comes time to pay the pensions there won’t be as much money in those funds as current estimates will have us believe.

  15. 15
    chingona says:

    RonF,

    In much of the western United States, public workers don’t have unions or those unions don’t have collective bargaining power. Mysteriously, people still complain about public sector workers being overpaid and having cushy jobs.

    Full disclosure: My husband is a public sector worker. There is no union where he works. He makes more than he would make doing the same type of work for a small business or a non-profit. He makes less than he would doing the same type of work for a large corporation. He has good benefits and pays a smaller percentage of his paycheck toward them than I do for my not-as-good benefits. (However, if I were to switch, we’d be paying quite a bit more.) To the extent that I resent him, it’s mostly for the large amount of paid holidays and for having more vacation time than I do.

  16. 16
    Ampersand says:

    For example, here in Illinois I am told the level of funding of public pensions funds is based in part on presuming that the rate of return on invested funds will be 8%. When it comes time to pay the pensions there won’t be as much money in those funds as current estimates will have us believe.

    In return for the promises Illinois made of a “defined benefit,” workers did their jobs for less money compensation than they would have gotten otherwise.

    Now that they’ve done the work, you want to renege on the deal and pay them less than they were promised.

  17. 17
    chingona says:

    RonF,

    My 15 is in response to your 12.

    In response to your 14, I know that. I thought it was clear from the context of my comment that I knew that, but rest assured, I know. Given the enormity of the pension crisis in some states, I think there ultimately will be some sort of reckoning in which workers will give up some of their defined benefit and taxpayers will pay somewhat less (but still a lot) to make up the difference.

    However, protected pension plans are not unique to the public sector. ERISA protects lots of private-sector pension plans as well.

    Edit: And what Amp said at 16. That was an explicit part of many of the negotiations that led to the existing pension plans.

  18. 18
    Robert says:

    Now that they’ve done the work, you want to renege on the deal and pay them less than they were promised.

    Nobody has said anything about paying people less than they were promised for past work. Existing pensions will continue to pay, and current accountholders under the existing system will keep the credit for the years they have put in towards retirement.

    What is under discussion is the contributions they will make going forward, and the structure under which further negotiation will take place.

  19. 19
    Jake Squid says:

    Get rid of the unions and see if their wages, the amount of money they have to pay towards their benefits and pensions and the amount of those pensions themselves go up or down. In other words, subject them to market forces. That will give you your answer.

    Unions are market forces.

    It’s interesting that folks are for an open market only if an open market is defined down to things that they like about open markets. It’s also extremely foolish to claim that unions are not free market forces. But, please, go on. Tell me about this mythical open market that excludes some parts of a free and open market. And follow that up by admitting that you are anti-free market

  20. 20
    Robert says:

    Jake/Amp/Charles et al, do you object to the rules that allow people to work for the state without joining the union, that require the union to be recertified periodically through a democratic, secret-ballot election, and that require the union to collect its own dues?

  21. 21
    murphy says:

    I’m not Jake/Amp/Charles, but I do think the questions Robert poses are misleading. For one thing, unions can be currently be decertified starting one year after after being voted into existence. The bar for decertification isn’t that hard to make, actually, and if you go to an anti-union site like unionfacts.org you’ll see just how many decerts are successful. Also, the leadership of a union is already elected by the rank-and-file membership at regular intervals. Asking a union to hold annual elections for its right to exist would pose an undue hardship akin to forcing the American people to vote every year not just on who would represent them in government but whether they want a government at all.

    And the only reason to support voluntary union membership (i.e. voluntary dues payment) in a union is to weaken unions. Non-members in such a system receive all the benefits of membership – they work under the exact same contract – without contributing a cent to the struggle to win or keep those benefits. It’s an insurmountable free-rider problem.

    And as for who collects the dues: why is this an issue for anti-union folks? Like almost all anti-union ‘reforms’, it’s mainly to make sure unions have less money. Employers typically have far greater ease of access to payroll systems and deductions, which means the union can collect a higher percentage of the dues owed if it works through already-existing systems. Dues deduction is hardly a big drain on the employer, which already has mechanisms in place for payroll tax deductions and 401k deductions etc, but it is a onerous burden for the union.

  22. 22
    Robert says:

    It’s an onerous burden for the union if its membership doesn’t support what the union does, yes.

    One chance at decertification? So one person, one vote, two times instead of one person, one vote, one time. Really not seeing that as a huge improvement.

    Free ridership is indeed an issue…for a union whose governance doesn’t actually have the confidence and support of the membership.

    Why do unions need to be protected from the possibility that their membership will stop liking what they do?

  23. 23
    murphy says:

    You must have misunderstood me – the *first* time workers can decertify a union is one year after the union is formed. They can also attempt to decertify the union at different stages in the contract cycle for the life of the union. Unions are emphatically NOT protected from the “possibility that their membership will stop liking what they do” – depending on the industry contracts generally run 2 or 3 years, which means the decert window opens every other year or so. And, again, this is in addition to the democratic election of union leaders.

    As for the free rider problem – it is really separate from whether people like their union. If you get all the benefits of a contract without paying, why would you pay? The free rider problem is the reason you can’t opt out of taxes, although I suspect your ideology might mean you would like this to be an option.

    And the payroll issue is just such a weird one to harp on – it’s really just a matter of whether dues are collected efficiently, under a payroll system that is currently up and running, or whether unions are forced to spend dues money to establish and staff collection systems.

  24. 24
    Robert says:

    I beg your pardon, you’re right about the decertification. In Wisconsin the current law is that the membership may petition for a decertification election every two years. The changed law would require a 51% affirmative vote annually to preserve certification.

  25. 25
    Charles S says:

    I agree with what murphy said. Nicely put on all three issues.

  26. 26
    gin-and-whiskey says:

    And the only reason to support voluntary union membership (i.e. voluntary dues payment) in a union is to weaken unions.

    No.
    I think there are some problems with public sector unions. I generally have fewer (if any) problems with private sector unions. But I still do not support mandatory dues, for reasons unrelated to union membership.

