Union, Civil Service Myths Busted

The Big Myth about government employees is that they are underpaid, unappreciated servants of the people who toil on behalf of the rest of us while we live lives of indulgence and luxury.


If only it were true. Civil servants today make higher salaries, get better benefits and pensions, and retire younger than the average private-sector worker who now is working longer hours and more years to pay the taxes to support the privileged civil servant class.


In other words, America is a socialist nation.


The Big Myth about labor unions is that unions assured good wages for American workers in the 1950s and 1960s, but that today unions have shrunk in size and Americans are thus suffering economically.


That is not true. Here are the facts:


America was prosperous in the 1950s because Europe and Japan were still recovering from World War II, and American factories were making 50% of the world’s finished goods. Today that number has fallen to 22%.


Workers in the 1950s would have had good wages even without unions, and millions did. At their peak,  37% of private-sector workers were unionized. Yet most Americans in the 1950s and 1960s had a very high standard of living because economic growth – not unions – provided it.


But starting after the War, labor unions organized millions of workers who already were, or would have been, well paid and had job security. Those unions certainly got even artificially higher wages for their workers and pumped up their own union coffers at the dollar-for-dollar expense of the American consumer. Then those same unions, shot through with corruption and largely controlled by organized crime, eventually drove many companies and entire industries (steel, railroads etc.) out of business, killing vast numbers of jobs and huge amounts of wealth with outrageous wage demands, ridiculous work rules, strikes, threats, intimidation and violence.


As a result, unions today remain unpopular with the private-sector American workforce that fears losing its jobs if unions organize workers and strong-arm their employers as they have in the past.


The second Big Myth about labor unions is that they have no power today.


That also is nonsense. According to the Wall Street Journal, union power certainly is declining with only 12.3% of all workers today being unionized, with private union employment only 7.2% of all jobs. But the big change is that union power has shifted from the private economy to the government sector. Reports the Journal:


‘The Bureau of Labor Statistics reported recently that 51.4% of America’s 15.4 million union members, or about 7.91 million workers, were employed by the government in 2009. As recently as 1980, there were more than twice as many private as public union members. But private union membership has continued to decline, even as unions have organized more public employees.’ (end of excerpt)


 And those union/civil service wage demands are putting not private industries but entire states like California and New York into bankruptcy. Pro-union Democrat politicians are facilitating this corruption nationwide by getting elected and “sitting on the other side of the table” from union negotiators.


In a January 2010 report from Chris Edwards, director of Tax Policy Studies at the Cato Institute called Employee Compensation in State and Local Governments, he notes that civil servants, and particularly unionized civil servants, now are taking many states and the federal government down a dead-end road of debt through exorbitant wage, benefit and pension demands. Edwards states:


State and local governments face large budget deficits as revenues have stagnated and spending has remained at high levels. To reduce deficits, large savings can be found in the generous compensation packages of the nation’s 20 million state and local workers. In 2008, wages and benefits of $1.1 trillion accounted for half of total state and local government spending.’ (end of excerpt)


Edwards points out that average compensation per hour, including benefits, for state and local government employees in 2009 was $39.66 versus $27.42 in the private sector, or 34% more, a long ways from the image of underpaid government workers. This includes a 70% higher ratio in the benefits category, $13.65 per hour versus $8.02 in the private sector. These figures come from the US Bureau of Labor Statistics.


Under benefits for 2009, BLS stats show that state and local governments paid for 88% of health benefits, versus 71% in the private sector.


Regionally, Edwards cites BLS statistics showing that the Pacific region (Alaska, California, Hawaii, Oregon, Washington) had the highest overall compensation, including benefits, for government workers at $49.02 per hour versus $30.78 for private workers (1.59 ratio) with a 64% unionized workforce share. New England was $43.22 versus $33.29 (1.30 ratio) with a 57% unionized share. The lowest disparity was in the West South Central Region (Oklahoma, Texas, Louisiana and Arkansas) where the average compensation was $30.73 versus $24.35 (1.26 ratio) where the government workforce is only 13% unionized.


Edwards also notes the unstated economic value of high job security, which always has been a hallmark of government employment:


‘During good times and bad, “layoffs and discharges” in the public sector occur at just one-third the rate of the private sector. Public sector workers are rarely terminated for cost-cutting or job performance reasons.’ (end of excerpt)


Edwards notes that debt crises in states like California are directly linked to civil service salaries:


‘According to official estimates, state and local pension plans are underfunded (or overpromised) by about $1 trillion. But these estimates greatly understate the poor shape of pension plans because they rely on optimistic assumptions to value future liabilities, a practice Warren Buffett has called “accounting nonsense.”’ (end of excerpt)


 Edwards’ report notes that state and local pensions could really be underfunded by $3.2 trillion, according to one private study.


According to Edwards’ report, other excesses in union/civil service funding include early retirement (‘Public sector workers generally retire earlier than private sector workers and enjoy generous pension benefits for life indexed for inflation. They can typically retire at age 55 after 30 years of work, as in California’s CalPERs system.’); rigged pension formulas (‘Virtually all public sector plans calculate benefits based on pay in the last one to three years of work. … Also, public plans typically have a more generous factor to adjust pension benefits for number of years worked… In some jurisdictions, government workers inflate or “spike” their pension earnings by getting themselves big raises or working overtime in their final year or two on the job.’ ); and double dipping (‘In California, New Jersey, Utah, and other states, public workers can “retire” early and then either resume their existing job or take a new job, thus receiving a salary and pension at the same time.’ ).


Also phony disability claims  (‘Excessive and fraudulent disability claims are a growing problem. In Nevada, “firemen hobbled by heart disease can collect an inflation-protected $40,000 a year for life on top of their pension. That applies even if they’re healthy enough to work in another occupation.”’); excessive benefits (‘News articles have revealed eye-popping annual pension amounts received by civil servants in run-of-the-mill positions in cities across the nation. In California, there are 6,144 retired public employees in the CalPERS plan and 3,090 retired teachers in the state teacher’s plan receiving annual pension benefits of more than $100,000.’);


And pay-to-play scandals (‘The reliance on (defined benefit) plans means that governments hold huge financial portfolios. That has encouraged “pay-to-play” schemes whereby Wall Street firms bribe public officials to get a slice of the government’s financial business. New York’s pension fund, for example, is currently engulfed in scandal: “Money manager Elliott Broidy … admitted to making nearly $1 million in gifts to benefit four former top officials in the office that oversees New York State’s pension fund, including one-time state comptroller Alan Hevesi.’)


Americans no longer are unaware of these arcane civil service dealings. Californians are up in arms about the corruption that celebrity Republican governor Schwarzenegger never has addressed seriously. Republican reformer Chris Christie was elected governor of New Jersey in November 2009 in order to address the crisis there while Republican Charlie Baker is very likely to be elected the next governor of Massachusetts to deal with that state’s economic problems caused largely by civil service/union graft and corruption.


Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.