If you review the recent history of battles between unions and state or local governments, you’ll find similar stories. In New York, Rudolph Giuliani won big concessions. In Chicago, Richard Daley did, too. In Wisconsin — setting aside Gov. Scott Walker’s attempt to end collective bargaining — unions have already agreed to a significant cut in take-home pay.
It has become conventional wisdom to say that public sector unions are inherently problematic because they can use their political influence to win lavish pay from politicians. But that’s not quite right. The real problem with most union contracts for public workers is not the money — it’s almost everything else.
On money alone, many politicians are pretty tough negotiators. No wonder that academic papers spanning more than 30 years have found that government workers receive compensation that is similar — with somewhat lower salaries and somewhat better benefits on average — to that of private sector workers with similar qualifications. One study went so far as to include workers’ scores on an intelligence test, to ensure the comparison was apples to apples. Over all, government workers are modestly underpaid or overpaid, depending on which technical accounting assumptions are used to value their pensions.
Read more: When Ed Rendell became the mayor of Philadelphia in 1992, he started a fight with the city’s labor unions that will sound familiar to anyone who has been following the recent news from Wisconsin. In his inaugural address, Mr. Rendell, a Democrat, announced, “Philadelphia stands on the brink of total disaster.”
He told the city’s unions that they needed to accept less generous health benefits, fewer holidays and a pay freeze. The unions promised to strike. Mr. Rendell pointed out, frequently and publicly, that the city offered better benefits than private companies did. The public sided with the mayor, and on most issues, the unions eventually caved.
If you review the recent history of battles between unions and state or local governments, you’ll find similar stories. In New York, Rudolph Giuliani won big concessions. In Chicago, Richard Daley did, too. In Wisconsin — setting aside Gov. Scott Walker’s attempt to end collective bargaining — unions have already agreed to a significant cut in take-home pay.
It has become conventional wisdom to say that public sector unions are inherently problematic because they can use their political influence to win lavish pay from politicians. But that’s not quite right. The real problem with most union contracts for public workers is not the money — it’s almost everything else.
On money alone, many politicians are pretty tough negotiators. They have both the motive and the means. They want to spend their budget on projects that are sexier than government pensions. And, as Mr. Rendell says today, politicians can often win a fight with unions in “the court of public opinion.”
No wonder that academic papers spanning more than 30 years have found that government workers receive compensation that is similar — with somewhat lower salaries and somewhat better benefits on average — to that of private sector workers with similar qualifications. One study went so far as to include workers’ scores on an intelligence test, to ensure the comparison was apples to apples. Over all, government workers are modestly underpaid or overpaid, depending on which technical accounting assumptions are used to value their pensions.
Either way, modestly is the crucial word. There is no good case that government pay is a major cause of the budget problems now facing states.