    There are already some problems with the concept that a group of people can force their bargaining choices on other workers who do not want to be unionized. It is even more disturbing when you consider a forced financial contribution, insofar as the forced contribution serves to benefit the incumbent union, and makes it MUCH less likely that the union will decertify.

    From a moral perspective, I think that forced contributions are simply improper.

    Non-members in such a system receive all the benefits of membership – they work under the exact same contract – without contributing a cent to the struggle to win or keep those benefits. It’s an insurmountable free-rider problem.

    Is that the only thing you see here?

    You may consider that unions offer benefits (they do.) But they also offer significant costs, most notably the inability of employees to negotiate for benefits individually. That has an affect both on people who want equal-value tradeoffs (“can I have an extra sick day if I don’t get a raise this year?” “No, we can’t go outside the union contract”) and those who believe that their individual performance and/or negotiating skills could produce results (for them) above and beyond those obtained by the unions.

    I am not a fan of public sector unions, but I don’t shirk from understanding or admitting the various benefits that they grant to their members. Why are all of the pro-union folks so determined to ignore or avoid any of the problems?

  27. 27
    RonF says:

    Jake Squid:

    Unions are market forces.

    I’m not talking about unions, at least not in a generic sense. I’m talking about public worker unions. It’s like talking about “immigrant rights” without making a distinction between legal immigrants and illegal aliens.

    Private unions can fairly be described as being a market force because there’s a market for what they do. If accession to a private union’s demands (say, GM’s union) ends up driving up the costs of what they make, I can go out and buy a Ford. Both GM’s unions and GM’s management know that and it acts as a constraint on both sides.

    But there is no market for what the government does. I can’t go out and drive some other government’s roads or get my drivers’ license from some other government’s DMV. There is no market constraint. Public unions are not market forces.

    There’s a distinction between public unions and private ones. Conflating the two is misleading.

  28. 28
    Jake Squid says:

    Why are all of the pro-union folks so determined to ignore or avoid any of the problems?

    There is no question that there are problems with unions. The thing is that the problems caused by unions are far more minor than the problems that unions evolved to combat. The suggestions offered by anti-union folks, however, do not really address the problems with unions nearly as much as they function to weaken or destroy unions. It’s nearly impossible to have an honest conversation about ways to solve problems caused by unions with anti-union folks. They just want to destroy unions, not find solutions to the ways that unions function. The desire to destroy unions is an anti-labor position.

  29. 29
    Robert says:

    The desire to destroy unions is an anti-labor position.

    One of the problems created by unions is that their fans always seem to create a false identity between the union and the workers.

    Being anti-union is not automatically the same as being anti-labor. It certainly COULD be.

    Turning it around, I have liberal friends who are very critical of big corporations and think they suck. Some of those friends are probably despicable communists. But others of them are gung-ho pro-capitalists who just want to reform the system.

  30. 30
    Dianne says:

    I don’t know about other fields, but I know that in the area of health care the VA, FDA, and NIH are all hiring. Or trying to. If public workers are so overpaid and all y’all in the private sector so oppressed, go ahead and apply for one of those cushy public sector jobs. Your cares will be over and du wirdst ein Schweingeld verdienen.

  31. 31
    Jake Squid says:

    One of the problems created by unions is that their fans always seem to create a false identity between the union and the workers.

    I’m not sure what you mean when you say, “false identity between.” Is that the same as a false equivalency?

    Being critical of big corporations is not the same as offering suggestions that only function to destroy corporations just as being critical of unions (which, btw, I am) is not the same as offering suggestions that only function to destroy unions.

  32. 32
    Robert says:

    Equivalency is saying two things are very similar. Identity is saying two things are the same. Unions are not labor; unions are an organizational structure that some laborers adopt. You can hate one and love the other.

    You could make suggestions that would destroy corporations and still be pro-capitalist. Corporations are not capitalism; that’s a false identity. You can make suggestions that would destroy unions and still be pro-worker. Unions are not workers.

  33. 33
    gin-and-whiskey says:

    Jake Squid says:
    March 3, 2011 at 7:34 am

    Why are all of the pro-union folks so determined to ignore or avoid any of the problems?

    There is no question that there are problems with unions. The thing is that the problems caused by unions are far more minor than the problems that unions evolved to combat.

    Yes, agreed.

    But so what?

    The world in which unions evolved–where businesses would send out club-wielding thugs to engage in wholesale warfare; where people would be locked into rooms; where people would be unpaid–is not the worls in which we live now.

    We live in a world without widespread child labor; with federal and state minimum wages; and with federal and state employment laws. THIS world, without unions, would be very different from the OLD world, without unions.

    there’s a reason the union folks like to talk about history, instead of reality: their argumen isn’t as good otherwise.

    The suggestions offered by anti-union folks, however, do not really address the problems with unions nearly as much as they function to weaken or destroy unions. It’s nearly impossible to have an honest conversation about ways to solve problems caused by unions with anti-union folks.

    Bullshit.

    Here is a thread, and here are some folks to discuss it. Are you calling us dishonest? Are you deciding that you’re the arbiter of what our true motivations are?

    What are the problems with unions that you mention but don’t describe, and why are you so certain that they are so unimportant?

    They just want to destroy unions, not find solutions to the ways that unions function.

    My desires are not defined in terms of a union, or a lack of one. If what I want can be accomplished better y the presence of a union, then I support a union. If what i want can be accpmolished by the detruction of a union, then I want the union destroyed.

    Since you’ve gone down the road, I’ll state that I think your position is more problematic than mine. You claim to be analyzing the cost/benefits of unions, but you don’t seem to be willing to consider any scenario in which they are not around. That’s not an honest analysis.

  34. 34
    Myca says:

    If what I want can be accomplished better y the presence of a union, then I support a union. If what i want can be accpmolished by the detruction of a union, then I want the union destroyed.

    Sure, me too.

    What’s your solution for growing income inequality and the 30 year stagnation of middle class wages?

