kitchen table math, the sequel: the Times on public sector pay

Saturday, March 12, 2011

the Times on public sector pay

terrific set of charts, graphs, and summaries

10 comments:

ms-teacher said...

And? As a person who worked in the private sector & owned by own business prior to teaching, I argue that we shouldn't be pointing fingers at public sector workers who have this higher pay & better benefits. Instead, the argument should be that private sector employees should start demanding this from their employers, may of whom are making massive profits off of their backs.

Public sector employees did not cause this economic crisis. Wall Street, hedge fund managers, and other corporations did.

lgm said...

Ok, I have to ask.

Why then, are you pressing the general public - ie single family residential property owners and renters who aren't sophisticated enough to have trust fund type of setups on the property - for money for the local component of the budget rather than continuing to lobby in the capitol buildings for increased state and federal contribution to the district's funding? 8-15% local tax raises are a bit much considering these people - many of whom work for private businesses, haven't seen a raise in years.

And how much tax do you think Joe Average, who in my county makes about 48K, can afford to carry on his home? The one that needs his and his spouse's income to afford? Considering he has a 401K with no medical in retirement, not a tax free pension with full medical.

Catherine Johnson said...

But....is it the case that hedge fund owners caused the long-term trend to higher pay for public sector workers relative to private sector?

The first chart shows a gap opening up around 1980. That's 30 years ago; the crash happened in 2008, right?

I think the Times is talking about what Goldin & Katz call "within group" inequality.

It's true that there has been widening inequality between top, middle, and bottom.

At the same time, there is widening inequality **within** the middle class.

Unless I'm misunderstanding something, that is what we see in the Times charts & graphs. One segment of the middle class is pulling ahead of another segment.

Is there a mechanism through which hedge fund owners and people who work on Wall Street produce within-group inequality in the middle class?

Maybe there is - but offhand I don't see the mechanism.

Catherine Johnson said...

private sector employees should start demanding this from their employers, may of whom are making massive profits off of their backs

I don't see publishing companies making massive profits off of my back.

I see them laying people off and hanging by a thread.

I see Borders going into bankruptcy.

At the same time, my property taxes have doubled in a decade, and the superintendent of my 1800-child district earns nearly $300K.

Allison said...

--I argue that we shouldn't be pointing fingers at public sector workers who have this higher pay & better benefits.

Straw man argument. We need to point fingers at the union leaders and government officials who worked together to turn the ratchet, which only goes one way: up. Public sector unions use collected dues to lobby for and vote for "bosses"--i.e legislators and executive branch holders who will then vote for their benefits to rise unsustainably.

THERE IS NO MONEY.

You can take the sum total of the complete output of the private sector --US GDP and it isn't ENOUGH to cover the promises that the taxpayers have to pay to local, state, and federal coffers when you include public pensions, public health care, Soc Sec, and Medicare/Medicaid. The total unfunded liabilities are more money than we've got.

US GDP is 2010: $14 Trilion. The unfunded liabilities of Social Security, Medicare and Medicaid already exceed $106 trillion. That's well over $300,000 for every man, woman and child in America.

Reality is you can't loot the private sector and find $100 Trillion, and that doesn't even INCLUDE state and local public sector pension promises.

Independent George said...

Instead, the argument should be that private sector employees should start demanding this from their employers, may of whom are making massive profits off of their backs.

That's the entire point - private sector workers are only in a position to demand any such thing to the extent that their industry can support those wages. Look at how it's worked for the auto industry. Public sector workers are constrained only to the extent that those same private sector workers are willing to be taxed to support those public sector workers.

It's a public choice problem - because public sector worker unions effectively have power over the officials elected to oversee them, those officials have incentive to offer cave to whatever demands are made, regardless of their ability to pay it.

Catherine Johnson said...

We need to point fingers at the union leaders and government officials who worked together to turn the ratchet, which only goes one way: up.

This is a major issue for me (and for just about everyone I know): in my state (New York) public sector compensation **only** goes up --- including when private sector compensation goes down.

That's the message of April 2009, when public sector compensation rose by 4% while private sector compensation fell by 9%.

Here in Irvington, we've raised taxes every year since the crash in order to pay raises --- and this comes after many years of raising taxes far above inflation in order to pay raises.

The annual above-inflation tax rate hikes have brought us to our present point, which is lay-offs and cuts in programs.

