The Problem with Public Sector Unions

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Erik Kain

Erik writes about video games at Forbes and politics at Mother Jones. He's the contributor of The League though he hasn't written much here lately. He can be found occasionally composing 140 character cultural analysis on Twitter.

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75 Responses

  1. Avatar Rufus F. says:

    Okay, now when you have a private sector union that is threatening the survival of a company that the government has decided is “too big to fail” and is bailing out, should/can the government take action against the union?Report

    • Avatar Mike Farmer says:

      This is the road to hell, but if government is going to take over a private company, they’d have to take actions agains the union, if the union is a part of the problem — I suppose they could also turn over management to the union — at this point, government can do pretty much what it wants to do, it seems. Are there any laws preventing government from taking actions against the union of a private company government now controls — I don’t know really, but I doubt it. My God, are these our new concerns?Report

      • Avatar Mike Farmer says:

        But, then, Ezra Klein says the Constitution is like really old and confusing and stuff, so I guess it’s all made up as we go along — you know, Pragmatic Enlightenment.Report

      • Avatar Rufus F. says:

        Well, I don’t think they’re our new concerns. I was just asking if that’s where the logic of the bailouts could, concievably, lead. I know the government can take actions against public sector unions, which I’m pretty sure was why Reagan could fire the striking air traffic controllers in ’81. But, if you’re asking for my personal opinion, I’d far rather see all saved companies go fully public and the government put the kibosh on future bailouts.Report

        • Avatar Rufus F. says:

          For the record, I wasn’t thrilled with Reagan firing the air traffic controllers, but I was eight years old at the time and my Dad was an IBEW rep for 23 years, so I’m completely biased.Report

        • Avatar Mike Farmer says:

          “Well, I don’t think they’re our new concerns”

          I was just expressing my amazment at cosidering the problem — oh hell, now we’re one step closer Tito and The Tyranical Two-Step.Report

    • Avatar john w says:

      This doesn’t make any sense as I read it. What kind of action are you proposing?Report

      • Avatar Rufus F. says:

        I’m not proposing taking any actions. I was just asking if the government could take actions, if they owned a controlling interest in a bailed-out company. When Reagan fired the striking air traffic controllers in 1981, people said he could do that because, as a “government union”, they’d violated the law. What I was asking was, if the government has to bail out an industry and does so, does their new controlling interest in the industry allow them to take the same sort of actions they can with public sector unions?Report

  2. Avatar john w says:

    So if the moral hazard is too great, would I be correct in assuming you would therefore ban any employee from owning stock and therefore becoming a shareholder?

    That would create the same moral hazard, only proportionally much, much worse, since any stock holder would almost certainly have more voting power there than in the electoral process where literally everyone over a certain age can vote.Report

    • Avatar E.D. Kain says:

      I don’t follow you. Stock in a company? How on earth does that create moral hazard?Report

    • Avatar North says:

      John, this seems to be disingenuous. Any employee who had the resources to buy a controlling (or even influential) interest in a company would not be a unionized employee of said company. And even in the remote chance that he/she did, his/her co-owners could divest themselves of their own ownership and his/her customers could take their business to a competitor company and the harmful impact of this purchased influence would be minimized.Report

    • Avatar Aaron W says:

      You should ask the unionized employees of United Airlines how well this went for them after all their shares were wiped out during the bankruptcy in 2001.Report

  3. There’s one simple reason why I think that public sector unions are important to keep around, even as I think that they often wield far too much influence in the United States. That reason is this: Solidarity was a public sector union.