    Mine is a strong labor movement.

    —Myca

  35. 35
    Jake Squid says:

    I’m with Myca on this.

    But to get to g&w’s comment:

    You claim to be analyzing the cost/benefits of unions, but you don’t seem to be willing to consider any scenario in which they are not around. That’s not an honest analysis.

    My position comes after considering scenarios in which unions do not exist, thanks for asking. My position does not mean that I’m not willing to consider those conditions. However, my position does mean that I’m not willing to consider generic, unspecified scenarios in which unions do not exist. Not that I’ve told you how I come to my present position.

    You can have no idea whether or not my analysis is honest since I haven’t laid out my analysis for you to review. Assuming I’ve reached a position on the issue without considering scenarios in which unions don’t exist is quite a reach on your part. Concluding that your imagining of my analysis is not honest is irrelevant to any discussion that involves things that you didn’t make up.

  36. 36
    Jake Squid says:

    RonF writes:

    Private unions can fairly be described as being a market force because there’s a market for what they do. If accession to a private union’s demands (say, GM’s union) ends up driving up the costs of what they make, I can go out and buy a Ford. Both GM’s unions and GM’s management know that and it acts as a constraint on both sides.

    But there is no market for what the government does. I can’t go out and drive some other government’s roads or get my drivers’ license from some other government’s DMV. There is no market constraint. Public unions are not market forces.

    There is a market, however, for labor for what the government does and the government needs to compete in that market for labor. The government does exist within a free market system. Even if you want to say that the government is completely outside the free market system, you cannot truthfully say that the labor for government functions is completely outside the free market system.

    You could remove government labor from the free market system by going to a conscription system. Then, just like military labor, all government labor could be considered outside of the market.

  37. 37
    Robert says:

    What’s your solution for growing income inequality and the 30 year stagnation of middle class wages?

    Mine is a strong labor movement.

    LOL. Right, because a structure of pressuring capital to return more of its yields to workers will TOTALLY lead to productivity increases and higher real returns. That’s why the UAW currently thrives in a super-rich domestic auto industry.

    If you want middle-class wages to be higher, then you have to figure out ways to improve and encourage middle-class real productivity. That means:

    1) putting more capital per worker on the factory/office floor (not taking it out in the form of consumption), which generally means more machines and less people

    2) reducing inefficiencies in workflows

    3) innovating and creating new areas of economic activity

    So reducing effective number of jobs in one place (while producing economic activity that produces more jobs in others), making things work better, and inventing new stuff.

    Are those big union strengths in your worldview?

  38. 38
    Myca says:

    Productivity has been rising. Profits have been rising. “The pie has been getting higher.” The middle class has been more productive. That’s not the problem.

    The problem is that the middle class has seen very little of the profit from this rising productivity.

    None of your solutions do a goddamn thing about that. None of your solutions offer any reason that the increased profits couldn’t just drop into the pockets of the very wealthy, as they have for thirty years.

    The size of the pie isn’t the problem. How the pieces are cut is the problem.

    Which is why the middle class needs a strong advocacy group dedicated to getting them a larger slice of the pie.

    Your response is a nice all-purpose answer, Robert, but it has fuck-all to do with the question I asked.

    —Myca

  39. 41
    gin-and-whiskey says:

    Myca says:
    March 3, 2011 at 10:06 am
    …What’s your solution for growing income inequality and the 30 year stagnation of middle class wages?

    Mine is a strong labor movement.

    —Myca

    I don’t necessarily see those things as a problem; it’s what results from them that is a problem. But I’d generally support higher taxes, more auditing of all taxpayers, fewer corporate exclusions, and better social services more readily than I’d support unions.

    I’d also support better education, some government spending to promote industry, and a few other things.

    Also, probably some protectionism when it comes to jobs. the U.S. isn’t too good at that.

    Unions-as-solution are WAY WAY down on my list.

  40. 42
    Myca says:

    And from the Socialist Worker, which I realize you will dismiss out of hand, but they cite the Economic Policy Institute, which is pretty mainstream.

  41. 43
    Grace Annam says:

    Robert is right in saying that people make employment decisions on more than wages. They can and do make them based on perceived value of benefits received.

    Whether public or private employees do better after all factors are taken into account is a matter which can be debated by people of good conscience.

    One point to consider is that people in the private sector cannot have their pensions voted away by the electorate.

    For instance, in New Hampshire, there is currently a fight over the municipal Retirement system which covers police, firefighters, and teachers. The system is statewide, but other benefits are determined by the local municipality. Police and firefighters contribute 9.3% of gross taxable earnings to the fund, which is set by statute and has been constant for many years. Police and firefighters also don’t pay into Social Security, so any benefit they get there is based only on earnings from other sources during the lifetime, like second jobs or other careers, which makes it a smaller check when the time comes. (Teachers have it worse; their retirement benefit gets reduced by the amount of their social security check when they start getting one, so they might as well have no social security at all.)

    Municipalities also contribute, at a rate determined by the non-partisan Retirement System. However, in order to balance budgets a few years ago, the legislature short-funded the system, for several years running, starting before the current economic crisis, but continuing into it.

    Now, in order to make up the long-term shortfall in the system, the newly-elected Republican majority wants to raise the retirement age and reduce the benefit, even for people who have been in the system for years, but are not yet vested (you get vested at 10 years).

    Sure sucks to be told for ten years that the deal was X, and to contribute your statutory share for those years, and then have the legislature vote to balance the budget by reducing your benefit.

    “But hey,” people might say. “In an economic downturn, that’s exactly what happens to people in the private sector with a defined-contribution plan, right? So fair’s fair.”

    Maybe. But that’s not the system people made their employment decisions on, nine years ago.

    When you work in a career where the hazards are higher than almost any in the private sector (line-of-duty death and injury, stress-related health problems, hazmat exposure, elevated rates of alcoholism, divorce, and suicide), your life expectancy is, on average, lower.

    So, as long as we’re debating what’s fair and what’s better, let’s include the risk of the electorate which hired you on clearly stated terms electing not to fund your retirement, often the only retirement you have.

