According to this Wall Street Journal article, a single public employee union is now the biggest spender in the 2010 elections, aside from candidates themselves. I.e., a union representing 1.6 million government workers is spending $87.5 million to encourage voters to reelect the politicians who give them pensions, pay raises, and other benefits. That’s more than the political spending of the entire U.S. Chamber of Commerce, which represents 3 million tax-paying businesses that collectively must employ tens of millions of private-sector workers. In “History of Public Employee Unions” (2009 posting), I learned that the idea that public employees could or should unionize is relatively new, less than 50 years old in most parts of the U.S. Thus after 50 years we may have reached a point in which politicians and government workers constitute a fully self-contained system in which politicians are guaranteed reelection and the workers are guaranteed much higher pay and benefits than private-sector taxpayers.
Related video: fireman talks to citizen.
Related analyses: several interesting articles in the Cato Journal, 30(1).
[These statistics aren’t the full story, since most unionized government workers belong to unions other than the one profiled in the WSJ (the New York Times says that there were approximately 7.9 million unionized government workers in 2009) and those unions will be spending independently. Companies that give money to the Chamber of Commerce to spend on political activities may separately support particular candidates (though really they are better off doing it through the Chamber because a company that supports one politician or party may alienate customers).]
It is no wonder that this problem has exploded so quickly, and that no one noticed the fleecing. After all who the hell knows what a pension obligation bond is?
I spent last summer having to visit every district office of the Ohio Department of Transportation. I do highway construction work in 49 states, and I have never seen anything like the District offices in Ohio. Every building I visited was just beautiful, whereas most district offices around the country are dumpy little cinderblock buildings. More notable than the buildings, however, was the security in these buildings. (In another life my work took me into CIA offices in Langley, and the security at these District OH DOT offices weren’t far behind.) I started asking at each office why the security was so intense. Every office gave me the same answer: a few years ago an employee had a laptop stolen from his car. Nothing ever came of it, but the laptop had a great deal of information relating to Ohio government employee pensions. “So what?” I said, “that’s all public information.” Well, not exactly. Not in Ohio.
On the other hand, has someone done something wrong by taking a government job? Of course not. When that person accepts a raise or a benefit package, has he cheated us? Of course not. And so on, and so on, all the way to this. Somewhere along the line someone did something really, really bad…and more than once.
Firemen are obviously considered more heroic by the US public than from where I’m from. All the firemen I knew back there had a reasonably good schedule of time on/time off, and most of the time on was not fighting blazes either –all my friends had a grand total of 0 tragic or heroic stories to tell. *But the pay was a pittance*, and you had to be basically fit enough to join the Army special forces to be even considered.
It was a good job for life, but the main attraction was the fact it was a reasonably stress free life, rather than pay. BTW, the pay is still a pittance.
Having said that, I kept telling a friend going through a midlife to quit bitching and join the volunteer fire service in NY state, where he lives, so some parts of the US seem to get away with free/cheap fire service…
Federico: “the pay is still a pittance”? http://www.cityofboston.gov/fire/employment/ says that a firefighter in Boston starts at a salary of $52,000 per year. That’s for a 19-year-old with no college degree. With a bit of overtime plus health and pension benefits, the total compensation for that 19-year-old is probably closer to $100,000 per year. http://www.firerescue1.com/labor-issues/articles/410405-Boston-firefighters-bodybuilding-success-comes-at-a-price/ lists some typical pensions, e.g., $90,000 per year, tax-free. Perhaps you know of a better paying career for someone without a college degree. If so, I’m sure the younger readers of this weblog would love to hear about it!
[According to http://www.bls.gov/oes/current/oes_nat.htm, the median hourly wage in the U.S. was about $16/hour in 2009 (probably somewhat lower now in the private sector). So the people who pay taxes to hand out these $100,000/year jobs to 19-year-olds are earning about $32,000 per year for a 40-hour week.]
Phil,
I am not from the US, and so are the firemen I was talking about. BTW, if the physical requirements to join the fire brigade in the US are as strict as the ones my pals had to go through, joining in is not an option for 98% of the population.
Federico & Phil,
I’ll see your Boston and raise you a Vallejo, CA where every police captain makes $300k per year and the AVERAGE salary for a firefighter….$171,000/yr. That firefighter is working 3 days a week, and will retire at age 55 with 80% of his salary.
And here’s another fun one: in Yonkers, NY if a policeman puts in some private security work on his own time, those hours get added to his pension time.
And speaking of pensions…retiring Vallejo fire fighters are making well over the $171,000/yr average. I don’t have the numbers, so let’s just say $200,000/yr at retirement. That means he’ll start his annual $160,000/yr pension at age 55 for every year for the rest of his life. How much does a private sector schmuck need to save to match that fire fighter pension? Only $4,000,000.
Phil,
Isn’t the cost of living in Boston very high? How does that $52,000 salary stack up against other wage-earners in Boston? I’m not sure that comparing that to nationwide pay statistics is fair.
It would seem that a fundamental basis of your argument is that if you didn’t go to college, you don’t deserve a good lifestyle. This may or may not be true; I don’t know. I don’t think that every job out there requires a college degree, though, and in large cities, rents are generally high enough that minimum wage is nowhere near enough to survive on one’s own. Private companies certainly aren’t lining up to pay good salaries to people unless they absolutely have to.
