Monday, February 28, 2011

The Vicious Cycle of Government Unions

A good summary of the vicious cycle of government unions, from Katherine Kersten writing in yesterday's StarTribune:

"Here's the vicious cycle: Union leaders take money from union dues and pass it to Democratic candidates. Once elected, the politicians "negotiate" with the unions that helped elect them. In essence, the unions hire their own bosses who face them across the bargaining table.

Politicians repay unions' financial support by doling out hefty pensions and benefits. It's easy to be generous when you're spending taxpayers' money, not your own.  Elected officials aren't accountable to a board of directors or shareholders, and they don't have to worry about going bankrupt, as private companies do.

Government is a monopoly, or near monopoly, so it has no concerns about competitiveness or efficiency to keep it honest. To keep unions happy, politicians need only kick the can down the road.  Today, public unions are among the Democratic Party's largest donors, and form the core of its on-the-ground campaign machine.

But the gig is up.

Increasingly, taxpayers understand that the structural deficits this arrangement generates will bankrupt us. Already, taxpayer-subsidized pensions and benefits are edging out other spending priorities -- from schools to parks and highways."


23 Comments:

At 2/28/2011 11:31 AM, Blogger Paul said...

Another part of the cycle not mentioned is the millions of dollars unions spend across the country in favor of various state and local tax hike initiatives. The more money and power they get, the more money they can spend on rape-the-taxpayer propaganda.

"It's for the children!"

 
At 2/28/2011 12:16 PM, Blogger hswalj said...

How much should an employer spend on pensions/401k matching? In this hysteria over government employees, with whom are they to be compared? Large corporations which generally provide great benefits plus stock options?

What should an FBI agent be paid and what benefits? An assistant US Attorney? A federal judge? A teacher?

By the way, I tried to talk my daughter out of majoring in education, to no avail. A master's cost over $70,000. Now she sees how little she makes and very low cap on the upper end. Probably going back to school.

 
At 2/28/2011 12:48 PM, Blogger PeakTrader said...

Hswalj, you seem to be in denial about how the massive federal and state budget deficits, along with accumulated federal debt, threaten U.S. living standards.

 
At 2/28/2011 12:53 PM, Blogger PeakTrader said...

Economists list U.S. budget deficit as No. 1 worry
Feb 28, 2011

"The massive U.S. budget deficit is the gravest threat facing the economy, topping high unemployment and the risk of inflation or deflation, according to a survey of forecasters.

"Panelists continue to characterize excessive federal indebtedness as their single greatest concern, with state and local government debt the second-biggest worry, the survey said."

 
At 2/28/2011 12:55 PM, Blogger juandos said...

"Large corporations which generally provide great benefits plus stock options?"...

Hmmm, lost in the seventies are you hswalj?

Name a dozen companies in the'private sector' that's doing that today...

"What should an FBI agent be paid and what benefits?"...

Zilch...

"An assistant US Attorney? A federal judge? A teacher?"...

They owe money to the taxpayers...

 
At 2/28/2011 1:43 PM, Blogger Buddy R Pacifico said...

Where can government employees put their retirement savings if they don't have an unjust enrichment pension plan? A 401a or 457b plan.

 
At 2/28/2011 3:13 PM, Blogger NC said...

A recession tends to reveal & cleanse corruption & waste. Public Unions have no place to hide. The media are having to do deep editing of the Wisconsin circus. Most of the commentary don't pass the redFace test.

The ideology of the left is crumbling worldwide. Unfortunately, most of the left are emotionally invested in their childlike ideology. This won't end well for them. The won't go gracefully.

 
At 2/28/2011 3:23 PM, Blogger hswalj said...

Juandos:

Check this out: http://www.thecoca-colacompany.com/careers/employee_benefits.html

 
At 2/28/2011 3:24 PM, Blogger VangelV said...

What should an FBI agent be paid and what benefits? An assistant US Attorney? A federal judge? A teacher?

Whatever the market rate is. And why do we need a government monopoly on security or education?

The way I see it for each job opening there are hundreds of applications. That implies that the compensation paid is more than adequate.

 
At 2/28/2011 3:26 PM, Blogger VangelV said...

A recession tends to reveal & cleanse corruption & waste.

Does it? That is not what happened during past recessions.

 
At 2/28/2011 3:41 PM, Blogger juandos said...

O.K. hswalj, that's one...

I guess you noted this at the very bottom of the page, right?

*Benefits may vary

Then again you may find this forum interesting: Coca-Cola Salaries, Bonuses and Benefits

How much of what is posted there is actually factual?

I have no idea but then again...

 
At 2/28/2011 3:43 PM, Blogger Mike said...

hswalj,

1. An employer should spend what he/she must to get the people they want/need. That amount varies greatly based on factors like prevalence of skill, over-all skill, revenue/results produced by employee, availability of people with the skills necessary to fill the job (demand). Do most people still get pensions in the private sector? I don't think so...they may get a tiny % match based on a tiny percentage of income that one can put in their 401k.

2. That doesn't change by vocation...but why didn't you mention janitors and ditch diggers along with FBI agents and judges? There are highly skilled private security and mediators/arbitrators to compare to FBI and judges...some in the private sector make a lot, some make a little and some can't get work after they've proven to be ineffective...doesn't seem to be that way with FBI and judges.

3. Why would you talk your daughter out of education? Average household income in '08 was 52,000....teachers make an average of 54,000 and only work 3/4 of the year (which puts them up around the 70k range if you compare by hour worked) with absolute job security and over-the-top benefits.
All that AND there are about 60 applicants for each teaching-job opening, so their great pay/hours/benefits are not due to shortage (total lack of demand).
I find it interesting how somebody could be so incredibly 'educated' and not understand the pay scale vs work-load in the field in which they have a master's. I thought teachers did it out of 'love'.

