February 20, 2011
Dispatches (III): I Regret...
[Executive board president of the Wisconsin Law Enforcement Association] Tracy Fuller writes, "I am going to make an effort to speak for myself, and every member of the Wisconsin State Patrol when I say this ... I specifically regret the endorsement of the Wisconsin Trooper's Association for Gov. Scott Walker. I regret the governor's decision to 'endorse' the troopers and inspectors of the Wisconsin State Patrol. I regret being the recipient of any of the perceived benefits provided by the governor's anointing. ...
...I think everyone's job and career is just as significant as the others. Everyone's family is just as valuable as mine or any other persons, especially mine. Everyone's needs are just as valuable. We are all great people!!"
One interesting fact I have learned from this article: Capitol and University of Wisconsin police will not retain collective bargaining rights.
Another interesting implication for Wisconsin is that the transit systems would [likely] (edit 7:20am 2/21) lose approximately $45 million in funds from the Federal government under Governor Walker's bill. From "Walker proposal could result in $7.1 million cut in federal aid to Madison Metro Transit," Wisconsin State Journal:
The state received $73.9 million in federal transit funding in 2010, including $22.5 million for the Milwaukee area and the $7.1 million for Madison, according to the memo.
About $27.3 million for the Milwaukee area likely would not be affected because Milwaukee County has a contract with a private corporation to run its transit services, the memo says.
But the remaining $46.6 million, including the funds for Madison, "could potentially be withheld" due to the governor's proposal, it says.
This is because:
...federal law requires continuation of collective bargaining rights on wages, pensions, working conditions and other conditions to get federal transit money, according to a Legislative Fiscal Bureau memo.
The article observes "[t]he Walker administration did not respond to a phone call and e-mail." regarding this issue.
Empirical question of the day: who [which income decile] relies the most on city bus systems in Wisconsin?
Posted by Menzie Chinn at February 20, 2011 10:00 PMdigg this | reddit
I would just like to stress here, that the right to strike and the right to join a labor union is not just a state issue, it is a national issue. And anyone who believes otherwise is the same type of dope who believes Glenn Beck will make them rich on overpriced gold.
[edited by JDH for content]
Posted by: Ted K at February 21, 2011 01:27 AM
I am sure the protesters will win the day...
Posted by: Babinich at February 21, 2011 03:26 AM
Wow! Menzie jumps the shark of caveats included in the article re: transit funding to: "...transit systems would lose approximately $45 million in funds..." From "if" and "maybe" Menzie jumps to the imperative "would".
Given the budget issues in DC for the very same 2011 fiscal year, and the likelihood transportation cuts will be implemented in the continuing resolution, it may be quite a jump to "would lose."
Menzie, that was not snark no a sneer. It was just a counterpoint.
Posted by: CoRev at February 21, 2011 04:04 AM
We in Latvia went through public and private austerity cycle ( and are still in it) from 2008-2011 after both local housing bubble burst and global crisis hit. GDP went down cumulative 25% in 2 years, so did public and private wages. Prices went down 4% , now inflation is back ( +4%).
Yes it hurts, I can tell You. Many things we enjoyed earlier are not available anymore. So what? We had our nice time.
But it recreates competitiveness of the economy, and secondly, what else can You do when You have overspent for years and lived above Your means?
Take the medicine, USA public workers, stop whining, whining will not solve the issue of insolvency of local governments or federal state.
Posted by: Ivars at February 21, 2011 06:20 AM
The item on Federal transportation funds requiring collective bargaining rights really illustrates a key point in all of this. How many business contracts assure workers in the private sector similar rights?
What I don't think you and many other public employees seem to realize is how different the retirement benefits are from the average worker in the private sector. Your previous post using BLS stats completely ignored the enormous unfunded liabilities. I posted a comment on that asking you to clarify, but I assume it's not a point you would argue.
The average white collar worker today is given a 401k with (sometimes without) a fixed contribution from the employer. If he wants to retire at 55 he will need to pay the costs of health insurance out of his savings until medicare kicks in, and then probably supplement that. Meanwhile, the teacher who retires at 55 has no worry on that front.
I think if most public employees were shown the amount that would need to be socked away in a 401k to assure the equivalent of benefits they will enjoy, they would be shocked.
Now, one might argue that ALL employees deserve benefits similar to public employees. But that's not the reality. In the meantime, public employees want benefits which are generally unavailable to those who will pay for them. That's just not a realistic expectation.
Posted by: Bob_in_MA at February 21, 2011 06:23 AM
With collective bargaining 5000+ state workers will lose their jobs. Without collective bargaining those jobs are saved. Do you want a transit system run by workers who are non union? Or do you want to take away (5000 jobs * $40K per job) = $200 million dollars in income from state workers and thier families?
Seems pretty simple to me. Walker is telling the public employee union members that if they all want to save their jobs, then they have to give up collective bargaining on pensions and health care. They can still bargain over wages.
