The GOP war on public employees

Posted by AzBlueMeanie:

Several weeks ago The Arizona Republic published an eight part investigative report entitled Arizona pension systems becoming a soaring burden. "Arizona anti-tax groups and business leaders are calling for changes to ease Arizona's ever-growing pension costs." This of course includes the Arizona Tax Research Association, the Goldwater Institute and the Arizona Chamber of Commerce.

I would be among the first to tell you that there are long-term sustainability issues with the Arizona State Retirement System. The problems originate with the Legislature and the management of the funds, not with individual employees.

I found the tone and tenor of the reporting fairly one-sided. It unfairly demonized public employees, particularly unionized employees (police, fire, teachers). Perhaps this was because the reporter relied too heavily on the above anti-tax groups as sources for information and quotations. Like this cherry-picked quote:

Byron Schlomach, an economist with the Goldwater Institute and a critic of the state's pension systems, said the public-safety benefits are overly generous and the burden for taxpayers was unreal.

"It's nice they have figured out a way to rob us," said Schlomach. "This is ridiculous. How can anybody justify this?"

Nice. This is the problem I have with the political media in this state. They tend to rely on right-wing think tanks like the Goldwater Insititute, or Tom Jenney from Americans for Prosperity as credible sources, ignoring the fact that their research is politically biased and scientifically flawed to produce the intended conclusion. And they always have a political agenda.

When the media cites these sources without questioning these factors the media implicitly endorses the politically biased views and political agendas of these right-wing think tanks. That's what the average reader takes away from reading such reporting. The letters to the editor of The Arizona Republic in response to this investigative report clearly reflected this phenomenon.

The timing of this investigative report was also interesting to me. FAUX News and conservative commentators over the past year have found a new scapegoat to blame for the nation's financial ills — public employees, particularly unionized public employees. I don't know how many stories I have seen this year falsely asserting that public employees are paid far in excess of their private sector counterparts. It's the next phase in the right's anti-government narrative. Public employees have been added to the pantheon of groups that the right loves to hate: Blacks, Latinos, gays, union members, the unemployed, the poor, liberals, etc.

It leads me to question whether The Arizona Republic is simply playing its part in the echo chamber of the right-wing media advancing this new narrative. It has a long and sordid history of doing so.

I am not the only one to have noticed this new narrative. Jon Perr writes this richly detailed post, Republicans Launch Phony War on Public Employees:

Move over, welfare queens, IRS agents and trial lawyers. The Republican Party has a new bogeyman: the public employee. With a sluggish U.S. economy, cash-strapped states and under-funded pension programs, Tim Pawlenty, Sarah Palin and other leading lights of the GOP are scape-goating government workers and their unions for the nation's woes. Of course, there's only one problem with Rush Limbaugh's claim that public sector employees are "freeloaders" and the charge from Indiana Governor and GOP White House hopeful Mitch Daniels that they are a "new privileged class in America."

Like so much else conservative mythmaking, as we'll see below, it's simply not true.

But that didn't stop outgoing Minnesota Governor and 2012 Republican presidential contender Tim Pawlenty this week from pretending otherwise. In a Monday Wall Street Journal op-ed titled "Government Unions vs. Taxpayers," Governor Pawlenty echoed half-term Governor Sarah Palin by targeting "unionized public employees [who] are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt."

How did this happen? Very quietly. The rise of government unions has been like a silent coup, an inside job engineered by self-interested politicians and fueled by campaign contributions.

Pawlenty repeated his charge to Fox News on Monday:

"You have public employees making more than their private-sector counterparts. They used to be under-benefited and underpaid. Now they're both over-benefited and overpaid…it needs to stop."

Sadly for would-be President Pawlenty, the charge – whether at the federal, state or local level – is false.

That's the conclusion of a recent study by the Economic Policy Institute. Just one of many recent analyses debunking Republican charges about government workers and their unions, EPI found that "on average, state and local government workers are compensated 3.75% less than workers in the private sector." The report by Labor and Employment Relations Professor Jeffrey Keefe of Rutgers University revealed that public employees are undercompensated compared to similarly skilled private sector counterparts:

The study analyzes workers with similar human capital. It controls for education, experience, hours of work, organizational size, gender, race, ethnicity and disability and finds that, compared to workers in the private sector, state government employees are undercompensated by 7.55% and local government employees are undercompensated by 1.84%. The study also finds that the benefits that state and local government workers receive do not offset the lower wages they are paid.

The public/private earnings differential is greatest for doctors, lawyers and professional employees, the study finds. High school-educated public workers, on the other hand, are more highly compensated than private sector employees, because the public sector sets a floor on compensation. The earnings floor has collapsed in the private sector.

* * *

To be sure, the attack on public employees heated up this summer, when Republicans in Congress pulled out all the stops to block a new federal aid package to state and local governments. Despite studies showing that cash-strapped states could shed as many as 900,000 teachers, policemen, firefighters and other workers, the Senate Republican Policy Committee insisted: "No state bailouts should be contemplated until the wages and pensions of public sector employees are brought into line." As the United Steelworkers' Fred Redmond wrote in The Hill in August:

The National Institute for Retirement Security (NIRS) and the Council on State and Local Government Excellence (COS & LGE) released a jointly-funded study on this topic just as the Republican sound machine revved up this spring. On the facts, they found that every one of the Republican assertions is false.