    Which, come to think of it, is adding yet another layer of stress to the job. It might be blackly humorous, if it were happening to someone hypothetical.

    Grace

  42. 44
    gin-and-whiskey says:

    Oh, and BTW:

    Myca says:
    March 3, 2011 at 11:10 am
    …None of [those] solutions offer any reason that the increased profits couldn’t just drop into the pockets of the very wealthy, as they have for thirty years.

    This wasn’t aimed at me.

    but I for one–and I think other people on this thread as well–have been VERY explicit about that fact that public and private unions are not the same thing, and are not subject to the same analysis. Yet many of the responses fail to distinguish between public and private unions.

    This post serves to illustrate why that matters. “Absent unions, the rich get richer” is a pretty good argument… but one which does not apply at all to the public union context.

  43. 45
    Robert says:

    Hmm, you make a good set of points, Myca. I’ll have to look into it further.

  44. 46
    Jake Squid says:

    This post serves to illustrate why that matters. “Absent unions, the rich get richer” is a pretty good argument… but one which does not apply at all to the public union context.

    Sure it applies. Look at Wisconsin. Who just got massive tax breaks and what are the reasons that Walker has given as to why the public unions must lose their leverage/be destroyed?

  45. 47
    Myca says:

    This post serves to illustrate why that matters. “Absent unions, the rich get richer” is a pretty good argument… but one which does not apply at all to the public union context.

    1) Yeah, I was talking more about unions in general … I figured the conversation has shifted.

    2) I’m not sure your statement holds, since we’ve already discussed the crossover in the labor market between public and private employment, and the ways in which Unions raise wages across an industry.

    —Myca

  46. 48
    Dianne says:

    Look at Wisconsin. Who just got massive tax breaks and what are the reasons that Walker has given as to why the public unions must lose their leverage/be destroyed?

    Exactly. Wisconsin’s gap between available funds and pension needs is TINY. And, prior to the idiot governor’s decreasing taxes it didn’t exist! The only reason Wisconsin has a problem is because the governor decreased taxes. I don’t know why he did that. It clearly didn’t increase business to the area or anything else.

    I don’t know why anyone in the US even wants decreased taxes. Decreased taxes=decreased services. And even semi-rich people need services like public transportation, police, fire, building inspectors, schools, hospitals, etc. Decreasing taxes only makes the situation worse. I’ll take a high tax state any day.

  47. 49
    RonF says:

    Jake Squid:

    There is a market, however, for labor for what the government does and the government needs to compete in that market for labor. The government does exist within a free market system. Even if you want to say that the government is completely outside the free market system, you cannot truthfully say that the labor for government functions is completely outside the free market system.

    I haven’t held that there isn’t a market for their labor. But there is no free market for much of what the government does. Despite Judge Judy and her ilk, there’s no private equivalent of criminal courts, public roads, building permits, regulatory agencies, etc., etc. ad nauseam.

    Then there’s the competition for the labor of their management (there’s a market for management just as there is a market for labor). That’s not a free market either – and unlike in private industry there’s a feedback loop. Politician gives in to union demands. Union takes union dues and contributes money to politician. Union solicits laborers for politician’s campaign. Union organizes transportation for union members to go to polls. Politician can buy more media time for campaign. Politician gets elected. Private union members cannot influence who their management is like public worker unions do.

    The choice that a laborer has to work for either private or public enterprise doesn’t make the relationship between the labor, the management and the consumer of their joint product or services a free market.

  48. 50
    RonF says:

    Dianne:

    I don’t know why anyone in the US even wants decreased taxes. Decreased taxes=decreased services. And even semi-rich people need services like public transportation, police, fire, building inspectors, schools, hospitals, etc.

    If all my taxes did was to go towards police, fire, schools, building inspectors, roads and the military they would be a lot lower.

    Hospitals? Semi-rich people only see the inside of a public hospital if they have to go to the emergency room and can’t get to (or didn’t get taken to) a private one. Public transportation? Semi-rich people drive cars and more often than non-at-least-semi-rich people tend to live in neighborhoods that aren’t served by public transportation. There are a lot of government services that semi-rich people never use.

    Grace:

    Sure sucks to be told for ten years that the deal was X, and to contribute your statutory share for those years, and then have the legislature vote to balance the budget by reducing your benefit.

    I’ll go along with the concept that you should get the deal that you’ve paid into. However, I see no reason why the deal can’t be changed going forward. I worked for a company for 12 years. About 8 years into it I was told “No more pension. You get benefits from what you paid in, but from now on you need to start paying into a 401(k).” New public hires should be told the same thing. Existing public employees should have their current pension benefits capped at what they’ve earned so far and have to establish a 401(k) for any further benefits.

  49. 51
    Brandon Berg says:

    Myca:

    Oh look, evidence!

    Rising average productivity doesn’t necessarily mean that any particular individual is getting more productive. In fact, it’s quite common for productivity to correlate negatively with employment in the short run. The reason is that when employers cut back, they tend to let their least productive workers go first. Also, it’s the least productive firms that tend to go out of business first.

    So when the economy goes into recession, and workers get laid off and firms go under, suddenly a big chunk of the least productive workers are no longer holding down the average, and we see a spike in productivity numbers which is really just a statistical artifact.

    The article you linked to is a bit misleading, though probably not intentionally so. It says that productivity was up 3.5% in 2009 and 3.6% in 2010. What they mean is that average productivity for 2009 was 3.5% greater than for 2008, and average productivity for 2010 was 3.6% greater than for 2009. You get a very different picture when you look at quarterly numbers, which show that productivity growth was much stronger in 2009. This is important because that’s when employment tanked.

    This may also be the reason why we see high average productivity in European countries with labor policies that disincentivize the hiring of low-productivity workers—by pricing the left tail of the distribution out of the market, they inflate their averages.

