I know that probably everything below is obvious to this audience and/or already presented better by someone else here, but anyway: following up John’s post on the deliberate deception behind the “contribute more” demand of public service workers in Wisconsin, here’s some inconvenient data.
The shorter: public service workers are not overpaid. Not even a little bit.*
Let me turn it over to an MIT colleague (one vastly more accomplished than I), Thomas Kochan,
Kochan is a Wisconsin native and a University of Wisconsin graduate. He’s recently been involved in some creative and effective labor negotiations in Massachusetts. In his day job, he studies industrial relations and labor policy at MIT in both the Engineering Systems Division and the Sloan School of Management (i.e. not habitats exactly overpopulated with DFH’s).
Here’s what he had to say to his home state:
It has to start by getting the facts right. Wisconsin’s public service employees are not overpaid relative to their private sector counterparts. Rutgers University professor Jeffrey Keefe has done the analysis. (See his complete study on our Employment Policy Research Network website: www.employmentpolicy.org.) Controlling for education and other standard human capital variables he found that Wisconsin’s public sector workers earn 8.2 percent less than their private sector counterparts in wages and salaries. Taking fringe benefits into account shrinks the difference to 4.2 percent. Thus, public sector workers have lower wages and higher fringe benefits (yes, pensions and health care benefits are the two standouts). But overall, they are not overpaid compared to the private sector. No easy scapegoat here.
That is: Wisconsin state workers are living exactly the way their fellow citizens should want them to: they are deferring present consumption for income security in retirement. This is what every financial counselor begs their clients to do. It is what as a society we want to happen — better by far that our citizens anticipate and prepare for life after work than to hit the bricks with a grin and a sawbuck in their pockets.
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And Wisconsin civil service is exercising such prudence at a cost to the taxpayer lower than that of private sector workers. You can argue whether or not that 4% figure is a sufficient price to pay for the (at least partly) notional job security public employees possess, but the basic point is clear: Wisconsin state workers are hardly bilking the tax payer to enjoy lives of sloth and opulence.
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And as for Governor Walker — this is just the (n)th over determination of the fact that his attack on public unions has nothing to do with underlying issues of state finance.
Rather, it is both malign — an attempt to complete the transfer of wealth from the middle to the affluent begun with the recent tax cuts he championed — and dumb, another way to undermine the state’s economy in the midst of recession, according to an analysis by the Institute for Wisconsin’s Future.
Is there a better way?
Kochan thinks so.
Given that the evidence seems to me to be overwhelming that the GOP both in Wisconsin and nationwide does not actually seek ways to govern well, such optimism could be dismissed as feckless idealism, yet one more out-of-touch professor’s dream of the way things ought to work in a world that we do not inhabit.
Except for this: Kochan has just recently completed his participation in what any observer of Massachusetts politics would have told you is impossible: to secure a policy and employment practice (and pay) bargain in the context of a merger of six state agencies and a bunch of unions and contracts. (see the linked op-ed. for a bit more on this).
It can be done, in other words — though only if the parties recognize some common interest. Here’s Kochan’s thumbnail sketch of what Wisconsin could do (were it only governed by grownups — which is my snark, not that of my far more genial and patient colleague):
1. Get the facts right and communicate them to the public. Create an expert panel to document and generate options for addressing your pension and health care issues. Have this panel report within three months.
2. Use these findings as inputs into your own “Grand Bargain” by bringing together state officials, representatives of all public sector unions, and neutral facilitators experienced in interest-based negotiations (you have some of the best in the country living in Wisconsin) and instruct them to negotiate solutions to the problems and to communicate their solutions to the public.
3. Use the lessons learned from this experience to carry out an evidence-based analysis of how to modernize the state’s public sector bargaining statute to fit the needs of today’s more transparent and financially strapped environment. That approach worked well before — a similar expert panel provided the ideas that were enacted into Wisconsin’s public sector statute in 1962. You can do it again, and if you do Wisconsin will again lead the nation in the practical, forward-looking problem solving that us ex-Wisconsinites brag about almost as much as we brag about the Packers.