From Friday's WSJ page A1, http://online.wsj.com/article/SB20001424052748704657704576150390393461846.html
Gov. Walker has pledged no layoffs or furloughs for the state's 170,000 public employees. He has said 5,500 state jobs and 5,000 local jobs would be saved under his plan, which would save $30 million in the current budget and $300 million in the two-year budget that begins July 1.
...it would require government workers, who currently contribute little or nothing to their pensions, to contribute 5.8% of their pay to pensions, and pay at least 12.6% of health-care premiums, up from an average of 6%.
In exchange, Gov. Walker has pledged no layoffs or furloughs for the state's 170,000 public employees. He has said 5,500 state jobs and 5,000 local jobs would be saved under his plan, which would save $30 million in the current budget and $300 million in the two-year budget that begins July 1.
Posted by: tj at February 21, 2011 06:35 AM
I meant to point out a historical analogy with the first item. The air traffic controllers who were fired by Reagan had endorsed him in the previous election. doh!
Posted by: Bob_in_MA at February 21, 2011 07:16 AM
Bob in MA: Thanks for your ringing endorsement of my knowledge about unfunded liabilities. I hope you will read my forthcoming book (with Jeffry Frieden), Lost Decades (Norton) out in mid summer, and re-assess my level of knowledge (thanks for letting me plug my book!).
There is something called PBGC. It guarantees private pensions. I suggest you look at the current state of its finances. Tell me then if you think the degree of funding of pensions are so different. That's not to say there isn't underfunding. Just that you are overstating the differences between private and public sector.
tj: Actually, this is an interesting question from a macro perspective. Several of the actions of the Walker Administration have either turned away Federal monies (high speed rail, broadband investment (!)), or would have negative implications for transfers. If the state were to lay off some workers, saving an equivalent amount of funds as in the Governors proposal, then those workers would receive unemployment insurance payments, some portion paid by the Federal government. In this aggregate demand context, the contractionary implications of the Governor's approach would be greater than layoffs.
Posted by: Menzie Chinn at February 21, 2011 07:29 AM
CoRev: Point well taken. Edited now.
Posted by: Menzie Chinn at February 21, 2011 07:36 AM
The comparison to PBGC illustrates my point. How many workers in the private sector have the type of defined plan covered by PBGC?
OK, I looked it up.
-In 2009, PBGC provided pension insurance protection to about 33.6 million participants
-The percentage of participants who are
active workers was 41 percent in 2007.
So about 13.77m active workers out over 100m private sector jobs, less than one in six. Plus, there are limits as to what the program insures.
I don't even know anyone who has a defined benefit plan that isn't a public employee. And I don't know any public employees without one.
And I certainly never said you weren't aware of unfunded liabilities, I merely pointed out that the figures you used comparing public and private benefit costs left them off the table. That distorted the results.
All the benefits received by the private sector worker with a 401k (ie., the majority of private sector employees) were included in that chart. But none of the unfunded liabilities.
Posted by: Bob_in_MA at February 21, 2011 08:04 AM
Menzie But government handouts come with strings attached. If you accept the federal money today, you are committed to increase state spending in the future. Many states around the country are turning down federal money today, because they can't afford the future committment that comes with it. eg the states' share of operating expenses in perpetuity for a high speed rail system, or states' share of medicare for expanded coverage that comes with new healthcare legislation.
Posted by: tj at February 21, 2011 08:11 AM
Wonderful! With the Huffington Post sold to AOL, someone had to take up the slack. Good work, Professor Chinn. There is no doubt that life in this country without our public sector unions would quickly descend to the level of Libya, Sudan or San Marino (choose one). Life as we know it would end. Dogs would eat babies in the street. Thanks for defending us, all you liberals out there! Keep sniveling - we luv ya!
Posted by: C Thomson at February 21, 2011 09:17 AM
Did you not read that the unions are willing to accept the spending cuts that Walker is asking for, even though the major source of this current (non) "crisis" is his sudden handing out of a bunch of tax cuts for businesses? The issue is his demand to end collective bargaining for state workers in the state where it was basically invented and is deeply and widely supported.
Posted by: Barkley Rosser at February 21, 2011 10:36 AM
You're a bit behind the curve, Barkley. That canard about the tax cuts being the major cause for Wisconsin's deficit is not true. Doyle was warning that the deficit would be $1.5 billion last November, with estimates running over $2 billion.
The unions are losing this one, and why should the governor stop short of achieving his full goals? Elimination of collective bargaining on pensions and benefits removes the temptation for unions to buy votes for benefit increases. Removal of automatic dues collection also weakens the potential for vote buying.
Posted by: Rich Berger at February 21, 2011 12:02 PM
Let's see...The Teabaggers are SUPPORTING the government?
I guess that it comes down to whomever has the best doughnuts.
Posted by: KarmaPolice at February 21, 2011 12:59 PM
If unions are so popular then Walker and republicans would not have been elected in the first place. His union busting policies should come as no surprise. It's amazing that so many voters in Wisconsin dislike unions they voted for a republican governor and republican majority.