    Long-term, my understanding is that median total compensation is rising, but that all the gains are going into noncash benefits, though I am not personally familiar with the numbers on this and could be wrong. Even with respect to cash wages, there’s a case to be made that the CPI overstates inflation and that real median wages have in fact been rising. Do you really believe that the average American is no better off now than in the ’70s? Because that’s exactly what you imply by saying that real wages have stagnated.

    Also, are you comparing median wages to mean productivity?

  50. 52
    gin-and-whiskey says:

    I am fairly sure that the national education association collects mandatory dues from–I believe–something between 20 and 30 states’ worth of teachers.

    and the NEA was–presumably based to some degree on those dues–THE HIGHEST political campaign spender in the entire country, according to this 2007/8 data (it doesn’t appear that more recent data is available.)

    http://www.followthemoney.org/database/top10000.phtml?PHPSESSID=6a8f67e0d24618da7d8b1a960ecbc670

    And in Wisconsin?
    Well, wouldn’t you know it. Looks like the NEA is the top state spender; the democratic campaign committee is #2, and the american federation of teachers is #3. http://www.followthemoney.org/database/top10000.phtml?&topnum=10000&s=WI&so=s&PHPSESSID=6a8f67e0d24618da7d8b1a960ecbc670#sorttable

    How is this not regulatory capture? Anyone who thinks about the poor under represented teachers, subject to the whims of those eeevil other folks, needs to take a second look.

  51. 53
    Jake Squid says:

    How is this not regulatory capture? Anyone who thinks about the poor under represented teachers, subject to the whims of those eeevil other folks, needs to take a second look.

    Given that a substantial majority is against the eliminating the collective bargaining rights of public employees unions, perhaps they are subject to the whims of those eeevil other folks. It sure looks like the Wisconsin government has been captured by certain private businessmen with a right-leaning political stance, not by those money-grubbing teachers. I suppose it’s possible that the teachers union is behind this, though.

    See Gallup and

    When did we start talking about regulatory capture, anyway? Which regulatory agency in Wisconsin is subservient to the teacher’s union? Are you more concerned about the NEA’s political contributions than, say, that of the Koch brothers’? Why?

    Me? I’m glad you asked. I believe that regulatory capture is a bad thing whether it comes from unions, corporations or wealthy inheritees. I don’t think that weakening unions is a good solution to the problem unless you are anti-union. My preferred solution is to have 100% publicly financed campaigns. I think that solves the problem of regulatory capture a lot better than the strategy of weakening unions does.

  52. 54
    Robert says:

    My preferred solution is to have 100% publicly financed campaigns.

    To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical.
    – Thomas Jefferson

  53. 55
    Jake Squid says:

    That’s great, Tom. We disagree.

  54. 56
    Robert says:

    OK. I’ll send my stormtroopers over to your place later to expropriate everything you own, sell it all on ebay, and donate the proceeds to the Federalist Society.

    Obviously, the STATE doing it would have more legitimacy…and they’d probably also have the wit to limit the expropriation to what you’d stand for without excessive squawking. Still be wrong, though.

    Out of curiosity, how do you see publicly-financed campaigns solving the problem of regulatory capture? From what I can see, it just changes the identity of the people doing the capturing.

  55. 57
    Ampersand says:

    The neat thing about Robert’s argument is that it could be used to prove that ANYTHING the state does is wrong.

    OK. I’ll send my stormtroopers over to your place later to expropriate everything you own, sell it all on ebay, and use the proceeds to pay for prisons/pay the fire department/build roads/fund schools/whatever.

    Obviously, the STATE doing it would have more legitimacy…and they’d probably also have the wit to limit the expropriation to what you’d stand for without excessive squawking. Still be wrong, though.

    Just because we all agree it would be wrong for Robert’s stormtroopers to do something, it doesn’t logically follow that it’s wrong for the state to do the same thing (especially if not done to stormtrooper-like excess.)

    I’m also curious about how far this principal of not funding elections, because part of funding elections is funding propagation of opinions and that’s WRONG, goes. How about the court system, which some people use to propagate their political views? K-12, which features all sorts of opinions (the earth is round, Shakespeare is a great author, learning math is important, etc..) Or universities, which I might use to propagate my opinion of the authorship of a 14th century monogram, for example? (And which many people — including many prominent conservatives — use to help propagate their political opinions.) The state of the union address? Public libraries, of course, have to go!

    What Robert’s quote ignored is just as schools and libraries propagate opinions only as part of their larger purpose of furthering and democratizing knowledge, elections propagate opinions only as part of the larger purpose of facilitating democracy.

  56. 58
    Robert says:

    We have a consensus about schools and libraries and universities, for the most part.

    We don’t have such a consensus about the partisan political issues of the day. It is fine to tax me to build a library where my kids will learn your damnable consensus majority opinions about that Shakespeare guy; it’s not OK to tax me to pay for your campaign for office.

    If you want to run for office, make some friends who like you first.

  57. 59
    Ampersand says:

    We don’t have a consensus about the views expressed by everyone in schools and by every book in libraries, but we do have a consensus that we ought to have schools and libraries.

    Similarly, although we lack consensus about partisan political issues, we have a consensus that we ought to have elections.

    What’s the difference?

  58. 60
    Robert says:

    The difference is that we have a widespread view that Thomas Jefferson was right. Not a consensus view, obviously, but enough of a plurality if not a majority. People don’t want taxpayer money being used for the campaigns of their political enemies. I don’t mind you running for office on a “Tax Robert Hayes more” platform; damned if I’ll pay you to do it.

  59. 61
    Brandon Berg says:

    Me, upthread, to Myca:

    Also, are you comparing median wages to mean productivity?

    Actually, I know that this is what you’re doing, because there are no median productivity numbers. Do you see the problem with this?

  60. 62
    Ampersand says:

    Not a consensus view, obviously, but enough of a plurality if not a majority.

    So if a plurality of Americans become convinced that publicly-financed elections are a good idea, then you’ll be in favor of them?