I’m beginning to get the sense that some real buyer’s remorse is sinking in over in Packerland.
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I certainly hope so. For this isn’t just a battle about unions and worker’s rights and futures — though it certainly is all of that. But layered over those battles is the big one: does the idea of a social contract stand a chance in America anymore? If not, then it’s decline and fall time, I’m fearing: the cocktail that Gov. Walker is mixing for Wisconsin — more income inequality (and lives made harder to live) and less wealth overall in the long term — is the bitter cup the rest of us will taste soon enough.
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*It’s certainly true you can get local exceptions like the notorious Vallejo public safety contracts implicated in that city’s bankruptcy in 2008. But nationwide, the numbers are clear. Just to anticipate the use of data points like that coming from this one badly run small city, the old trick of pulling out the extreme tail of a distribution and deeming it typical is effective in media terms; it’s a disgraceful and stupid way to make policy.
Images: Rembrandt van Rijn, An Elderly Woman (in widow’s dress and black gloves), 1632-1635
William Hogarth, Marriage à la Mode (No. 2), c. 1743
arguingwithsignposts
Hey, you don’t have to go all Rembrandt on our asses!
Mark S.
Not if we keep electing Republicans.
Tom Levenson
@arguingwithsignposts: I’m a John Foster Dulles man: I believe in overwhelming responses!
jl
Menzie Chinn at Econbrowser blog teaches in WI and has some good posts this week on the mess there.
One post refers to the Keefe study with a nice graph, and also a link to a study that shows that WI has no long term public pension problem.
BGinCHI
I bet you a dollar Scott Walker couldn’t even understand this post. He’s in a cartoon, not a grown-up movie.
Good post, Tom. Keep the info from that guy and others coming. It’s essential to get facts instead of slogans.
pragmatism
i’ve been spending some time in sacramento and the legislators have this talking point down. “go from defined benefit to defined contribution”. in one Q&A session that i attended a constituent floated the “why can’t we ask the pension beneficiaries to take a cash payment right now?” The D assembly member, who was quite sympatetic to the union and pension issues on the right said, “Because they’d have to be dumb enough to take the smaller amount and it doesn’t make actuarial sense”.
bleh
It is what as a society we want to happen—better by far that our citizens anticipate and prepare for life after work than to hit the bricks with a grin and a sawbuck in their pockets.
BLARGH! Arglebargle socialism! Gummint planning, Obamacare, comm’nist fascist broccoli breast-feeding!! Immigrant Messican welfare garble! Bailout. Blurp…
Reader of the Most Depressing Blog Evah, Formerly Known as Chad N Freude
Unaccustomed as I am to asking serious questions here’s one: Is there any way to get/likelihood of getting Professor Kochan’s proposal published (i.e., given prominent press) in WI? Getting it put to Gov. Walker in anything resembling a public forum?
HyperIon
I never bought the argument that public workers are in general over-compensated (having worked in both sectors).
And the issue of eliminating collective bargaining for state workers…that’s just DUMB.
However, it may be the case that their defined benefit pensions will eventually cause problems. But that’s as much the fault of management saying “yes”. I don’t see much difference between private defined benefit plans and public defined benefit programs. They promise a lot and can be easily underfunded AND never paid out. Sad but true.
BGinCHI
@Reader of the Most Depressing Blog Evah, Formerly Known as Chad N Freude: Maybe Charles Woodson could run it over to him and then lay him out in the endzone.
Tom Levenson
@Reader of the Most Depressing Blog Evah, Formerly Known as Chad N Freude: Kochan’s proposal was published in the Madison progressive paper (self-described) The Cap Times. I have no idea how prominent that is locally, but I’m guessing Kochan can get the word out to what remains of Democratic leadership in the state easily enough. The GOPers? They’ve got a long way to go even to be ready to enter the 12 step program they so deeply need. IMHO, of course — don’t blame Kochan for my pessimism.
Chuck Butcher
This is a great post, with the unfortunate short-coming of addressing ass-holery with sense and facts as though either has any real bearing in that case.
You could hold this in front of the eyes of every citizen and change a handful of minds. Still, it is worth saying it. Maybe some with intial sympathy will get their backs up.