    So my problem is not with the public sector unions, although there are certainly some whose leadership I find loathsome (and others whose leadership I find commendable). My problem is with the politicians and officials in various locales who are too-often willing to cater to their every demand.Report

  4. Avatar john w says:

    By the way, there is an alternative to public sector union: massive use of temps. We’ve been seeing it for a decade at the state level (where people are known to work “part time” 5 days a week, 9-5 for years on end), but that doesn’t fit neatly into your argument.Report

  5. Avatar 62across says:

    For the sake of discussion and allowing A) and B), what is the alternative? Should we privatize the public safety and educational sectors completely or partially? Or are you arguing to disallow collective bargaining in the public sector?Report

  6. Avatar E.C. Gach says:

    Unions can make companies unprofitable, and management can make it too profitable. I mean, if a company’s profits sky rocket, the union is there to make sure workers see some benefit. And if profits go to low, management will cut and reorganize (at least it should) until some kind of respectable profit is returned.

    I’ve always had a problem understanding why, in the public sector, a similar accountability doesn’t take place. If I’m a politician, do I have any incentive to be wasteful to the point of needing to cut programs, or worse, tax my constituents?

    As far as union pensions being untenable. I think this is a complex problem with different origins depending onthe particular case. Some places might have actually over promised, others, having promised certain benefits, just never payed into them and are now whining about the unions being to greedy.

    If the appropriate sums of money had been set aside at the appropriate times, how many of these union pensions would still be untenable? Sure, GM had a lot to live up to with its worker retirement plans, but maybe if they had taken that liability seriously and factored it into their long term strategy, it wouldn’t have been such a problem.

    It’s just frustrating hearing everyone laud corporations for exercising their collective bargaining power, and then decrying unions for doing the same. How dare anyone ever wish for power parity between employer and employee.Report

    • Avatar North says:

      E.C. I touched on this briefly in my summary (Gosh Thanks E.D. for calling it out, I’m blushing!). The incentives are extremely different for managers in the public sector versus the private sector.

      Private sector manager gets a report. It tells him (and his peers) whether they’re losing money or making money. It tells him (and his peers) what divisions are costing the most, what divisions are earning the most. This manager knows -knows- that his boss and his boss’s boss is going to be looking at these papers and he knows that they’re extremely interested in what this paper says. His job is on the line. If the private manager is managing the biggest division in the company with the most people and the most expenses if he sees that his division is not making the most money he’s going to start sweating. He’s going to stay up at night. When he eats lunch with his peers he’ll be ribbed or maybe even disliked because of his division’s performance. He’s going to tell the employees something has to be done and done now! Or he’s going to find himself out on the curb with all his photos in a box. Or the company croaks and he and all his co-workers are on the curb with their photos in boxes.

      Cut now to the public sector manager. He gets a report. First thing we must realize; this report has no revenue numbers (or very few). Most of the businesses these managers oversee don’t, in of themselves, create money for his organization. His money comes from above, not below. Every budgetary year his boss (or some level of boss removed) comes from the elected body and informs them how much money their entire organization gets and then they have an interoffice scrum to figure out who gets how much of that dough. This manager feels very differently about the size of his division. In government size equals importance. If your department is big and expensive then that makes you important. Growing your division is important to you. It makes your job more secure, it’s easier to grab a bigger chunk of the overall budget. People in government don’t like laying off employees, it’s not fun, these are your peers and friends, why do it if you don’t have to? The bigger your department the more jobs you have to offer. You throw more weight around when you’re fighting with your peers for your piece of the budgetary pie. At lunch the manager’s friends are envious. They want to be where he is; build a bigger administrative fief to oversee. His underlings vie franticly for his favor, they have relatives and friends they’d like to get into the department and he’s the one making those calls. Are his bosses looking at the costs of his divisions? Not necessarily. Are they interested? Maybe not. And if they are interested they’re probably elected or appointed which means they’re outsiders. They didn’t rise through the ranks like the private sectors bosses probably did. They don’t know how things work. When they look at an org chart to figure out who to discuss budget cuts with it’ll probably be the senior managers (aka the dude with the biggest fief).

      The dynamics are almost inverted. It’s no wonder they work so differently.Report

      • Avatar 62across says:

        The dynamics are inverted from the customer side as well, aren’t they?