Analyzing data from the U.S. Government's National Compensation Survey, their economists found that when factors such as education and work experience are taken into account, state and local employees earn less than their counterparts in the private sector. To be exact, state employees earn 11 percent less than comparable private sector workers. Employees of city and county governments earn 12 percent less than their private sector counterparts.

Pensions and health insurance coverage make up a slightly greater share of public employees' overall compensation than those benefits do for private sector employees, but when those costs are included, state and local employees still wind up with less total compensation – 6.8 and 7.4 per cent less, respectively. 

Still, Republican leaders have extra ammunition – and talking points – for federal employees. Consider, for example, the "2 to 1" claim now dominating the U.S media:

"The average federal employee makes $120,000 a year. The average private employee makes $60,000 a year." (Rand Paul)

"It's gotten to a point where the average federal worker makes twice as much as the average private sector worker." (John Boehner)

"Federal employees receive an average of $123,049 annually in pay and benefits, twice the average of the private sector." (Tim Pawlenty) 

But as with state and local governments, this line of attack is an apples-to-oranges comparison at best and an outright deception at worst. As FactCheck pointed out:

The analysis is based on data from the Bureau of Economic Analysis and crudely done by dividing total compensation (salary and benefits) by the number of current federal civilian employees. Comparing such averages is quite misleading, for two reasons:

First, BEA says the figure is inflated by including compensation that is actually paid to benefit retirees, not just for current workers. The figure is at least several thousand dollars too high, by our calculations.

Second, the average federal civilian worker is better educated, more experienced and more likely to have management or professional responsibilities than the average private worker. 

Over 44% of federal employees have a college degree, compared to about 19% of private sector workers. More importantly, an assessment of salaries (excluding benefits) by the Office of Personnel Management found that on average comparable federal civilian workers are paid 22 percent less than private workers. The disparities, even including incentive pay, are even greater in some metropolitan areas:

(It is worth noting, as FactCheck does, that there are limitations to the OPM data. Not only are benefits not included, but the benchmarking methodology makes direct public/private section comparisons difficult.) 

It is true that since 2000, the pay of federal employees has risen faster than their private sector counterparts. (Then again, American average household income sank durng the Bush years.) There is no question, as Pawlenty and Palin each point out, that states and localities face a crisis in meeting their future pension benefit obligations. But as Dean Baker of CEPR noted, many public employees don't get Social Security, adding "most public sector pensions do not provide retirees with an especially high standard of living." That public employees find themselves in the GOP's crosshairs has less to do with their compensation than being what Sarah Palin decried as "union thugs." As Jonathan Cohn of the New Republic pointed out, "Unions represent around 37 percent of public sector workers, compared to 7 percent of private sector workers." (Left unsaid? They vote Democratic.) He then got to the heart of the matter:

"But ask yourself the same question you should have been asking then: To what extent is the problem that the retirement benefits for unionized public sector workers have become too generous? And to what extent is the problem that retirement benefits for everybody else have become too stingy?

I would suggest it's more the latter than the former." 

While Tim Pawlenty praised President Obama's proposed pay freeze for federal employees as "a step in the right direction," right now Republicans have bigger fish to fry. At a time of record income inequality, rising poverty and massive budget deficits, the GOP is focused on its $700 billion, 10-year tax cut windfall for the wealthy. Meanwhile, state and local governments continue to shed tens of thousands workers. As for those public servants still at work around the nation, they are, in the words of Rush Limbaugh, "a bunch of leftist, socialists, neo-communist union people asking their brothers in government to raise taxes."

No, they're just the Republicans' latest scapegoats. Scapegoats, it turns out, who get paid less, not more, than their private sector neighbors doing the same work.

UPDATE: Shrinking the size of government actually worsens the public pension shortfall. "A larger-than-expected reduction in government employment will cause taxpayers and working public employees to pay more into the ailing Arizona State Retirement System, which has more than 100,000 retirees receiving benefits for the first time." Pension-contribution rate raised:

It is the first time ASRS, created in 1953 and the largest public-pension program in Arizona, is charging a double-digit contribution rate.

It also was announced that retirees will not receive a cost-of-living adjustment in the upcoming fiscal year because there is no money in an ASRS reserve account. It will be the sixth straight year there has been no cost-of-living adjustment, and one is not expected until at least 2020.

The Arizona State Retirement System board on Friday raised contribution rates to fund a pension trust battered by investment losses. Rates have risen significantly since 2000, when they were 2.17 percent. The employee and employer pay the same rate, which is applied to an employee's wages. The current rate is 9.6 percent. Projected rates going forward as of July 1:

Year/Rate

2011: 10.5 percent
2012: 10.95 percent
2013: 11.3 percent
2014: 11.5 percent
2015: 11.75 percent
2016: 11.85 percent
2017: 11.9 percent
2018: 12 percent
2019: 11.9 percent
2020: 11.6 percent

Source: Arizona State Retirement System