In the second half of the 1990s, I worked as an economist for the City of New York. This was during the dot-com boom when everyday there was an article in the New York Times about the newest IPO multi-millionaire and the high tabs spent on dinner and drinks at Le Cirque. I made $36,000. My union had negotiated a five-year collective bargaining contract when the City was still recovering from the crash in the real estate market of the late 1980s, and as a result, our collective agreement specified a two-year pay freeze, followed by one, two and 4.5 percent pay increases in the subsequent years. What this meant was that public sector workers were having real pay cuts during one of the greatest economic booms in the city’s history. My pay was low by Manhattan standards and our holiday party was pot-luck, but my work was interesting, the benefits were good and I had the satisfaction of knowing that my job was safe and not subject to the whims of a boss.
Like me, many workers prefer the public sector precisely because there is job stability and because there are limits on working hours that allow greater work-life balance, in a country with no legally mandated vacation and the most flexible working hours in the world. An implicit contract exists that is now under threat in Wisconsin, Ohio, Indiana, and across the U.S.
Though it is common knowledge that public sector workers make less, some recent newspaper articles have reported otherwise, based on straight comparison of wages and benefits without controlling for work characteristics. A recent Economic Policy Institute brief, using data from the CPS and adjusting for benefits and differences in working time, shows that public sector workers do indeed earn less, with an -11% “penalty” when comparing wage earnings and a -3% penalty when accounting for non-wage benefits. The “public sector penalty,” as they refer to it, is greatest among those with college (-25% penalty), master’s (-31%) and professional degrees (-37%). Where public sector workers fare better is among the less educated – those with secondary (+6%) or some college education (+9%). And this is where collective bargaining is essential – to ensure a wage floor that allows workers a decent standard of living.
From the outset, the attack on public sector unions has not been about reining in spending to tackle deficits. If it were, the Wisconsin unions’ offer of wage concessions would not have been ignored and the Governor’s proposal wouldn’t have excluded police officers, whose relatively higher pay and recurrent use of overtime often leads to budget problems.
Rather, the focus is on union-busting and, in particular, the removal of employment protections that are often negotiated in collective agreements. Unlike most of the rest of the world, the U.S. has no employment protection legislation—employment is “at will” and employers can fire their workers with dubious cause, no notice period and no right to severance. It is an extreme form of disciplining labor and one that conservatives would like to place on public workers, particularly teachers.
But there is a bright spot. High unemployment appears to have awakened solidarity. A recent New York Times poll found that Americans opposed restricting collective bargaining for public employees by a nearly two-to-one ratio. Forty-one percent of respondents believed that lawmakers threatening wage and benefit cuts for public sector workers were doing so not to cut deficits, but to weaken unions’ power. Also, and again by a nearly two-to-one ratio, tax increases were preferred over benefit cuts for state workers. The only hold outs were the rich – respondents who earned over $100K a year – 45 percent said they favored cutting pay or benefits. Then maybe they should have the pay cuts?
The Triple Crisis blog welcomes your comments. Please share your thoughts below.