Private Employees vs. Public Employees w. Labor Unions

There is a fair amount of public information  on the impact of public employee labor unions on the cost of state and local governments and comparisons of wages and benefits (pensions and health care) of private and public workers.

Here are some ideas about public employees and local and state labor unions.  (Remember, these is based on national and state-wide information, not Coral Gables in particular.)

• Pensions and health plans are very underfunded (or “over promised”, if you will) across the nation in state and local governments;
• On average, public employees’ wages and benefits are as much as 8 percent higher than the private sectors wages, but these are just average for all age groups and education levels;
• Public employees on average are older as a group and have higher education attainments–so the reported wage and benefits difference are not that  great, although underfunded benefits are under-reported so you are not getting true measures of benefits for public employees.
• And, to be fair, data across the nation show public employees receiving about 4 percent lower wages and benefits than private employees.  There is a small difference of 1% in favor of  private employees for the same age and education groups;
• The rise of public sector unions in the last 20 to 30 years, and their ability to negotiate that has been extended by national and state laws and helped to increase salaries and benefits;
• Labor unions have been large contributors to candidates for state and local government, and this has helped them leverage more local power into salaries and benefits;
• A big difference between public and private employees is that public employees have much better pensions programs than private employees; they retire at an earlier age than the private sector (this allows for double dipping); they work fewer hours than in the private sector (isn’t that nice); and they often have inflation protection for their pension.
• Some jobs in the private and public sectors are not comparable, especially, for public security.
• Public employees have much better health plan coverage than private employees.
• All benefits to public employees are really higher than the apparent budgeted values because the pension and health care funds are hugely underfunded.

What can we conclude:  public employees are well paid on average; their benefits are exceptional; they have great flexibility to retire early and take up another career; unions have had a disproportionate impact on wages and benefits for some groups like public security; taxpayers will be stuck with unfunded liabilities for a long time for no good reason; they have great health benefits; and they are politically resistant to reducing salaries and benefits.

I plan to report in more detail on some of these conclusions in coming days.

Falling Support for Labor Unions

Public labor unions beware.  There is a rising concern among the public on the power and usefulness of labor unions.  The reaction to the isolations and indifference of public labor unions is liable to increase local resistance to the unions and their leadership.

Favorable views of labor unions have plummeted since 2007, amid growing public skepticism about unions’ purpose and power. Currently, 41% say they have a favorable opinion of labor unions while about as many (42%) express an unfavorable opinion. In January 2007, a clear majority (58%) had a favorable view of unions while just 31% had an unfavorable impression.

The latest nationwide survey by the Pew Research Center for the People & the Press, conducted Feb. 3-9 among 1,383 adults reached on cell phones and landlines, finds that favorable opinions of unions have fallen across demographic and partisan groups.

via Favorability Ratings of Labor Unions Fall Sharply: Overview – Pew Research Center for the People & the Press.

Firefighters Have Become A Big Problem

It is worthwhile reading the BusinessWeek story about the power of national firefighters union and their push to get more bargaining power nationally.  Some are blind or indifferent to the future of the finances of the cities that they serve so well and that compensate them so well.

Los Angeles, Philadelphia, and Milwaukee have resorted to shutting fire stations temporarily or taking trucks out of service to cut costs. Philadelphia’s closings, which began last month, are intended to save $3.8 million, mostly by cutting overtime. Firefighters’ pay played a key role in the 2008 municipal bankruptcy of Vallejo, Calif., a city of 115,000 near San Francisco. Its fire and police contracts called for raises of more than 10 percent just as the housing crash hammered tax collections. The average firefighter’s pay and benefits were set to hit $193,000 a year before the town went bust.

via Sounding the Alarm for Firefighters’ Pay – BusinessWeek.