  61. 63
    Robert says:

    No, but if a consensus develops that they’re the way to go I won’t go to war for the sake of Jeffersonian ideals. ;)

    But that’s a hell of a hill for your team to climb. Once people realize that they’d be mandated to give money to Ron Paul, Pat Buchanan, Joe Biden AND Sarah Palin all at the same time…yeah, well. I might pay money to see all those people in some kind of cage-fight situation, but pay their bills? Pass.

  62. 64
    Elusis says:

    The world in which unions evolved–where businesses would send out club-wielding thugs to engage in wholesale warfare; where people would be locked into rooms; where people would be unpaid–is not the worls in which we live now.

    I can’t believe this remark has been allowed to stand.

    Google results for ‘Walmart locked workers in’

    It’s only funny until someone gets an ankle crushed!

    Oh look, they also forced people to work through unpaid breaks and lunches, misclassified workers to avoid paying them overtime, blah blah blah.

    I dated a wage and hour attorney for a while. He turned out to be a douchebag, but I heard plenty of stories. Like the non-union construction companies that would file the low bid on a job, then make their costs by hiring Southeast Asian immigrants who spoke little English, drive them 90 minutes to the job site but refuse to pay them for that time, refuse to give them breaks and lunches, make them stay past their promised quitting time (they’re providing the transportation, after all) and thus work them 10-12 hours in a day, then alter their time cards to show far less than 40 hours a week in order to 1) avoid having to pay any benefits, and 2) make it look like the hourly wage they were paying met state and local regulations about minimum wages while actually paying far less. These same outfits were known to fire guys who complained about the working conditions but not pay out time worked since their last paycheck. And for every firm that got caught with their hand in the cookie jar, you can be sure 50 more are operating fearlessly, knowing that their employees are largely powerless, ignorant of their legal rights, and unaware of how to get help to remedy their situations.

    (Oh yeah, and employers totally never hire thugs to beat up union picketers or anything. )

  63. 65
    Schala says:

    I don’t know why anyone in the US even wants decreased taxes. Decreased taxes=decreased services. And even semi-rich people need services like public transportation, police, fire, building inspectors, schools, hospitals, etc. Decreasing taxes only makes the situation worse. I’ll take a high tax state any day.

    Quebec province has the highest income tax rate of all North America.

    You don’t pay a dime below 10k income a year. At 25k, tax is about 25%. At 60k, tax is about 35%. At 100k+, tax is 45%. Rough numbers.

    Sales tax combined provincial and federal is 15-16%.

    And for that, we get a developing subway network in Montreal. A good network of busses and suburb trains too. Free hospital and doctor visits. Basic 69% meds coverage (if your plan isn’t better, or you have no plan). Also state-funded welfare and pensions for all eligible – and that’s many (though it’s barely a living income, it’s better than 0).

    To be eligible for welfare, you need to 1) Not be working 2) Not be on unemployment benefits (which is federal, and has priority…it’s also usually a higher amount) 3) Not be considered in a couple with someone who is working more than the limit allowed (which is super low)

    I’ve heard a bit about how welfare works in the US, but it sounds the eligibility bar is set much higher than that, that few people can even be on it.

    Our (Quebec’s) public-sector unions are also much stronger than Wisconsin’s I would think.

  64. 66
    RonF says:

    Amp:

    Plus, Robert assumes — without any links or facts to justify this — that public sector workers are overpaid. But using a bog-standard2 method of measurement, public employees are actually underpaid compared to private sector workers (see here, here, and here, for example).

    These studies are based on what I think is a false premise; compensation for labor for different jobs can be compared by their inputs – experience, certifications, education, etc. But that’s not right. Jobs are comparable based on the value of their output – what people are willing to pay for them. If people are willing to pay the same amount for two different products or services that take the same amount of time from a laborer to produce them, then the jobs are comparable and it would make sense that the laborers would have similar compensation.

    But it makes no sense to pay people for things like experience, education, etc., if the work they do doesn’t result in a product that people are willing to pay for. Just because you have a high level of education doesn’t mean that your labor is worth more than someone who has a low level of education. The worth of labor is what people are willing to pay for it, not the level of effort or time or money you paid to be prepared to produce it.

    Or, as Adam Smith said in The Wealth of Nations, “The worth of a thing is the price it will bring.” Note that we’re not talking non-economic worth. A child costs you a fortune and gets you no economic compensation at all by the age of 21 – yet I wouldn’t say they are worthless. But economically they are just that.

    My son has a batchelor’s degree in a branch of engineering. It took him as long to get that degree as it does for a lot of kids his age to get a batchelor’s degree in education. Do you seriously think that a teacher should get paid the same as he does? No. Why? Because people are willing to pay more for an hour of his time than they are for an hour of a teacher’s time.

    Brandon Berg said:

    There’s only one way to tell whether government workers are overpaid, and it has nothing to do with comparisons to private-sector workers. Is the government having a hard time finding qualified applicants to fill open positions? It’s not paying enough. Is it getting many more qualified applicants than it can hire? It’s paying too much.

    He’s right. The proper compensation for a job is the amount of money that people who can and will do the job are willing to accept and that the people doing the hiring are willing to pay. It may be that the two don’t initially agree, in which case either someone’s got to change their expectations or the job doesn’t get done. But all getting a degree proves is that you can get a degree. It does not prove that you can apply what you learned in a productive fashion.

  65. 67
    RonF says:

    Schala:

    I’ve heard a bit about how welfare works in the US, but it sounds the eligibility bar is set much higher than that, that few people can even be on it.

    This is not the most current number, but according to an article in the Wall Street Journal, about 50.1 million people in the U.S. get some kind of government payment based on their income or lack of a job.

    In September 2009, around 4 million Americans were served by a state cash-assistance or welfare program, more than 37 million received federal food stamps and about 9.1 million received unemployment benefits. If treated as exclusive numbers, there would be a total of 50.1 million Americans who received federal aid in September 2009. This data is based on a report published in USA today in January 2010.