        When I hire a contractor to do some landscaping, I want the best talent for the price. If I choose to pay a lot more, I should expect exceptional service and results. If I choose to have the work done cheap, I should expect poorer service and results, if I’m honest.

        But in the public sector, we want highly skilled cops, firefighters and TSA agents, while at the same time, we want the lowest possible taxes.Report

        • Avatar North says:

          I agree whole heartedly 62. Ultimately people would always like something for nothing.

          But, honestly, lets face it. The taxpayers don’t really connect taxes to government services or even really to government finances. Not in their hearts. Taxes are something they hate and want less of. Full stop, period. Services are something they want more of, full stop, period. Deficits? They don’t like them and know they’re bad but they’re pretty fuzzy about it.

          If they truly accepted that taxes equaled finances and services then they’d pay close attention to them. The government auditor’s weekly or monthly report would the ratings king of its time slot. Politicians would rise and fall on the efficiency and effectiveness of their portfolios. Now days we can barely name what any given pol is responsible for.Report

          • Avatar 62across says:

            The divide between what taxes pay for and the perceptions of the same is a core problem. I agree closer attention should be paid.

            Are you familiar with the tax receipt proposed by Third Way (www.thirdway.org)? They suggest every taxpayer get a personalized, itemized accounting of what their taxes paid for. There’s an idea for a way to connect value to cost that could allow for a much more meaningful debate. I’m sure people have no idea how much they are paying to service the national debt versus say congressional salaries. It would be useful on the state and local level to put public employee pay into perspective as well.Report

            • Avatar North says:

              I’m aware of it and like it. More information is generally better. Alas, as with everything, it would just be another political football. Since the receipt would be, in essence, a chart and charts can be manipulated to say anything whoever was in charge of drafting the receipts would make them say whatever they wanted.Report

              • Avatar RTod says:

                Good point about graphs, but at the very least the Third Way does underline for people that they don’t get to get out of the ditch without making some tough choices. Not that people still won’t gravitate to the douche-bag candidate who promises them they won’t have to.Report

              • Avatar 62across says:

                Though it is no protection from the allure of douche-bag candidates, the beauty of the Third Way idea is that it isn’t charts and therefore harder (not impossible, though) to manipulate.

                The itemized list would show to the penny how much of your taxes go to which programs. It’s based on simple calculations that extrapolate % of budget to % of tax paid. People would be able to see if the numbers add up to 100%.

                I sure think it would make the “we can cut X out of the budget without touching defense or entitlements” much harder to make. Though, to both your point and RTod’s, politicians will still try to make that argument and the populace will still ignore the information.Report

            • Avatar Aaron says:

              I could go for that, but I would want the “itemization” to be highly personalized and granular. That is, I don’t want a breakdown of a how various pennies are allocated among goverment programs. I want something more like, “You had a really high income last year, and your generous six figure federal tax payment has been allocated toward the purchase of .03% of a new F-22 Raptor.” Or “… paid for .1% of the bonus of a bailed-out AIG executive.” Perhaps, “Your federal taxes were misspent by Rep. Joe Wilson out of his per diem during a junket to Afghanistan, to purchase marble goblets that he subsequently distributed as gifts to favored constituents.” It could be fun.Report

      • Avatar E.D. Kain says:

        No need to blush, North, it was a very good summary as is this comment. Very well put.Report

  7. Avatar Francis says:

    One big problem with arguing against public unions is the First Amendment. “Congress shall make no law … abridging the freedom of speech … or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

    What is a public union except an assembly of government workers petitioning Government for a redress of grievances? More generically, event absent State laws governing public employment, how do you plan to prevent government workers from forming voluntary collective bargaining associations?Report

    • Avatar Jaybird says:

      I don’t think that the problem is that people don’t have the right to unionize, it’s that it’s much easier to deal with a bad union in the private sector… the company goes out of business. Maybe it moves overseas. Maybe, just maybe, the union makes a concession or two and the business goes back to chugging along.

