Public Employees: Myths and Realities
Mark Brenner
| December 20, 2010
With all the venom directed at public employees these days, it’s hard to separate the facts from the attacks. Here’s a guide to common claims made about government spending, taxes, and public employees.
The Claim: Government employees are overpaid.
The Facts: The Economic Policy Institute measured state and local public workers against their private sector counterparts with the same age, experience, and education. They found that public workers earn about 11 percent less.
Public workers had better benefits on average, but even when health care and retirement were included, public workers were still 4 percent behind private sector counterparts.
Claims that state and local government workers are overpaid often fail to account for their education and experience. Fifty-four percent have at least a four-year college degree, compared to 35 percent in the private sector.
The Claim: The federal deficit is out of control.
The Facts: It’s true that this year’s budget deficit—projected to be 10.3 percent of U.S. economic activity—is the highest since World War II. Whether it’s a problem depends on your time frame and how we address it.
Short-term government spending was the only thing that kept the economy from cratering in 2008. It staved off a second Great Depression.
With no private sector investment in sight, public spending will be the only engine for job creation in the foreseeable future. Aside from the pain created by high unemployment, no jobs means no recovery for tax collections and therefore a widening deficit.
The deficit is a long-term problem if we do nothing, but before doing something we have to look at spending and revenues. The bulk of federal spending is on the military (22 percent) and health care, including Medicare, Medicaid, and children’s health programs (21 percent).
The obvious place to start trimming is today’s military budget, which is two and a half times what it was 10 years ago. Health care costs are also skyrocketing, because they are driven by for-profit health care. A single-payer system like “Medicare for all” would correct that.
The Claim: Taxes are too high.
The Facts: Depends whose taxes you mean. According to Citizens for Tax Justice, overall taxes in the U.S. are the third lowest among industrialized countries (only Turkey and Mexico are lower). Corporate taxes are also lower than in most other industrial nations.
But there are inequities—and they favor the rich. People at the bottom of the income ladder, the lowest 20 percent, pay almost twice as much of their income in state and local taxes as the top 1 percent. The poor pay 11 percent, the rich just 6 percent.
At the end of World War II corporations paid more than a third of all taxes collected by the federal government. Today they pay only 10 percent. The burden was shifted to individuals, and as taxes on the wealthy were cut over the last 30 years, the liability has been transferred to working people.
The Claim: The private sector is more efficient than government.
The Facts: Advocates claim outsourcing will save money. But after more than two decades of experience, reality isn’t so clear-cut.
Cost overruns combined with the cost of contract monitoring and administration often makes privatization more expensive than in-house services. According to a 2007 survey by the International City/County Management Association, more than one in five local governments had brought previously outsourced services back in house.
In most cases insufficient cost savings were cited as a primary reason. And where contracting out does produce savings, they typically come from lower wages and benefits for workers—not some supposed inherent superiority of business.
The Claim: Government waste, fraud and abuse are rampant.
The Facts: Government-bashers love to talk about overpaid, do-nothing bureaucrats, but if you’re looking for misused tax dollars your best bet is to scour the Chamber of Commerce’s membership list. Defense contracts and construction projects like the “Big Dig” in Boston hold taxpayers hostage with wildly inaccurate, often fraudulent cost estimates.
According to the Project on Government Oversight’s database of federal contractor misconduct, the top five defense contractors have racked up 156 instances of misconduct since 1995, totaling $3.57 billion in fraud and waste.
The Claim: Government employees are overpaid.
The Facts: The Economic Policy Institute measured state and local public workers against their private sector counterparts with the same age, experience, and education. They found that public workers earn about 11 percent less.
Public workers had better benefits on average, but even when health care and retirement were included, public workers were still 4 percent behind private sector counterparts.
Claims that state and local government workers are overpaid often fail to account for their education and experience. Fifty-four percent have at least a four-year college degree, compared to 35 percent in the private sector.
The Claim: The federal deficit is out of control.
Short-term government spending was the only thing that kept the economy from cratering in 2008. It staved off a second Great Depression.
With no private sector investment in sight, public spending will be the only engine for job creation in the foreseeable future. Aside from the pain created by high unemployment, no jobs means no recovery for tax collections and therefore a widening deficit.
The deficit is a long-term problem if we do nothing, but before doing something we have to look at spending and revenues. The bulk of federal spending is on the military (22 percent) and health care, including Medicare, Medicaid, and children’s health programs (21 percent).
The obvious place to start trimming is today’s military budget, which is two and a half times what it was 10 years ago. Health care costs are also skyrocketing, because they are driven by for-profit health care. A single-payer system like “Medicare for all” would correct that.