A recent NPR Planet Money episode talked about a study performed in New York City which tracked several employees of a fast food eatery over 8 years, and one of the conclusions was that the only way those people ever managed to make it out of poverty was to get a union job. http://www.npr.org/blogs/money/2010/10/19/130678389/the-tuesday-podcast
Unions certainly do some shady things, but I think it’s incorrect to assume that private corporations or government agencies would do right by their employees if left to their own devices.
What’s so sad about all this is the fact that a soldier — not one of those few with high ranking who sit behind a desk, but your average volunteer soldier who puts his / her life in danger at the front line — make far less compared to virtually all public works with far less benefit upon completing their service. What’s more, when they are hurt, they hardly get much help or benefit other than a 10 min fame with a medal. Very disgusting when you see such treatment especially when the soldier and a public worker are working for the same entity: the government.
I am impressed how well some professions manage to look after themselves and their colleagues own interests. This typically seems to involve a kind of incestuous brotherhood where the the folks in power have rising through the ranks.
Lawyers. Judges are lawyers, and so on all the way to the supreme court. The legal system is so fantastically complicated that it just doesn’t make sense unless there is something huge at stake. The lawyers always win–the system is created for them, by them. It’s been my experience that the legal system isn’t interested in solving problems, so much as letting chips fall where they may, and having to spend a lot of resources to try to figure it all out after the fact.
Firemen. Where I live in southern California, Firemen have it made. There are so few house fires that they are essentially over paid paramedics. You can’t make a living here working for a private sector paramedics or ambulance service, though firemen manage to get paid extraordinarily well. I personally arrived at a house fire which was just starting, and was amazed to watch the firemen in action. They demonstrated absolutely no sense of urgency and ultimately the small house fire grew and destroyed the house completely. This is not a supply and demand industry. There are thousands of applicants for each open position, and yet salary’s and benefits don’t reflect this. Why? Because fireman re responsible for hiring fireman and setting the standards for who can be hired or even receive training.
Doctors. MCAT testing, medical school, board certifications, residency is just another example of a brotherhood controlling the process.
All of these professions involve lengthy training and certification processes which are tightly controlled by the respective professions. These professions are all tightly intertwined with government in some way as well. In that way, these professions are successful in controlling the supply of new people to the workforce. All of these professions enjoy inflated compensation in a theoretically free market as compared to more socialist countries.
Alex: The cost of living in Boston is very high indeed. McDonald’s pays its 19-year-old high school graduates $150,000 per year in total compensation and a Big Mac here costs $25. An apartment in the suburbs costs $7,000 per month. It isn’t anything like the rest of the U.S. (I’m not going to Google the actual median wages or cost of living for Massachusetts because (a) you could do it for yourself just as easily, (b) the median includes a lot of workers with advanced degrees and 20 years of job experience.)
You infer from my posting that I think a person is more or less “deserving” of a particular lifestyle. I noted the fact that a college degree is not required for this $100,000+/year job (total compensation) because a college degree makes an employee more sought-after by other employers. We all “deserve” to live like Wall Street executive, with a mansion in Greenwich, CT, a Gulfstream jet on call, and the bailout checks flowing continuously from Washington, D.C. Unfortunately in a market economy, not every employer is going to be willing to pay us at that level.
Surely a 19-year-old fresh from high school deserves to be paid $52,000 per year in salary and another $50,000 in pension and health care benefits. The only question is whether it is fair to tax a 65-year-old working at Walmart earning $24,000 per year in order to pay that 19-year-old to enjoy the lifestyle that he deserves (http://walmartstores.com/pressroom/news/8283.aspx says that the average hourly wage for a Massachusetts Walmart employee was $12.06 in 2008).
“BTW, if the physical requirements to join the fire brigade in the US are as strict as the ones my pals had to go through, joining in is not an option for 98% of the population.”
Here in the US, we can’t allow that. It wouldn’t be fair you know. So the requirements are set up by the Liberal city managers so a 90 pound woman (41 kg) can pass the physical.
After they are in, the life is actually too soft for their own good. I read somewhere that the main reason for firemen’s disability retirement is type II diabetes.
I’m just wondering how useful a college degree really is anymore…especially for gauging potential employment. I’ve met lots of kids who have slept and texted their ways through 4 years of so-called higher education.
Firemen…it’s a great job if you can get it. If you take away the union contributions to elections you’re left with undisclosed corporate donors, both foreign and domestic.
Until the current system changes, the average American is screwed either way.
Jim: http://www.nytimes.com/2010/05/25/business/economy/25gradjobs.html answers your question to some extent. Despite the ineffectiveness of the typical college, Americans with new bachelor’s degrees are less likely to be unemployed than average and they earn higher salaries ($47,673/year) than average, even immediately upon graduation (though not as high as a 19-year-old fireman in Boston and perhaps only about half as much when benefits and pension are considered).
Jim,
You write: “If you take away the union contributions to elections you’re left with undisclosed corporate donors, both foreign and domestic.”
The implication here is that the unions, bad as they are, balance things out. But this is not the case. Unions donate almost exclusively to Democrats, while Wall Street, Pharma, and insurance companies on balance give more to Democrats than Republicans. Those numbers are from this election cycle, and the Republican disadvantage in corporate giving isn’t as bad now as it was in 2008.