      The problem is that unions that deal with the government don’t have any checks on them.

      Look at the TSA, for example. Why in the holy hell would they possibly require a union?

      Let’s say that the union makes a marginally unreasonable demand… what checks are on it?Report

      • Avatar Jaybird says:

        Additionally, the TSA did not get together and start getting all collective after its creation. It was *CREATED* as a Union Shop.

        It never reached the point where people were peacefully assembling and speaking freely (though certainly not with a prayer beforehand… separation of Church and State, after all).

        It was born Union.Report

      • Avatar Francis says:

        Jaybird, I agree that the management of public unions is a hard problem. But ED’s decision that public sector unions create too great of a moral hazard is just a little too simplistic (not to mention a little arrogant).

        Does he propose that public employees lose their right to vote? Or to support publicly a particular candidate? That can’t be right. So immediately the biggest problem in public hiring — that public employees throw their support to legislators who in turn support them — is essentially unsolvable. (See teachers, prison guards, cops.)

        And the second biggest problem — that public employees form collective bargaining units and demand job protections — is protected by the First Amendment. And frankly, even if the First Amendment didn’t exist, union contracts would come into existence anyway. As a society we want competent people in public employment. There’s only so much of a discount you can demand before the quality of staff starts to drop off rapidly (like zero). So if you’re not going to offer salaries that are dollar-for-dollar equivalent to the private sector, you have to offer something else, like favorable working conditions.

        Yes, in the grand scheme of things, it’d be nice if we had more competent legislators hiring more competent labor negotiators who did a better job of limiting working condition rules and of imposing salary structures that levied automatic cutbacks when govt revenue dropped. But mostly people don’t care. They do care if their schoolteachers suck, or the cops are morons. And when the head of the union / voluntary collective bargaining association speaks up at public meetings and says that the reason that the quality of personnel is so low is due to lousy wages, then legislators authorize salary hikes.

        For the libertarians in the crowd, this is as local as government gets. The vast majority of public employees are hired at the municipal / local district level. On the one hand, it means that the disastrous decisions of one city tend not to be visited upon other taxpayers (though this may change with pension crises). But on the other it means that it’s impossible to impose a single nationwide solution.Report

        • Avatar North says:

          Well Francis, it’s not like unions aren’t ruled to death as it is. Try getting unionized police or firefighters to strike and you’ll find out real quick how effective their freedom of assembly is. They’re all gummed up in red tape and restrictions already. And what on earth is the justification for public sector white collar job unions?Report

          • Try getting unionized police or firefighters to strike and you’ll find out real quick how effective their freedom of assembly is.

            Well, yes, but virtually every state creates an alternative means for them to exercise the strength of their collective bargaining rights, usually some form of arbitration procedure. Do prohibitions on strikes violate the freedom of assembly, of and by themselves? Probably, even if the courts would say otherwise. But virtually every state (NC and Virginia excepted, I believe) implicitly recognizes this problem and give these unions alternative forums in an attempt to approximate that freedom of assembly.

            And what on earth is the justification for public sector white collar job unions?

            You know how I said above that there are some public sector unions whose leadership is nothing short of loathsome? You’ve figured out who I was thinking of. This group’s function primarily seems to be to turn every argument about government spending into a labor issue, standing as a powerful bulwark against any Democrats who may otherwise have an interest in making spending cuts, while simultaneously providing an avenue to get the unions as a group to treat every spending bill as a legitimate basis for GOTV efforts.Report

            • Avatar North says:

              I know and agree Mark. And my Dad was a teacher for goodness sakes.

              I don’t entirely blame them; Teachers are run near insane by what idiotic parents try to shovel onto them. It’s not surprising they are jaded and numb and let their union do whatever.Report

            • Avatar Will H. says:

              The difference between the trade unions and the shop unions is that the trades regulate human capital rather than labor. Part of that is maintaining a certification process with portability nationwide (and limited international).
              I think that white collar workers that provide human capital rather than labor could use those trades as a model for organization.

