States across the country are struggling with their finances as a result of overspending and the effects of the economic recession and stagnation. Some states are in more trouble than others, however. It is no coincidence that the states with the worst budget troubles, which predated the recent economic difficulties—California, Illinois, New York, and New Jersey—are also among the states with the strongest public employee labor union influence.
Through the power of collective bargaining rules and natural political alliances with politicians in power, labor unions have exerted undue influence and risen to become the premier special interest group. No wonder public employees now typically earn greater pay and benefits than their private-sector counterparts.
To combat the influence of public employee labor unions in California, a group called Californians for Public Union Reform has recently filed with the state in an effort to put an initiative on the ballot next year to eliminate union representation for all state and local government employees in California. The Sacramento Bee blog, “The State Worker,” identified Lanny Ebenstein, UC Santa Barbara economics professor, president of the California Center for Public Policy, and president of the Santa Barbara County Taxpayers Association, as the treasurer of Californians for Public Union Reform. In October 2010, the California Center for Public Policy published a study written by Ebenstein called, “Reforming Public Employee Compensation and Pensions.” Among Ebenstein’s conclusions were the following:
Public employee compensation is out of line with the private sector in every area. There are thousands of individual government agencies in the state, employing almost 2 million individuals. Whether the standard is salary, working conditions, benefits, or especially pensions, public employees in California receive compensation far in excess of what workers in the private sector do. It is illiberal and unjust, and no true liberal or progressive should support current public employee compensation.
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The California public employee compensation crisis will continue to cripple the state in the years ahead—and more so and sooner than most now recognize. As a result of inaccurate actuarial assumptions concerning a) long-term return on investment, b) the number of government employees in the future, and c) longevity, both the short-term and long-term fiscal crises at the state and local government levels require change immediately. The status quo is unsustainable.
Taxes are not too low in California, and public services should not be cut continually and further. Rather, the answer is to pay public employees fair salaries, benefits, and pensions—not salaries, benefits, and pensions greatly in excess of those in the private sector.
While collective bargaining for public employees is common, it is not universal. As a recent Wall Street Journal column cited in the SacBee blog notes:
At least 18 states already outlaw collective bargaining with some categories of government employees; Virginia and North Carolina prohibit it for all public workers. Two newly elected Republican governors, Scott Walker in Wisconsin and John Kasich in Ohio, have threatened to dismantle their state bargaining statutes if unions fail to make concessions.