The Claim: Taxes are too high.
The Facts: Depends whose taxes you mean. According to Citizens for Tax Justice, overall taxes in the U.S. are the third lowest among industrialized countries (only Turkey and Mexico are lower). Corporate taxes are also lower than in most other industrial nations.
But there are inequities—and they favor the rich. People at the bottom of the income ladder, the lowest 20 percent, pay almost twice as much of their income in state and local taxes as the top 1 percent. The poor pay 11 percent, the rich just 6 percent.
At the end of World War II corporations paid more than a third of all taxes collected by the federal government. Today they pay only 10 percent. The burden was shifted to individuals, and as taxes on the wealthy were cut over the last 30 years, the liability has been transferred to working people.
The Claim: The private sector is more efficient than government.
The Facts: Advocates claim outsourcing will save money. But after more than two decades of experience, reality isn’t so clear-cut.
Cost overruns combined with the cost of contract monitoring and administration often makes privatization more expensive than in-house services. According to a 2007 survey by the International City/County Management Association, more than one in five local governments had brought previously outsourced services back in house.
In most cases insufficient cost savings were cited as a primary reason. And where contracting out does produce savings, they typically come from lower wages and benefits for workers—not some supposed inherent superiority of business.
The Claim: Government waste, fraud and abuse are rampant.
The Facts: Government-bashers love to talk about overpaid, do-nothing bureaucrats, but if you’re looking for misused tax dollars your best bet is to scour the Chamber of Commerce’s membership list. Defense contracts and construction projects like the “Big Dig” in Boston hold taxpayers hostage with wildly inaccurate, often fraudulent cost estimates.
According to the Project on Government Oversight’s database of federal contractor misconduct, the top five defense contractors have racked up 156 instances of misconduct since 1995, totaling $3.57 billion in fraud and waste.
Links:
[1] http://www.labornotes.org/node/3149
Public Sector, Public Good
Mark Brenner
| December 27, 2010
AFSCME members rallied in California against poverty wages and service cuts. Jim West Dumping on public sector workers is so “common sense” these days that even a few fellow unionists are piling on. The head of the New York City building trades council, Gary LaBarbera, just joined the business-backed “Committee to Save New York,” a group formed solely to advance Governor Andrew Cuomo’s war on public sector unions’ pay and pensions.
Using a line lifted straight from the Chamber of Commerce, LaBarbera said that “without a fiscally sound environment, we will not be able to attract new businesses to the city.”
Labor is bringing down the government and crushing economic recovery? The era of upside-down politics is upon us.
Lawmakers across the political spectrum spent a generation giving big business a free hand in everything from trade policy to environmental protection to financial oversight. But two years after Wall Street crashed the economy, they’ve found a more convenient scapegoat. Those actually responsible for our economic mess have slipped out of the spotlight—though they’re still setting the country’s economic agenda.
LaBarbera and Pawlenty preach “fiscal sanity,” but Congress doesn’t dare go where the money is and raise taxes on the rich—they’d rather rob the Social Security trust fund. No one seems to remember that the richest Americans paid twice as much federal income tax under Nixon as they do under Obama.
This collective amnesia makes it easy to point the finger at public employees, but it’s also pushing lasting solutions further out of reach.
Despite Washington’s current bout of self-loathing, government spending is a central part of today’s economy and key to its recovery. Last year government outlays accounted for 20 percent of all economic activity, and 22 million people work in federal, state, or local government jobs.
Cutting their pay and laying them off will drive unemployment officially into double digits and extend the economic slump that’s killing the bargaining climate for everyone. And yet hundreds of thousands of city, county, and state workers are bracing for pay cuts and pink slips this year.
When Wall Street speculation drove us to the brink of another Great Depression, it wasn’t the captains of industry who stepped in. It was government—and everyone, from workers to bankers, demanded it do so. For a moment, the idea that government should do something was on the table again.
Beltway politics have snapped back from that moment like a rubber band, but labor shouldn’t lose sight of the fact that big problems require big solutions. Government will always be needed to do things markets can’t or won’t.
The Great Depression of the 1930s led to the creation of unemployment insurance and Social Security. It redefined what people expected from their government. A new common sense took root—government can and should do more. This outlook helped inspire everything from seat belts to food safety rules to standards for healthy workplaces—every reform an intrusion on the unfettered workings of the market.
Labor officials like LaBarbera seem to have forgotten that it was their forebears who led the charge for government to improve our lives and protect the little guy from the brutality of the market. The common sense that government can and should act to relieve the suffering of its citizens wasn’t the product of high-minded debate in Congress. Lawmakers moved because tens of thousands took to the streets and sat down in their workplaces, demanding change.