              As far as public unions go, I remember reading several months back about the Steelworkers trying to organize the contracted airport security guards.
              First, the gov’t side-stepped the union associated with the TSA to hire an outside contractor. Then, the Steelworkers saw this as a high-profile organizing opportunity.
              As I remember, there was some other union in competition with the Steelworkers to organize them, and the Steelworkers lost out.Report

        • Avatar Jaybird says:

          The problem seems to me to be that the excesses of the public sector unions are truly mind-blowing.

          We’ve had arguments here about Teachers’ Unions (it’s a pretty fun thread, check it out):
          https://ordinary-times.com/blog/2009/05/06/teachers-unions-performance-pay-and-autonomy/

          The problem with Public Sector Unions is that the stuff that gets protected at the margins is so positively weird that one wonders what is not even questioned in the middle.

          Public School Teachers’ Unions protect ‘F’ teachers from being fired.

          I’m not talking about C- teachers, I’m not talking about D- teachers, I am talking about straight up Failures. Teachers who attack students, perhaps. Teachers who mock students after failed suicide attempts. A teacher pretty much has to commit a felony to no longer be protected.

          Lemme tell ya, that was *NOT* the case at HP.

          When reading about how unemployment is at some ungodly number and, at the same time, reading about how TSA Agents who do ‘X’ on the job or Teachers who do ‘Y’ on the job being protected from losing their jobs, I find myself surprised at the energy put into protecting these folks.

          We’re not talking about a union that works for a company that has a car that you have the choice to not buy. We’re not talking about a union that works for a company that you can even move away from if you don’t want to deal with them.

          We’re talking about people who take tax dollars and who cannot be fired except if they start pulling felonies? This is absurd.Report

          • Avatar Jaybird says:

            And I’m not saying that you were making that particular argument. I got off on a rant.Report

          • Avatar gregiank says:

            But how widespread is this problem. Is it more a collection of the outrageous anecdotes of the moment to prove a cause?

            There was a teacher here in town who just arrested for sex abuse. Sounds very nasty and like he is a bad guy. He was fired. He was fired the day after being arrested. No conviction or anything and he is fired. Should he be around kids after being charged or even in school: no. But he was fired for being arrested. This is just an anecdote just all the others. I’ve yet to see how this is truly a massive problem.Report

            • Avatar Jaybird says:

              I’d like to point out that I said this:We’re talking about people who take tax dollars and who cannot be fired except if they start pulling felonies?

              And your example was of a teacher who recently got fired for a felony.

              It’s wacky. We can figure out if someone is a failure as an accountant. We can figure out if someone is a failure as a Professional Football Coach. We can figure out if someone is a failure as a line cook.

              When it comes to a teacher, it’s a lot tougher? I don’t think so.

              I think that you’d be able to figure out who is a downright *BAD* babysitter… hell, I figure you’d be able to figure out who is a babysitter that you wouldn’t want near your own children. But when it comes to teachers, suddenly, examples of teachers who were *NOT* fired despite attempts from the administration to do so become “outrageous anecdotes”.Report

              • Avatar gregiank says:

                No my example was a teacher fired for being arrested, not even close to being convicted. That is an anecdote that flies in the face of other anecdotes about teachers not being for anything.

                What i am still not seeing is evidence that this is a systematic problem as opposed to a set of outrageous anecdotes. It might be a massive problem, i just haven’t seen it proved. Firing bad teachers is a good thing but , again, i haven’t yet seen how it is a sure fire fix. My guess is fixing education will require multiple changes that cross ideological lines.Report

              • Avatar Jaybird says:

                Arrested for…

                A felony. And, interestingly, a very *PARTICULAR* type of felony. “Diddling the students”, one might say.

                While I can totally see how one might point out this as an example of the system totally having the fortitude to fire a failing teacher, I hope that you, at the same time, might see this as an example of behavior so egregious that most people out there who witness it are likely to say “of course he was fired”.

