Tuesday, October 12, 2010

Public Service Employee Unions/The Paralysis of the State


If you had any doubt that Public Service Employee Unions were a significant threat to our country and our personal well being, I think the following article will put this threat into proper prospective. We are in trouble as a result of these unions and unless we start to recognize it and deal with it...there will be no money left for anything but the support of those that are supposed to work for us but are really putting each of us in the poor house to feather their own nests. All public service employee unions must be dissolved and all ridiculous fringe benefits and early retirements have to be eliminated...not just in the future but retroactively. All pensions must be adjusted to be no more than the average in the private sector. All retirements must be at at 65 or older...as in the private sector. All wages have to be adjusted downward to be no more than their employers received...that is US! Until that is done, there is no end in sight...and the corruption will run unabated. A government employee is prohibited from lobbing for political parties...why is it that their unions are not so restricted? This entire thing is a travesty and we all have been sleeping at the switch, whoa these many years. We have to wake up now...if it means all governments filing Chapter 11 to get this done...then so be it. I see no other way to accomplish this. When a business has a down turn and cannot negotiate with it's creditors, this is the only avenue available...the same is true for governments.

So I suggest that the City of Phoenix, the County of Maricopa and the State of Arizona call a meeting with all of the Public Service employee unions and give them an ultimatum...renegotiate all plans, all wages, all retirements as noted above or 'else'. Also, no more funding of political campaigns for either party effective immediately. It is time that the people we elect to represent us start doing so and now is a better time than any.

Also, those government employees who's salaries are based on what the 'union members' received should also be adjusted accordingly. A good place to start is at the City and County Manager levels, the School Superintendents, the University Presidents and staff, etc. These people should not make more than the Governor, the Sheriff, the County Supervisors nor the Mayors of our cities. We, the voters, control those wages (unlike Congress, which also needs to be changed) but have no control over the 'hired guns' 'we' employ. Makes no sense to me.

Finally, I think it would be a good move if all Federal elected officials were paid by the State and that the State Legislature controlled their salaries. After all, they are supposed to represent the State and we the people. Why do they have control over their salaries and not we, their employers? This may be an issue for the Goldwater Institute to pursue.

By the way..."Someday" is today! There is no time like the present.


October 12, 2010

The Paralysis of the State

Sometimes a local issue perfectly illuminates a larger national problem. Such is the case with the opposition of the New Jersey governor, Chris Christie, to construction of a new tunnel between his state and New York.

Christie argues that a state that is currently facing multibillion-dollar annual deficits cannot afford a huge new spending project that is already looking to be $5 billion overbudget. His critics argue that this tunnel is exactly the sort of infrastructure project that New Jersey needs if it’s to prosper in the decades ahead.

Both sides are right. But what nobody seems to be asking is: Why are important projects now unaffordable? Decades ago, when the federal and state governments were much smaller, they had the means to undertake gigantic new projects, like the Interstate Highway System and the space program. But now, when governments are bigger, they don’t.

The answer is what Jonathan Rauch of the National Journal once called demosclerosis. Over the past few decades, governments have become entwined in a series of arrangements that drain money from productive uses and direct it toward unproductive ones.

New Jersey can’t afford to build its tunnel, but benefits packages for the state’s employees are 41 percent more expensive than those offered by the average Fortune 500 company. These benefits costs are rising by 16 percent a year.

New York City has to strain to finance its schools but must support 10,000 former cops who have retired before age 50.

California can’t afford new water projects, but state cops often receive 90 percent of their salaries when they retire at 50. The average corrections officer there makes $70,000 a year in base salary and $100,000 with overtime (California spends more on its prison system than on its schools).

States across the nation will be paralyzed for the rest of our lives because they face unfunded pension obligations that, if counted accurately, amount to $2 trillion — or $87,000 per plan participant.

All in all, governments can’t promote future prosperity because they are strangling on their own self-indulgence.

Daniel DiSalvo, a political scientist at the City College of New York, has a superb survey of the problem in the new issue of National Affairs. DiSalvo notes that nationally, state and local workers earn on average $14 more per hour in wages and benefits than their private sector counterparts. A city like Buffalo has as many public workers as it did in 1950, even though it has lost half its population.

These arrangements grew gradually. Through much of the 20th century, staunch liberals like Franklin Roosevelt opposed public sector unions. George Meany of the A.F.L.-C.I.O. argued that it is “impossible to bargain collectively with government.”

Private sector managers have to compete in the marketplace, so they have an incentive to push back against union requests. Ideally, some balance is found between the needs of workers and companies. Government managers possess a monopoly on their services and have little incentive to resist union demands. It would only make them unpopular.

In addition, public sector unions can use political power to increase demand for their product. DiSalvo notes that between 1989 ad 2004, the American Federation of State, County and Municipal Employees was the biggest spender in American politics, giving $40 million to federal candidates. The largest impact is on low-turnout local elections. The California prison guard union recently sent a signal by spending $200,000 to defeat a state assemblyman who had tried to reduce costs.

In states across the country, elected leaders raise state employee salaries in the fat years and then are careful to placate the unions by raising future pension benefits in the lean ones. Even if cost-conscious leaders are elected, they find their hands tied by pension commitments and employee contracts.

The end result is sclerotic government. Many of us would be happy to live with a bigger version of 1950s government: one that ran surpluses and was dexterous enough to tackle long-term problems as they arose. But we don’t have that government. We have an immobile government that is desperately overcommitted in all the wrong ways.

This situation, if you’ll forgive me for saying so, has been the Democratic Party’s epic failure. The party believes in the positive uses of government. But if you want the country to share that belief, you have to provide a government that is nimble, tough-minded and effective. That means occasionally standing up to the excessive demands of public employee unions. Instead of standing up to those demands, the party has become captured by the unions. Liberal activism has become paralyzed by its own special interests.

The antigovernment-types perpetually cry less, less, less. The loudest liberals cry more, more, more. Someday there will be a political movement that is willing to make choices, that is willing to say “this but not that.”


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1 comment:

  1. I can't speak for the City of Phx or Maricopa County but the majority of the State of Arizona employees don't like unions and are not in unions. This can be verified by a public records request to the State of Arizona, Dept of Administration. They barely had enough members in unions to maintain the paycheck deduction for those actually in a union a few years ago. That being said, there is still a problem with the cost of the pension plans. First and foremost the Elected Officials Retirement Program should go. Why do they have a pension plan when they are term limited...and look at the benefit. Now then, that leave us with the Arizona State Retirement System (ASRS) and Public Safety Personnel Retirement System (Officers/Firefighters,etc) and Correctional Officer Retirement System (CORP). CORP is 100% funded for the Department of Corrections due to their high turnover rate. the ASRS use to be 110% funded until the Legislature reduced their contribution rate back in the early 90s to give employees a "raise". Yeah, how did that work out! They also changed the benefit structure to increase the benefit, allow for buy-back of other time from other states without the actuarial monies being paid to the fund, and then began to allow those who retired to talk all of the retirement contributions (state and employee's plus interest with them). These actions combined with market drops send the plan below needed funding levels. PSPRS (for officers and firefighters) was established to provide a greater benefit to these individuals due to high risk employment. The problem is the contributions don't pay for the benefit. For the state, why have 3 plans (ASRS, PSPRS and CORP)? Have one plan, one benefit structure and have the contribution rates reflect the cost. Get rid of elected officials retirement and give them a simple 401K. Kirk Adams is trying to make the plans stable. We'll see how this session goes. Don't blame the unions. They really have no power in state government. These funds are in a mess due to the Legislature doing a bad job!