Plenty of public sector unionists do get it. They’re working together for a strong and expanded public sector:
Teachers in California are taking on the small-government ideology directly with a counter-education and mobilization campaign. Health care unions and postal workers in Canada are linking arms with the communities they serve. Chicago teachers are fighting school closings and the de facto privatization of education.
These unions are championing the issues that matter most for our communities, defending the public good and serving as watchdogs on cronyism and corruption. They know that the common good is not the same as a healthy bottom line for corporations. These are labor’s values, the antidote to the dog-eat-dog individualism of the market.
Banks and big corporations are once again sitting on mountains of cash, and the rich have been stuffing their pockets for decades. The resources are there to tackle today’s big problems: unemployment, the environmental and energy crises, health care and retirement security for everyone.
We can put society’s resources to work in the public interest. The question is whether we’ll keep accepting what we can live with, or start fighting for what we deserve.
Using a line lifted straight from the Chamber of Commerce, LaBarbera said that “without a fiscally sound environment, we will not be able to attract new businesses to the city.”
MAGICAL THINKING
LaBarbera’s only mouthing what the higher-ups are telling us: the deficit is the greatest threat the country faces, and public unions have engaged in a “silent coup,” as Minnesota Governor Tim Pawlenty put it, taking over government and running it into the ground with supposedly outsized pay and benefit packages.Labor is bringing down the government and crushing economic recovery? The era of upside-down politics is upon us.
Lawmakers across the political spectrum spent a generation giving big business a free hand in everything from trade policy to environmental protection to financial oversight. But two years after Wall Street crashed the economy, they’ve found a more convenient scapegoat. Those actually responsible for our economic mess have slipped out of the spotlight—though they’re still setting the country’s economic agenda.
LaBarbera and Pawlenty preach “fiscal sanity,” but Congress doesn’t dare go where the money is and raise taxes on the rich—they’d rather rob the Social Security trust fund. No one seems to remember that the richest Americans paid twice as much federal income tax under Nixon as they do under Obama.
This collective amnesia makes it easy to point the finger at public employees, but it’s also pushing lasting solutions further out of reach.
Despite Washington’s current bout of self-loathing, government spending is a central part of today’s economy and key to its recovery. Last year government outlays accounted for 20 percent of all economic activity, and 22 million people work in federal, state, or local government jobs.
Cutting their pay and laying them off will drive unemployment officially into double digits and extend the economic slump that’s killing the bargaining climate for everyone. And yet hundreds of thousands of city, county, and state workers are bracing for pay cuts and pink slips this year.
When Wall Street speculation drove us to the brink of another Great Depression, it wasn’t the captains of industry who stepped in. It was government—and everyone, from workers to bankers, demanded it do so. For a moment, the idea that government should do something was on the table again.
Beltway politics have snapped back from that moment like a rubber band, but labor shouldn’t lose sight of the fact that big problems require big solutions. Government will always be needed to do things markets can’t or won’t.
The Great Depression of the 1930s led to the creation of unemployment insurance and Social Security. It redefined what people expected from their government. A new common sense took root—government can and should do more. This outlook helped inspire everything from seat belts to food safety rules to standards for healthy workplaces—every reform an intrusion on the unfettered workings of the market.
Labor officials like LaBarbera seem to have forgotten that it was their forebears who led the charge for government to improve our lives and protect the little guy from the brutality of the market. The common sense that government can and should act to relieve the suffering of its citizens wasn’t the product of high-minded debate in Congress. Lawmakers moved because tens of thousands took to the streets and sat down in their workplaces, demanding change.
WHAT DO WE WANT?
Today plenty of public sector unions are hiding from the resentment the right is whipping up. But if the past 30 years have taught us anything, it’s that keeping your head down doesn’t stop the bleeding.Plenty of public sector unionists do get it. They’re working together for a strong and expanded public sector:
Teachers in California are taking on the small-government ideology directly with a counter-education and mobilization campaign. Health care unions and postal workers in Canada are linking arms with the communities they serve. Chicago teachers are fighting school closings and the de facto privatization of education.
These unions are championing the issues that matter most for our communities, defending the public good and serving as watchdogs on cronyism and corruption. They know that the common good is not the same as a healthy bottom line for corporations. These are labor’s values, the antidote to the dog-eat-dog individualism of the market.
Banks and big corporations are once again sitting on mountains of cash, and the rich have been stuffing their pockets for decades. The resources are there to tackle today’s big problems: unemployment, the environmental and energy crises, health care and retirement security for everyone.
We can put society’s resources to work in the public interest. The question is whether we’ll keep accepting what we can live with, or start fighting for what we deserve.
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