                I suppose it’s possible to imagine someone who would explain “innocent until proven guilty” for a while… but then we could have a handful of discussions about public sector unions vs. the private sector and how “egregious” here is in a completely different place than “egregious” there.Report

              • Avatar gregiank says:

                Like i said above, i don’t have a problem with him being taken out of school at all, but i do wonder a bit about firing a person just for being arrested, because of that whole innocent thing. I’m guessing if the charges are dropped for some reason his picture won’t be on the front page of the paper or that he will be rehired. Anyone remember Richard Jewel

                But the point is just to show an anecdote where a teacher was fired fast. Thats it, its just an opposing anecdote. It doesn’t prove much of anything, just like all the other anecdotes.Report

              • Avatar Jaybird says:

                Do you have any kids? (This is not a loaded question like I’m sure it appears to be. I don’t have any kids so I’m not going to pull the “I HAVE A DAUGHTER AND IF THERE WAS A TEACHER AT HER SCHOOL WHO” speech on you.)

                Since I don’t have any kids, instead of thinking about “teachers”, I’m instead thinking about “babysitters” since that’s a lot more accessible to me, personally (despite not having any kids).

                Imagine having a choice between babysitters.
                You’ve got Jennifer next door, Mary down the street, or Paul from across the way. You probably take input from your kids on which one you’ll have sit. You probably also take into account that this one charges by the hour while that one charges by the night while that other one will raid your fridge mercilessly.

                Now imagine hearing that one of them was arrested for molesting a kid s/he was babysitting. Innocent until proven guilty and all that.

                How much will that impact your decision on whether you hire this person to babysit your kid(s)?

                Now let’s read some of the horror stories from teachers who could not be fired because of union troubles.

                It seems odd to say that these are just anecdotes because they are things that are, like, being reported in the newspaper as things that are happening.

                Jesus, if I said that “a wedding party being blown up in Afghanistan was an outrageous anecdote”, what would your response be?

                If we have a system where the outrageous anecdotes involve teachers that cost school districts millions to fire even though they are people that you, personally, would *NEVER* hire to babysit your child, *WE HAVE A PROBLEM*.

                Remember, I’m not arguing that we need to fire all of the teachers except for the ones who are B- or better.

                I’m arguing that we need a way to fire the ‘F’ ones.

                Though, granted, it’s good that teachers who get arrested for sexual assault are still getting fired quickly. Hurray. Must have been a white girl.Report

              • Avatar Rufus F. says:

                My sense is it’s a bit like Old Regime France- a bunch of entrenched groups with their own privileges (teachers, administrators, parents, students) all of whom benefit in some ways from the dysfunctional situation, while also suffering from it, and all of whom are therefore ready for massive changes, just so long as they happen to the other groups and not their own. Or is that too cynical?Report

              • Avatar Jaybird says:

                I don’t know. I know that those in my circle who are teachers have massive problems with administration and have much overflowing love for children and, as far as I can tell, improve childrens’ lives.

                When they have problems, they have problems being micromanaged by NCLB and other asinine things that get in the way of making sure that kids know how to read expurgated versions of Huck Finn.Report

          • As noted below, these outrageous anecdotes are just that, anecdotes.

            We do need to rid ourselves of failing teachers, but the current tenure regime is not as protective (on its own) as we’re lead to believe. Administrators and districts have the ability to fire (or not renew contracts) with failing teachers. They just decide that they’d rather use their time doing other things.

            There is a systemic problem in our schools that includes teachers, administrators and parents. Alas, we (in our public debates) focus only on one of those groups.Report

            • Avatar Jaybird says:

              Administrators and districts have the ability to fire (or not renew contracts) with failing teachers. They just decide that they’d rather use their time doing other things.

              This is insanity.Report

              • Avatar Michael Drew says:

                This is insanity.

