Tag Archives: Benefits

Commentary

We’ve become a nation of takers, not makers

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From moderate conservative Stephen Moore, writing in the Wall Street Journal. (H/T ECM)

Excerpt:

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida’s ratio is more than 3 to 1. So is New York’s.

Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things. The leaders in government hiring are Wyoming and New Mexico, which have hired more than six government workers for every manufacturing worker.

Now it is certainly true that many states have not typically been home to traditional manufacturing operations. Iowa and Nebraska are farm states, for example. But in those states, there are at least five times more government workers than farmers. West Virginia is the mining capital of the world, yet it has at least three times more government workers than miners. New York is the financial capital of the world—at least for now. That sector employs roughly 670,000 New Yorkers. That’s less than half of the state’s 1.48 million government employees.

The problem with having a high number of government workers is that government workers don’t actually produce anything to sell. They pay the salaries of their workers by taking a percentage of the money that productive business make when they sell customers useful things like cell phones and laptops and automobiles.

This article is the second most popular on the Wall Street Journal. Recommended.

News

Veronique de Rugy debunks myths about public sector pension liabilities

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From Reason magazine. (H/T Hyscience)

Bullet point summary:

Myth 1: Unfunded state pensions do not represent an immediate threat and are therefore not in crisis.
Fact 1: In the best case scenario, some state pension funds will run out as soon as 2017. And the longer the states wait to fully fund their pensions, the more drastic the financial consequences will be.

Myth 2: State debt accurately reflects state liabilities. And state default is not a concern because the federal government will bail the states out before they reach that point.
Fact 2: Many government pension liabilities are kept off the books, so most states and cities underestimate their actual debt.

Myth 3: State and local workers are not overpaid. And even if they are, changing their compensation won’t make a difference.
Fact 3: While this is a complex issue, the total compensation package for state workers does tend to exceed that of their private-sector counterparts.

Myth 4: The financial crisis, which caused a depreciation of pension assets, is the real culprit behind pension underfunding.
Fact 4: While the recession dealt a severe blow to state pensions, the problem of pension underfunding dates back to the early 2000s. Many states had already failed to cover the cost of promised benefits even before they felt the full weight of the Great Recession.

And conclusion:

Here’s the bottom line: We can argue endlessly over when the pension plans will run out of cash, or what the true value of the unfunded liabilities is. We can even debate what the true meaning of being broke. But there is one issue where there is no room for debate. Once the pension plans run out of money, the payments will have to come out of general funds, meaning out of the pockets of taxpayers. If the states want to avoid this, they must push through reforms as soon as possible. A good first step would be to switch to accounting methods that show the true market value of their liabilities. Once those methods are in place, lawmakers should consider moving away from defined benefit pensions.

What states like Wisconsin and Ohio are doing is completely necessary. This is a real crisis, and we need to act now to make sure that taxpayers are not squeezed when the money runs out.

News

Republicans introduce national right-to-work legislation

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Sen. James Demint

From the Hill.

Excerpt:

Eight Republican Senators introduced a bill Tuesday giving workers a choice as to whether to join labor unions, which they argue will boost the nation’s economy and provide an increase in wages.

Sen. Jim DeMint (R-S.C.), introduced the National Right to Work Act to “reduce workplace discrimination by protecting the free choice of individuals to form, join, or assist labor organizations, or to refrain from such activities,” according to a statement.

Seven other Republicans signed onto the effort: Sens. Tom Coburn (Okla.), Orrin Hatch (Utah), Mike Lee (Utah), Rand Paul (Ky.), James Risch (Idaho), Pat Toomey (Pa.) and David Vitter (La.).

“Facing a steady decline in membership, unions have turned to strong-arm political tactics to make forced unionization the default position of every American worker, even if they don’t want it,” Hatch said. “This is simply unacceptable. At the very least, it should be the policy of the U.S. government to ensure that no employee will be forced to join a union in order to get or keep their job.

“Republicans cited a recent poll they said shows that 80 percent of union members support having their policy and that “Right to Work” states outperform “forced-union” states in factors that affect worker well being.

From 2000 to 2008, about 4.7 million Americans moved from forced-union to right to work states and a recent study found that there is “a very strong and highly statistically significant relationship between right-to-work laws and economic growth,” and that from 1977 to 2007, right-to-work states experienced a 23 percent faster growth in per capita income than states with forced unionization.

“To see the negative impacts of forced unionization, look no further than the struggling businesses in states whose laws allow it,” Vitter said. “It can’t be a coincidence that right-to-work states have on balance grown in population over the last 10 years, arguably at the expense of heavy union-favoring states.”

DeMint blamed the problems faced by U.S. automakers on the unions.

“Forced-unionism helped lead to GM and Chrysler’s near bankruptcy and their requests for government bailouts as they struggled to compete in a global marketplace,” he said. “When American businesses suffer because of these anti-worker laws, jobs and investment are driven overseas.”

If you want to attract businesses, then you need to have pro-business laws. That’s where jobs come from – businesses.

Here’s an article about states who are trying to pass these laws to attract more employers.

Excerpt:

Currently 14 states beyond Indiana and Wisconsin are considering legislation that would limit union benefits and/or collective bargaining power. They are: Alaska, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Mexico, Ohio, Pennsylvania, Virginia, Washington (state) and West Virginia. In any number of these states, supporters have planned or held rallies against the measures. But public support might be less than deep. According to a Rasmussen Poll conducted late last week and released Monday, 48 percent of likely U.S. voters sided with Wisconsin Governor Walker whereas only 38 percent sided with his union opponents; the other 14 percent were undecided. And 50 percent of the respondents favored reducing their home state’s government payroll by one percent a year for 10 years either by reducing the work force or reducing their pay. Only 28 percent opposed such action.

This is how we are going to turn the recession around. Cut off the spending on left-wing special interests – NPR, PBS, ACORN, Planned Parenthood, Unions. They all will have to pay their own way, just like the grown-ups do.