 
At 2/28/2011 6:00 PM, Blogger Dr. T said...

Ms. Kersten's statements are correct. My question is why weren't the public unions being challenged decades ago? Public unions were negotiating with paid-for politicians back in the 1960s, and the process was widespread by the 1970s.

-------------
I ask questions of hswalj: If you ran a for-profit corporation, would you hire the typical DMV clerk (at $40k plus benefits worth another $10-15k) to work with your customers? Would you hire an investigator with no experience for the $65k salary that new FBI agents get? Would you hire a janitor for $11 an hour plus $10k of benefits when the typical janitor in your area works part-time for only $8 an hour?

Public employees are avidly pro-union because they don't ever want to be fired from their cushy government jobs that pay better than equivalent jobs in the private sector.

 
At 2/28/2011 11:00 PM, Blogger hswalj said...

Ok Dr T, I'll take the bait! These kinds of debates are more or less worthless as apples can't be easily compared to apples. My gut is "no" to the DMV clerk and janitor but yes to the FBI agent who's likely either got a law degree or accounting degree.

Keep in mind we take honest public employees who make important decisions for granted. I'm not talking about the DMV clerk. The Feds pay more than states and I've seen the clear difference in caliber; and federal employees cannot bargain over pay

Anyway that's all I've got to say on the subject.

 
At 3/01/2011 12:36 AM, Blogger David said...

The,same can be said for Corporations. They make contributions to get Republicans elected, and the Republicans approve tax cuts and R&D credits.

 
At 3/01/2011 1:18 AM, Blogger Che is dead said...

"The,same can be said for Corporations. They make contributions to get Republicans elected, and the Republicans approve tax cuts and R&D credits."

Yeah, it's exactly the same. Corporations make contributions to politicians in the hope that they will be able to keep some of the money that they've earned and unions make contributions to Democrats so that they can have my money. Wow, it all makes sense now.

 
At 3/01/2011 10:47 AM, Blogger Bobby Caygeon said...

@David

You might want to look at the corporate donors during the last Presidential election cycle and the amounts they gave to each party. Might hurt your narrative.

 
At 3/02/2011 11:42 AM, Blogger Daniel said...

Over 14,000 of the State of MI employees are non-union employees. They chose to work for the state using entirely market based decisions involving the total compensation available to them including benefits. Compared to private employees of similar education levels, these workers are paid a lower salary but presumably believe it is worth giving up income for better benefits. Again, these are individual employees making similar decisions as union members. Also, there is nothing inherently evil about defined benefit plans. On a total expense basis, they achieve economies of scale over DC plans and have lower management fees. The only reason DC plans are a net saver for employers is because many employees fail to realize the appropriate level of contributions needed in order to fund their retirement. Therefore, these savings are occurring due to individuals experiencing shortfalls in their later years, not exactly the system we should all aspire towards.

 
At 3/02/2011 1:29 PM, Blogger Ron H. said...

Daniel

"Also, there is nothing inherently evil about defined benefit plans."

No, there isn't. It's not the type of plan, as much as the level of benefits promised that's a problem. Taxpayers can't afford them.

"The only reason DC plans are a net saver for employers is because many employees fail to realize the appropriate level of contributions needed in order to fund their retirement. Therefore, these savings are occurring due to individuals experiencing shortfalls in their later years, not exactly the system we should all aspire towards."

This doesn't make sense. Are you suggesting that employees shouldn't be responsible for their own retirement planning? Are employers saving money because employees don't know how much to ask for in retirement benefits? A defined benefit plan, in which one size fits all, can just as easily lead to inadequate income in retirement if one assumes that their employer somehow knows what their individual needs will be.

Perhaps a better solution, which others on this blog have suggested, would be to pay all compensation as wages, with each individual choosing to contribute to their own benefits as they see fit.

 
At 3/03/2011 8:33 AM, Blogger VangelV said...

Yeah, it's exactly the same. Corporations make contributions to politicians in the hope that they will be able to keep some of the money that they've earned and unions make contributions to Democrats so that they can have my money. Wow, it all makes sense now.

That is only a part of the truth. The fact is that corporations buy votes from both parties so that they can be given protection from competition or handed out subsidies that cost taxpayers and consumers more. They like regulations because they get to write the regulations. The only way forward is to get government out of the way entirely so that no corporation or individual is given handouts that come from either taxpayers or consumers.

 
At 3/03/2011 5:07 PM, Blogger VangelV said...

Also, there is nothing inherently evil about defined benefit plans.

I don't know about this. If interest rates are kept artificially low these plans wind up bankrupting employers as their liabilities go up. If the inflation rate explodes and interest rates spike they wind up wiping out the purchasing power of employees who will see their purchasing power wiped out. Defined benefit plans are great if you live in a hard money system where rates are hard to manipulate and purchasing power holds up. In a fiat system where governments intervene they are too dangerous.

 
At 3/03/2011 5:10 PM, Blogger VangelV said...

Perhaps a better solution, which others on this blog have suggested, would be to pay all compensation as wages, with each individual choosing to contribute to their own benefits as they see fit.

That can only happen in a free society where property rights are respected. You know of one?

 
At 3/04/2011 2:21 PM, Blogger Ron H. said...

"That can only happen in a free society where property rights are respected. You know of one?"

Well, no, but it's nice to think about.

 

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