Attacking Public Employees

Jan 6, 2011

Every culture and civilization has a set of myths which are sometimes partly true, but which are exaggerated out of proportion.

For example, they say any child in America can grow up to be president. That was made more believable when Barack Obama won. But for too many children today, a decent education, let alone the White House, is an impossible dream.

We take other things on faith too. These days, something most people seem to believe is that we have too many public sector employees, that they are paid too much, and that the cost of their pensions and benefits are killing us.

As a result, it is widely expected that Governor Snyder will seek deep cuts in public sector benefits to help close a nearly two billion dollar hole in next year’s state budget.

Well, there may be no alternative to painful cuts affecting almost everybody. But there’s evidence that suggests that what you think you know about public workers’ compensation was just plain wrong. I was reminded of this recently by Roger Martin, a colleague of mine years ago at the Detroit News.

Roger isn’t exactly an unbiased observer. His lobbying firm, Martin Waymire Advocacy Communications, represents a coalition of Michigan state and local public employees called Citizens for Accountability in Reform. Naturally, they want to keep their benefits.

But he wasn’t the first person to suggest that what we thought we knew about public employee pay was just plain wrong. Michigan State University Economist Charles Ballard talked to me about this in detail two years ago. He was a co-author of a study of our state employee workforce published that summer. 

The study found that the state workforce has been dramatically shrinking. In fact, it fell by nearly one-fifth in the seven years starting in 2001, and has shrunk further since then.

What’s more, according to the non-partisan House Fiscal Agency, state employees earn, on average, less than their counterparts in the private sector at every level. Ballard’s study actually concluded that state workers who haven’t graduated from college do about the same as those in the private sector. But those who have a bachelor’s degree or better make much less.

What about overheated pensions and benefits? Well, state workers have been giving back. They are paying higher premiums for health care. The state has switched from the old, expensive defined-benefit pension model to a defined contribution model, which will save the state billions, over time.

Roger Martin directed me to five other studies, none of them sponsored by his firm or his clients that came to roughly the same conclusions that, up to now, public sector workers have been paid less and have had to sacrifice more.

That doesn’t mean that further cuts may not be avoidable. But we should consider two things. First of all, we should be a little suspicious when politicians who want tax cuts for the rich begin to demonize modestly paid public sector workers. And second, if we want to severely cut the modest compensation we pay teachers and policemen, we shouldn’t be surprised if we get inferior people in those jobs. For there is, after all, one thing that both public and private sectors have in common: You get what you pay for.