El Cid
They damn sure all overpaid!
And it don’t matter what your damn “numbers” and “perfessers” try to say.
They’s makin’ too much money.
A buddy of mine was telling me that at a school a guy he works with’s kid goes to, there’s a teacher up there who spends 5 hours a day in the break room, but they ain’t nothin’ they can do because of the teachers’ union.
And they all skeert to say anything cause she’s black. If anyone says a damn word, they’s a ‘racist’.
We don’t need no government takin’ our money and giving it to a bunch of lazy people who get everything they want while I can’t even go out to eat no more.
It’s the people what know how to spend their own money, and if they’d stop taking so damn much for these government schools that want to teach my kid about how to gay marry and such, maybe we wouldn’t have all these people too lazy to work!
Litlebritdifrnt
Today there was a retirement party for 3 of our Assistant Clerks of Court, the youngest of which is 48, I am figuring that they struck some sort of deal with the State to retire as opposed to continuing working. Even I have to say that retiring at the age of 48 after 30 years of a desk job is a bit extreme.
Michael
@El Cid:
Awesomely teatardtastical.
gelfling545
well, here I am trying to live on my sumptuous teacher’s pension (which I paid into for 18/20 years) and hoping to hold on until Social Security kicks in because my health did not hold out. Yep all that lovely money – all $24 thousand a year. Maybe I’ll take that world tour now. Hah. This is the life. Not.
gelfling545
@Litlebritdifrnt: They generally ask the longest term employees to retire because their salaries are the highest. They don’t do it to be nice.They do it to save money.
freelancer
@El Cid:
I don’t get this outlook at all. It’s politics via spite. A parable:
Two guys are casualties of an IED in Iraq. They both lose a leg each. They get home and the VA gets the soldier a prosthetic limb and rehab so he can learn to walk around on it. The other guy was a private contractor whose privately held insurance balked and fucked him out of getting a prosthetic limb and gave him crutches instead. Instead of being pissed at the institutions that are screwing him over royally, out of spite and envy, he’s making a thing about defunding the VA instead. ‘Cause the soldier’s got it so cushy and he’s “spoiled”.
jl
Two items at Center for Economic and Policy Research (CEPR):
Go After Wall Street, Not the Teachers (at CEPR blog)
The Origins and Severity of the Public Pension Crisis (under CEPR reports)
both discuss is (I think) a very important fact that has received as far as I can see very little attention.
The public employee pension crisis (to the extent that one exists) is almost entirely a result of the financial panic. I guess the people who caused the crisis, many of whom would probably] be found criminals if anyone was interested in enforcing the law on the rich), while people who actually work should not only suffer but be defamed in our glorious modern US.
I’m not giving URLs since they seem to cause WP to eat up my comments.
El Cid
@freelancer: Snark.
ppcli
@El Cid: Wow, you speak fluent wingnut. Whenever I try to do that people say I have a heavy accent.
El Cid
@freelancer: And anyway — the Old Testament was pretty much about vengeance, by God and man, and there didn’t seem to be a lot of emphasis on rational solutions which would leave all better off.
Davis X. Machina, in one of the most useful complaints of all time:
If prisoners have better health care than you have or can afford, then the solution is to make sure to take health care away from the prisoners, rather than get everyone else better health care.
jl
@El Cid: Is that you, uncle Jay?
freelancer
@El Cid:
I know you were snarking. But seconds before I read yours, I heard people where I work bitching in the same vein. It’s just baffling to me.
ETA: @El Cid:
I’ve quoted that several times.
PurpleGirl
El Cid is a master of the snark. He speaks very fluent wingnut. You have to consider anything he writes is snark. I’ve been caught myself, thinking “how could he mean that?” and then I remember how expert he is at snark.
chris
@Litlebritdifrnt:
chris
@Litlebritdifrnt:
Tried to reply to you and somehow messed it up. A friend of mine retired today from the NC judicial system (you are from NC right?) You got it….they offered her a buyout. I expect they are trying to budget cut for Art Popes boys. Didnt sound like that great a deal to me. She had about 15 yrs in and she got about 8 months pay and free insurance for a year. Wont draw any pension til some later date (not sure when). I’m assuming its quite some time and wont be particularly generous since she only had 15 in.