                Maybe it is, and maybe it isn’t, right? It depends on whether rooting out failing teachers really is the best thing administrators can do with their time to improve the education their schools provide.Report

              • Avatar E.D. Kain says:

                It is. That and hiring good teachers to.replace them, and then keeping those teachers and challenging them to excel, all of which is impossible if you can’t get rid of bad teachers.Report

          • Avatar Mike Schilling says:

            I know of one incompetent who was fired from HP. The result is that she was almost able to buy a seat in the Senate.Report

            • Avatar Jaybird says:

              Zing!

              Yeah, Carly and Hurd are not my favorite people. One of the tricks he pulled a couple years back was “EVERYBODY GETS A HAIRCUT!”

              Employees got a 5% cut.
              Management got a 10% cut.
              Upper got 15%.

              (Or something like that.)

              Anyway, bonuses were unchanged. He walked away with 8 figures that year.Report

  8. Avatar Ian M. says:

    At the risk of boring everyone, the budgetary problems faced by state and local governments have a lot more to do with the failing economy – reduced property taxes and lower sales tax receipts – than with public unions (one data point – http://www.nytimes.com/2011/01/02/business/02showdown.html?_r=2&hp)

    The “outrageous pension and benefit programs” were negotiated and a predictable expense which came at the expense of higher pay. When politicians fail to plan (like estimating budgets based on ridiculous projections of growth) they can fall back and blame pensions, unions, or any number of predictable expenses they failed to account for. Erik, this is a fact of bargaining – you give something up to get something somewhere else. Those benefits attract people to the profession and you have repeatedly said we need better teachers. How is reducing compensation going to help teacher recruitment? Transparency? Unions have to report how they spend their money, unlike private companies. Every union officials salary is a matter of public record – how does this lack transparency? What worker places the needs of the customer above their own? Not doctors, not nurses, not judges, policemen or firefighters. Free markets mean economic choosers fighting for their self interest. If you don’t like that you have to give up on Capitalism.Report

    • Avatar E.D. Kain says:

      I never said we should reduce compensation, but public employees should move from pensions to 401ks.Report

      • Why? Let me just anticipate the predictability argument- there are plenty of people bright enough to do the actuarial work to figure out present cost of future pensions. All we need are governments committed to funding these future liabilities.Report

      • Avatar Francis says:

        Why? Just because private sector employees were beaten into assuming individual risk much better taken at a group level doesn’t mean public employees should do the same.

        A much better alternative would be for each state to adopt enforceable government accounting standards and stand-alone pension agencies. If a government agency at any level fails to make the required monthly payment to the pension agency, then any present or former employee should have the right to seek a writ of mandate ordering the payment to be made, in the exact same way that would exist if the government failed to make payroll.Report

        • Avatar Will H. says:

          I think the pension system works well if it’s managed well.
          401(k)’s fluctuate according to the current value of the holdings.
          A pension evens those price variations out over a period of time.Report

          • Avatar Dave says:

            I think the pension system works well if it’s managed well.

            That pretty much sums up the problem with the state public pension funds.

            California, through CalPERS and CalSTRS, lost $600 million on a single real estate investment in New York City in addition to who knows how much was lost on investing in land for residential development at the height of the housing boom.

            Even if the investment strategies aren’t too far outside the box for conservative investing, too many states are having a hard time facing up to the fact that their funds can’t meet the future liabilities and the number of tricks that can be used to gloss over this is diminishing fast.Report

      • Avatar RTod says:

        I don;t know how typical Oregon is, but we got into a deep budget crisis a few years ago because the public employees had been guaranteed a return of investment for the PERS retirement funds, and in the early OOs when the investment markets fell it required the State stepping to to make up the gap. The fact that the State had to do that for public employees was about as popular as one might imagine.