    That is approximately one out of every six people in the country (the U.S. has approximately 308 million people). And I’ll bet those numbers – especially the unemployment benefit numbers – have gone up since September 2009. Add to that the approximately 100 million people on Medicare, Medicaid and Children’s Health Insurance Program and even with overlap among the groups I think you’re well beyond “few people”.

  66. 68
    Ampersand says:

    About half of those “100 million” people are using Medicare, which isn’t welfare. Neither is unemployment. Insurance programs that people pay into aren’t welfare.

    Nonetheless, you’re right to say that a lot of Americans receive some sort of government assistance. To your list, I’d add the mortgage tax deduction and the tax breaks for employer-provided health insurance, both of which are huge giveaways mostly going to wealthy and middle-class people.

    So we do give a lot of money to our citizens. That said, compared to other wealthy countries, the amount of assistance we provide to our impoverished citizens is pretty stingy. And it’s also true that few people can manage to get on a US “cash-assistance or welfare program,” which is I suspect what Schala meant to refer to.

  67. 69
    Dianne says:

    You don’t pay a dime below 10k income a year. At 25k, tax is about 25%. At 60k, tax is about 35%. At 100k+, tax is 45%. Rough numbers.

    That’s not terribly high. Especially since it means that you don’t have to pay health insurance, which is a huge black hole for money in the US, and have some assurance of retirement benefits. Plus subways, which I’ve really come to appreciate living in NYC.

  68. 70
    Grace Annam says:

    RonF opined:

    I’ll go along with the concept that you should get the deal that you’ve paid into. However, I see no reason why the deal can’t be changed going forward.

    Perhaps, but that’s not what’s being proposed. What is very likely to happen is that people who have been in the system for years will now be told that they must work longer to received the benefit they signed on for, even at the same rate.

    Also, I tried to make it clear in the post you were replying to that the workers in this retirement system have paid their share all along, and the only reason there’s a shortfall is that the municipalities didn’t pay their share. The proposed fix is … to lessen benefits for the people who have been paying their share.

    To the broader issue, I agree that unions can be problematical. But so can corporations – very much so. Oh, and government, too. The issue is fundamentally one of power. High-level executives in large multinational corporations have tremendous power, and they operate in an environment where all of the incentives are to get as much as possible out of the workers for as little as possible in return. That kind of environment invites abuse, systemically. A union simply balances the scales, and people can argue about whether they’ve overbalanced in a specific case, but in my experience that’s not usually where the smart money is.

    Add to that the fact that it’s very difficult to form a union, but not difficult to disband one, and the current push to de-unionize should be very, very concerning for individual workers.

    Grace

  69. 71
    Brandon Berg says:

    About half of those “100 million” people are using Medicare, which isn’t welfare.

    Medicare is partially—ranging from almost entirely to just a little bit—welfare for many people. Yes, people pay into it, but there’s basically no relationship between what you pay in and the benefits for which you qualify. To qualify for Medicare, you just need to have paid the 2.9% (less, prior to 1986) tax for at least ten years. It doesn’t matter whether that’s 2.9% of $10,000 or 2.9% of $1,000,000. Your benefits are the same.

    For people who’ve contributed the bare minimum to qualify, Medicare is almost entirely welfare. They’re being subsidized by people who’ve paid in far more than they can ever expect to get out. I don’t know enough about the actuarial details to give specific numbers, but at least a large minority of Medicare beneficiaries, if not a majority, are getting benefits worth* substantially more than they paid in, i.e., welfare.

    *Of course, I mean “worth” in an ex ante sense, not in terms of actual payout, which is dependent on what covered medical events occur.

  70. 72
    Ampersand says:

    That’s what insurance is — risk is spread over a large group, rather than individualized. You could with equal truth say that a minimum wage worker who paid into the system for 48 years of work and then died the day before her 65th birthday is subsidizing the rich lawyer who lives to be 95 and gets treated for cancer five times and two open-heart surgeries. (In general, rich people live longer than poor people, so on average rich people probably receive more post ante from Medicare than poor people do).

    You folks have been predicting the imminent collapse of Medicare since the day Medicare was proposed, and you’ve always been wrong.

  71. 73
    RonF says:

    About half of those “100 million” people are using Medicare, which isn’t welfare. Neither is unemployment. Insurance programs that people pay into aren’t welfare.

    I was following along the lines of the types of government assistance that Schala was citing, which included medical care.

    To your list, I’d add the mortgage tax deduction and the tax breaks for employer-provided health insurance,

    Tax deductions have nothing to do with whether Schala was right or wrong about whether it’s hard to get the kinds of assistance in the U.S. that were defined in the comment.

  72. 74
    RonF says:

    Grace:

    Also, I tried to make it clear in the post you were replying to that the workers in this retirement system have paid their share all along, and the only reason there’s a shortfall is that the municipalities didn’t pay their share.

    I do not wish to minimize the mendacity of the politicians who used what should have gone to the pensions to fund social programs, capital projects, overpriced contracts to political colleagues and contributors, etc. God knows that Illinois is in a massive deficit for just that reason.

    Iff the contributions of the municipalities had been made as scheduled and the investments of the resultant funds would have yielded enough to pay off the defined pensions then I’ll agree with you that they paid their share.

    As far as the dangers of disbanding unions go, I’ve only worked in a unionized labor force for probably a total of less than a year of my life, and it was generally a bad experience. I was at one unionized job for only one contract negotiation. I showed up at the meeting we were supposed to vote on the contract. When I walked in I asked for a copy of the contract.

    “There is no contract yet, so we don’t have a contract to give you.”

    O.K. Let me see a copy of the proposed contract.

    “No you can’t see that.”

    How am I supposed to vote on the contract if I don’t know how much I’m going to get paid under it.

    “You can’t see the contract.”

    Inside I go. I wasn’t the only one. The union official told us that he and his colleagues worked very hard to get us the best deal they could and we should all trust him and vote for the contract. I stood up and said that I wanted to know how much I was going to get paid under the contract and until someone showed me that I was going to vote against it. We voted down the contract.

    I was fired within a week.

    Since then I’ve managed to make a pretty good living without belonging to a union. I don’t think having a union would benefit me much.