Triassic Sands
I visited Wisconsin a few years back and the thing I noticed most about the state was that all the public employees were driving Lexus Crossovers or Mercedes sedans. They all lived in McMansions and even the public school teachers had their children in private schools. Meanwhile, corporate CEOs were panhandling on street corners trying to get enough money together for a decent meal. Occasionally, a concerned poor person would stop and toss a buck or two in the hat, I guess because they felt sorry for the beleaguered executives whose crippling taxes were funding opulent lifestyles for the have nots.
This country has become a socialist nightmare. Adopt a rich person now, before it is too late.
Violet
Just posted this in the thread above, but probably fits better here:
From Eric Kleefeld’s Twitter feed:
They’re moving the Madison protesters out of the capital building.
BD of MN
@freelancer:
You forgot to mention where the private contractor originally was paid 4x the soldier, yet still bitches afterwards…
darms
@freelancer:
Because we in the USA are at heart a nation of spiteful people. Maybe not every one of us but most of us.
We The Spiteful by Mark Ames (from 2004)
“If the left wants to understand American voters, it needs to once and for all stop sentimentalizing them as inherently decent, well-meaning people being duped by a tiny cabal of evil oligarchs—because the awful truth is that they’re mean, spiteful jerks being duped by a tiny cabal of evil oligarchs. The left’s naive, sentimental, middle-class view of “the people” blinds them to all of the malice and spite that is a major premise of Middle American life.”
HRA
Whoever began working as a NY state employee at a date in the 1970s, did not contibute to their pension. Everyone else after that date had to and has contributed to their pension.
In the last year under Gov. Paterson, the state employees were offered an incentive to retire. Considering they were still to young to get SS, some have taken other jobs in the private sector and have taken the jobs they enjoy moreso than the job they had in the public sector. Some have even come back to the same work as volunteers.
I had a better health insurance in the private sector and I did not have to pay anything for it.
James E Powell
Although I am not in Wisconsin and know not a soul who lives there, I would like to know if there is any evidence, rather than any sense, that the general public has turned against their Governor.
There is enough evidence in the public record to show that Walker is doing the bidding of billionaires and that the best interests of the state and its middle class residents are not his top priority.
But there is also plenty of evidence in the public record that the general public routinely ignores the evidence and supports whoever hates the same people who they hate. (As stated more eloquently by Davis X Machina, quoted above.)
asiangrrlMN
Tom! Good to read a post by you. I was wondering where you were. Glad that you weren’t permanently incapacitated from reading McArdle.
This really feels like a watershed moment. I am not an optimism by any means, but the Republicans have overreached this time, methinks. They have been so used to screaming all kinds of shit and getting the response they want, they didn’t even consider that their message may not be well-received.
Plus, Walker is blisteringly stupid. That helps.
@El Cid: When you get going like this, it makes me want to drag out your big old bottle of Communalis and go at it all night.
burnspbesq
@pragmatism:
The only thing anyone really needs to know about this: switching from defined benefit to defined contribution shifts investment risk from the employer to the employee.
thomas Levenson
@asiangrrlMN: THanks for the welcome back.
Not McArdlitis, just day job blues…
Jager
@freelancer: Exactely, since I’m such an old bastard I remember when when public sector jobs were considered rather shitty; low pay, weak benefit packages and shabby retirement pay. After 30 years of right wing economic bullshit the public sector worker looks like a fat cat today.
Duane
One thing I have been wondering about the whole going after public sector unions and pensions…… what about the pensions and pay of elected officials and political appointees? If the state is in such a crisis I would assume that Gov Walker is giving back his pay and forgoing his pension, right? It would be the prudent way to balance the budget.
asiangrrlMN
@Duane: I really wish this would be brought up more by the media to all the jackholes in politics bleating about everyone having to feel the pain. Of course, that would mean we had a media who didn’t have the same mentality (pain for thee, but not for me), so it will never happen.