        It bears noting, however, that the reason the State got itself in the mess was agreeing to those future rewards while negotiating a decade earlier, and that the concession was made because the voters wanted to hold off on cost of living adjustments and thought putting off the bill until the future was a marvelous idea. The culprit wasn’t circa-2000 graft, it was circa-1990 populism.Report

    • Avatar E.C. Gach says:

      How would we make that happen?Report

    • Avatar North says:

      Personally I’m not of the opinion that public sector unions are the core cause of the countries budget woes. Canada, for instance, has public sector unions up the ying-yang but their budget was balanced for twenty years.Report

  9. Couple of thoughts-
    a) Too great for what? Should public sector unions cease to exist? Is this limited to public sector unions at a particular level of government? (For example, I am not sure that anyone has made a claim that NAGE or AFSCME have out-sized influence in DC.)
    b) Would love to see you elaborate on this point.
    Clearly there is a notion that all public sector pensions and benefits are overly generous. But the biggest problem with defined benefit pensions is that states have been severely underfunding them for decades. There is nothing inherently wrong with defined benefit, and there is plenty of upside (especially with respect to the certainty it gives to retirement planning). Of course, there are reforms that ought to be made (percentage of average salary, number of years used for retirement base, employee contributions), but the system itself is not intrinsically flawed.
    Benefits are also more complicated than some would have us believe. Do public sector health insurance plans seem better than those in the private sector? I’ve yet to see data that goes beyond anecdotes. But, let us assume there is a difference. Do we now, by legislative fiat (plan design, for example), take health insurance out of the collective bargaining process? Many here in MA want to do just that, but it ignores the reality that many unions made salary concessions in order to keep good health insurance.

    I guess what really gets my goat is the scapegoating of public employees that is becoming more and more common in our political discourse. I do not claim objectivity as I have been employed by a state legislature and now a state university. However, I have also worked for a large corporation, small businesses, think tanks and non-profits and no one sector has a monopoly on lazy/incompetent employees.Report

  10. Avatar Koz says:

    I agree almost entirely with this. And, there’s tremendous, often unappreciated value in clearly stating the obvious. Vote Republican, cut spending, punish liberals.Report

  11. Avatar James K says:

    While I agree with your general premise that public sector unions can be problematic, and many such unions are a serious problem in the US, I think there are some factors cutting against your main point.

    1) It really depends on the union. To give you examples, the PSA in New Zealand represents core public sector employees in New Zealand (though I’m not a member myself), and it has a reputation for being willing to work productively with government Departments. The PPTA (which represents high school teachers, and instructors at non-university tertiary institutions) can be more rancorous, but there’s nothing like the pension problems I’ve read so much about in the US.

    2) In some ways unions can be more important in the public sector than the private. In my mind, the primary benefit of union pay negotiations occurs when the market the workers operate in in uncompetitive. In a perfectly competitive market an employer could pay no more than marginal product or labour or they’d go out of business, and they could pay no less or they wouldn’t be able to hire anyone. But in less competitive markets, the firm obtains supernormal profits, and unions can enrich their members by transferring a portion of these profits to their workers. Also, less competitive markets tend to give employers more bargaining power so unions are more useful as a counter-balance. Mind you, perhaps the problem with some US public sector unions is that they’re too good at this.

    Now I don’t think this refutes your main point, it’s more that I think the way to address the problem is by comparing and contrasting the productive unions with the pathological ones and trying to work out how to prevent the latter from occurring.Report

  12. Avatar Dave says:

    I never said we should reduce compensation, but public employees should move from pensions to 401ks.

    Erik,

    This would only work in the impossible scenario that defined benefit plans are eliminated in their entirety. Otherwise, the moral hazard potential is huge. Yes, public sector employees can benefit from the upside of a wise investment strategy, asset allocation and maxing out contributions. However, those individuals are likely to be the exception and not the rule, and what happened in West Virginia a couple of years ago would likely take place again.

    http://money.cnn.com/2008/05/19/pf/retirement/West_virginia_pensions.moneymag/index.htm?postversion=2008052014

    I’d call that a bailout.Report