    And remember – we are the public union worker’s employers. We are the ones that will have to pay out these wages and pensions, one way or another. It’s in our interests to get as much as we can for as little as we have to pay so that we can keep our hard earned money for our own pensions, which unlike the public unions’ ones are not guaranteed by the taxpayers.

  73. 75
    Brandon Berg says:

    Amp:
    I thought I made this sufficiently clear in the footnote to my comment, but I guess not, so let me give it another shot.

    Real insurance is redistributive in an ex post sense. After the covered event occurs and the payout is made, we can look back and see that there was a redistribution of wealth from people who didn’t have an insurable event to the person who did. This is fine. It’s what insurance is.

    But it’s not redistributive in an ex ante sense. We pay the same premium, we get the same level of coverage. Now, maybe your house will burn down and mine won’t. Or maybe mine will burn down and yours won’t. Both of these events are equally likely, so I’m not subsidizing you, and you’re not subsidizing me. Neither of us can complain that we’re getting a raw deal.

    Medicare, though, is redistributive in an ex ante sense. You get the same level of coverage as a guy paying ten times as much as you. Now, it may turn out that you get hit by a bus on your 65th birthday, and the other guy develops an expensive, nonfatal chronic medical condition on his. But that’s no more likely than the opposite to happen. Ex ante, he’s paying ten times as much as you for the exact same level of coverage for no reason other than the fact that he makes ten times as much money.

    That’s not insurance. That’s welfare.

  74. 76
    Robert says:

    Medicare is a subsidized quasi-insurance program, in which the (effectively) underpaid premiums of low-income members are covered by the (effectively) overpaid premiums of high-income members.

    It’s not a welfare program in the strict sense of “here is some money”, but it’s welfare in the sense of being redistributive of income. If it weren’t, rich people’s Medicare would be awesome and gold-plated and poor people’s Medicare would be dingy warehouses where they hit you over the head with a meat axe if your suffering becomes too great. Instead, everyone gets the same level of care.

  75. 77
    Grace Annam says:

    RonF wrote:

    Iff the contributions of the municipalities had been made as scheduled and the investments of the resultant funds would have yielded enough to pay off the defined pensions then I’ll agree with you that they paid their share.

    That is broadly the situation, as I understand it from a presentation I attended recently, given by a representative of the retirement system. Part of the fix has been to increase municipal contributions for the next 30 years, which is already planned, but could be abrogated at any moment by a cash-strapped legislature.

    I have no philosophical objection to offering a different deal to new incomers into the system. They can then make their choices on that basis. I just object to yanking the rug people are actually standing on. (I might make practical objections which have to do with the quality of people we attract, but that’s a different issue entirely.)

    “You can’t see the contract.”

    Sounds like a bad union. They’re definitely out there. My own union is small and inadequate. I’ve participated in several negotiations over the years, and I have a great deal of negative experience. However, even in a small, ineffectual union, in a state with non-binding arbitration, I have seen the simple fact that the grievance process exists and must be dealt with prevent small abuses in power. Those small abuses become past precedent, and add up over time.

    I have also worked in non-union shops, both in law enforcement and in other jobs. They have their points. But with years of experience in both situations, I prefer a union. And, much as I prefer a population with a right and ability to concealed carry because then the bad guys have to worry that anyone they choose to mug might shoot them, I prefer a population with a right and ability to organize, because then the bad guys have a bit more motivation to pay some attention to how they treat their workers. The existence of unions, over here, helps that non-union person, over there.

    And remember – we are the public union worker’s employers. We are the ones that will have to pay out these wages and pensions, one way or another. It’s in our interests to get as much as we can for as little as we have to pay so that we can keep our hard earned money for our own pensions, which unlike the public unions’ ones are not guaranteed by the taxpayers. [emphasis added]

    This boggles my mind. I’ve just been pointing out the precise fact that pensions are not guaranteed by taxpayers, and in fact can be voted away by those very taxpayers, something which cannot happen to a person’s IRA, and that this is in the process of happening to me and my co-workers.

    So I’m starting to suspect that my time would be better spent on other things. Carry on, RonF. Carry on.

    Grace

  76. 78
    Schala says:

    I was speaking specifically of welfare’s “here is some money”, not to mention that meds coverage then also becomes 100% (instead of 69%) with 0$ co-pay (your only contribution to national healthcare is on your taxes, normally…but on welfare, your income is so low that your contribution is nil anyway). After 2 continuous years of welfare, dental care is also 100% covered (as opposed to 0%). Eye care is never covered, but thankfully, I don’t need it.

    I have 140$ worth of meds a month (hormones are pricy). And a check of 590$.

    When I worked, and had no other insurance. The insurance was a deduction of 300~500$ on my taxes form. It never put me in the hole either, it just lowers your tax returns.

    Food stamps are accessible even if you do work, though most people I know are too proud to even admit to needing them.

    4 million US citizens on welfare is only a bit higher than 1%.

    I read stats that in 1973, both Canada and US had 5% of people on welfare. In 1994, Canada had 11%. In 2001, Canada had 7%, US had 2%. In 2001 again, Quebec province had 8.4% on welfare.

    I found those stats on some site, in 2001, saying Canada “adopted catastrophic socialist policies since 1973″ and how Idaho is ‘so hot’ to have only 0.1% people on welfare and a 94% reduction of people on it (since 1996). How our dollar has lost so much value to be at 63% worth the US dollar, in 2001, and how it’s the fault of those socialist policies (funny how it caught up to be at parity like, right now – without less welfare).

  77. 79
    RonF says:

    Grace, I’m sorry for the confusion. I was thinking of the situation here in Illinois, where the State has for years neglected to meet their statutory obligations for pension contributions. The State Constitution obligates the taxpayers to make up any deficiencies in the funds. Our State public pension funds are grossly underfunded and given that the State’s own projects presume that the current investments will make an 8% return on inventment, about 2x what they are currently making and well above what both they’ve made for some time and what they’re probably going to make in the future.