El Cid
@asiangrrlMN: Don’t worry, I’d just be getting started anyway.
jl
@James E Powell: Polls are coming in that the WI public is against Walker on his budget bill, about 50 to 60 percent against, and 40 to 45 percent for.
Talkingpointsmemo has been following the national and WI polls on Walker.
asiangrrlMN
@El Cid: You tiger, you!
@jl: That’s good to hear, but it’s still too close for comfort.
Steeplejack
@arguingwithsignposts:
LOL. Win.
Evolved Deep Southerner
@James E Powell: Mr. Powell, you make a good point. Everybody’s talking about how Walker and the unions are in a stalemate, but on the actual playing field, they just moved the ball downfield on labor, didn’t they? Yeah, the way they did it looked and stank like shit, and they were all but spat upon by everyone as they walked out of the voting chamber in shame, but they did it.
I think at the end of this Wisconsin drama, Walker will end up getting this shit through by means of something even shittier than the way it was “passed” through the WI House.
But you know, let’s say he burns all his political capital and ends up being despised by every single swinging dick in Wisconsin because this whole thing is a grave matter of saving face and honor at this point. He passes it if it harelips Sarah Palin, future be damned.
If the people of Wisconsin have turned against him, they can recall him after a year. Start collecting signatures and have all the paperwork on that 365th day. And in the meantime, make his and his allies’ life so fucking miserable that they serve as an example for every other Republican governor even considering this grievous shit.
If he passes this bullshit by hook or by crook, the best you can do is recall him as soon as possible and then reinstate collective bargaining rights. Be the hero. Fight like hell in the meantime, and if you lose the battle, it doesn’t have to mean you’ve lost the war. Once you finally tote Walker’s carcass off the stage some 11 months from now, believe me, they’d rather switch than fight.
Evolved Deep Southerner
ETA (since I can’t seem to go back and edit the actual comment now): I posted a similar thing on another thread earlier but it fits a lot better on this one. In other words, stop my if you’ve heard this one before.
Bill H.
The argument is well presented and makes a difference in the way I view the Wisconsin issue specifically. The numbers in California are much different, as are many other factors, so I think each issue needs to be argued on its own merits, but it’s refreshing to see a case well presented.
The other day I read in a discussion of the Wisconsin affair that public sector unions do not actually get free pensions and health care, that “every penny of that cost comes out of their wages” in the form of lower wages because public sector workers make less money than private sector workers do. Unfortunately, the poster stopped there, without providing any evidence to support his claim, so I discounted the claim altogether. This one presents the entire case even though the link provided is to the website only, not to the specific article, and I was unable to locate the article in question on that website. But I’m not questioning the reference. Websites change from time to time.
This earlier post is, unfortunately, altogether all too typical of the nature of our political discourse. We present half of the argument, the part which seems to support our side, and then are too lazy to complete the presentation in a manner that would be convincing. I enjoyed seeing an argument researched and fully presented, and my opinion was altered by it.
Bill H.
The argument is well presented and makes a difference in the way I view the Wisconsin issue specifically. The numbers in California are much different, as are many other factors, so I think each issue needs to be argued on its own merits, but it’s refreshing to see a case well presented.
The other day I read in a discussion of the Wisconsin affair that public sector unions do not actually get free pensions and health care, that “every penny of that cost comes out of their wages” in the form of lower wages because public sector workers make less money than private sector workers do. Unfortunately, the poster stopped there, without providing any evidence to support his claim, so I discounted the claim altogether. This one presents the entire case even though the link provided is to the website only, not to the specific article, and I was unable to locate the article in question on that website. But I’m not questioning the reference. Websites change from time to time.
That other post is, unfortunately, altogether all too typical of the nature of our political discourse. We present half of the argument, the part which seems to support our side, and then are too lazy to complete the presentation in a manner that would be convincing. I enjoyed seeing an argument researched and fully presented, and my opinion was altered by it.
Bill H.
Sorry for the double post. FYWP, I thought I was editing.
Mike G
Wisconsin state workers are hardly bilking the tax payer to enjoy lives of sloth and opulence.
No, the Koch brothers have that role.