That, ultimately, is the choice: lay off teachers & administrators OR pay everyone less and keep people and programs.

In our case, union negotiations have been at impasse for nearly a year; the contract expired in spring 2009.

Recently, though, the union head apparently said that he was inclined to look at givebacks.

So we'll see.

SteveH said...

"..private sector employees should start demanding this from their employers, may of whom are making massive profits off of their backs..."

Companies that have unionized workers can make massive profits too. As for "demanding this", I'll try not to laugh derisively.

Unions are no longer about the basic rights demanded by the shirtwaist factory workers 100 years ago. Unions are now about trading security for the individual benefits of a free job market. It seems, however, that some teachers expect both; the security of tenure and seniority, AND the same pay level as (supposedly) comparable jobs where workers are exposed to much more risk to their job security. Amazingly, they seem to get it!

Ideally, it should be a wash overall. If a unionized company doesn't sell widgets, then the union will negotiate or else the company will close. At a private company, the negotiations are done at an individual supply and demand level, not at a company level. If you are good at what you do, then the company will pay you more or else you can go to another company that will pay you more. However, in either case, the amount of money that is available to pay salaries depends on how many widgets are sold. Whether you have a union or not has to do with how the money is spread around.


Schools are different. They have captive customers who have no choice. Decisions are concentrated in just a few locations. There is nothing stopping our school committee from being a very tough negotiator, but what is the product they are buying? How do they negotiate for the best individual interests of all? Do they know or care what those interests are? Unions fight charter schools that try to answer those questions. Clearly, it's easier to control the process when the decision-making power is concentrated in a small group.

So why don't we elect committee members to select what car we can buy? The car committee could offer recommendations and offer special deals, but would they force you to buy one of their cars? School committees could say that this school is what they offer, but they will allow you to go to another public (including charter) school. Unions do not want parents to have that option.

Still, what is it about towns like Irvington where the budget and cost per student go ballistic? Why did the bubble get so big before people tried to pop it. Can it be popped? This is more than the just the problem of concentrating the decision-making process in a small group.

In our town (and in others, perhaps), there is a very personal factor involved. There is some sort of mythic ideal of "public schools" and the idea that the schools and teachers are the experts. I had a parent once try to shut down a discussion about schools using this argument.

People make nasty comments about the "elitist" parents who send their kids to private schools. I was one of those for a while. Many of these elitist parents have big stories to tell of how they tried working within the public schools. Ironically, now that my son is in high school, many seem surprised that he is just going to the public high school.

In an affluent town, many parents send their kids to private schools and wash their hands of the public schools. (I think about 20-25% of our town's kids go to private schools.) When it comes to running for the school committee, those parents are not apt to run.

Many of the issues in education are fundamental. I once told some school committee members that they should hand out Hirsch's series ("What you're First, Second, ... grader needs to know") and tell parents that this is NOT what the schools teach. This is not a simple product and there are a lot of people who what to control it. Many of those don't want to think about costs when it comes to "our kids".

Catherine Johnson said...

Still, what is it about towns like Irvington where the budget and cost per student go ballistic?

That's my question -- and I find it pretty interesting (and horrifying).

I learned last weekend that the Irvington School District's buildings and grounds person was earning TWICE what the Village of Irvington's buildings and grounds person was earning.

Now, number one, there is no reason to fund two buildings and grounds people for the town & school district. Town has 6500 people, I think it is; district has 1800 kids.

But, number two, how is it that village taxpayers are paying the school's building & grounds person twice what we're paying the village's equivalent?

I don't have an answer apart from the fact that school administrations roll right over school boards. It really is quite extraordinary.

The school board association helps this process along.

While school boards are being squelched by administrations, voters don't know how things work or what is happening at the board level ---- and since they believe that more is more where school funding is concerned, they let the tax increases go by year after year without thinking too much about it.

I wonder whether affluent towns have more tax revolts than more middle-class towns ----- ??

At this point, it seems to me that in a town like Irvington taxes have to reach a crisis point before citizens call a halt.

Of course....our board has now un-called the halt.

Proposed budget this year has a 4.3% tax hike.

Around 2.5 times inflation.

Hainish said...

Catherine, I've heard teachers say that their pensions come out of their own salaries, i.e., that they "pay into the system." Is this true?