Posted by: tj at February 21, 2011 01:48 PM
Rich Berger Try working the arithmetic. Even if you accept Gov Walker's claims as to the costs of the the employee benefits, they don't even come close to the size of the 2 year budget shortfall...which is not all that bad according to Moodys. And the budget issue is a complete irrelevance since all parties agree to the Governor's proposed cuts. The only issue that's being disputed is the right for some public employee unions in Wisconsin to engage in collective bargaining. And note that Gov Walker is only trying to deny collective bargaining for Democratic leaning unions. Other unions in the state that lean Republican (e.g., police and highway patrol) are exempt from Gov Walker's wrath.
And I'm sorry, but 85% of this year's budget shortfall is due entirely to Gov Walker's tax cut. Again, do the math.
This appears to be the same flim flam game that Walker pulled when he was on the Milwaukee County Board. He created a budget crisis, used it as an excuse to weaken unions, and was subsequently found to have negotiated in bad faith (he lied about the budget numbers according to the commission's ruling). Now given Walker's track record, why would any union trust his word?
Posted by: 2slugbaits at February 21, 2011 03:02 PM
US domestic oil production is down 55% since the secondary peak in '85, which is an avg. 3.2%/yr. depletion rate per capita. At the trend rate of depletion from the peak, US oil production per capita will have fallen by 66% per capita by '20 and 75% by '30.
However, during the same period the growth of fiat digital debt-money/bank lending and gov't spending has been 4-5% per capita, which is a net 7-8% faster than the equivalent per capita oil production.
Industrial production has fallen 16% since the secular peak in '00 in per capita terms, and by nearly 25% in real per capita terms. Since '85, real per capita terms, US industrial production is down nearly one-third!!!
To compensate for the loss of oil production and value-add living wage employment in the goods-producing sector, we have had to increasingly import oil, and we grew debt and gov't spending at 3-4 times population and labor force growth, leaving the US with a total debt/GDP at the highest in history at more than 350%.
Were the US to be forced to adapt to a permanent oil depletion regime, as now seems inevitable, debt/asset values will have to fall 80-85% per capita in the next 10-20 years.
Total gov't spending and GDP will have to be cut in half per capita.
We will be required to double and triple up as individuals and households to reduce oil and oil-related consumption and production.
We are talking the end of the mass-consumer economy and the Oil Age civilization as we know it. We need a mass-conservation and steady-state economy. If we don't do it, Nature will impose it on us, like it or not.
Posted by: Nemesis at February 21, 2011 03:10 PM
Bob_in_MA: What I don't think you and many other public employees seem to realize is how different the retirement benefits are from the average worker in the private sector.
Sounds like you need a union.
You know, there is an obvious alternative to your plan of dragging everyone down and that is to lift everyone up.
Posted by: Joseph at February 21, 2011 03:38 PM
tj: With collective bargaining 5000+ state workers will lose their jobs. Without collective bargaining those jobs are saved.
Perhaps you could enlighten us with the logic of your statement. Arithmetic would be nice.
The unions have already agreed to all of the budgetary terms including reductions in pensions and higher contributions to health insurance.
Posted by: Joseph at February 21, 2011 03:43 PM
You take the same condescending tone that Menzie has in these posts. It certainly isn't my plan, and trying to belittle me certainly doesn't alter the reality.
You all, rather simplistically, want to paint this as good guy vs. bad guy. It's not a question of what you or I would think is ideal, or even just.
It's a question of realistic expectations. And for public employees to think they deserve benefits the people paying the price don't themselves enjoy is naive.
Frankly, I think it will advance the liberal agenda, for things like single-payer healthcare, when fewer people are insulated from the harshness of the current reality the majority face. But that's probably a little too nuanced for you.
Posted by: Bob_in_MA at February 21, 2011 04:28 PM
Bob_in_MA: To quote: "What I don't think you and many other public employees seem to realize is how different the retirement benefits are from the average worker in the private sector." Let me ask, who exactly is being condescending. I have known for years what a DC versus DB plan is. While working in the US government, I attended various in-depth discussions of PBGC, and unfunded liabilities in general. I also know that the unfunded liabilities argument is not particularly resonant in the Wisconsin case. I don't know how it plays out in Massachusetts.
Posted by: Menzie Chinn at February 21, 2011 04:38 PM
If you are aware, why do you keep comparing the public system to the one covered by PBGC, when 85+% of private sector employees aren't covered by those plans? A 401k is usually underfunded, but for that worker it's his problem and his alone.
The figures you used weren't restricted to Wisconsin, but if you have those figures, and you are correct that there is no underfunding of municipal and state employees in Wisconsin, then I would be willing to be real money the graphs that include benefit payments would look pretty different.
Posted by: Bob_in_MA at February 21, 2011 05:01 PM
Bob_in_MA, I wasn't being condescending. I was offering a serious alternative. Union wages and benefits raise the bar for all workers and benefit everyone. How does dragging someone else down improve your working conditions?
There is an old story of the poor peasant who had nothing of value except a single cow. One day the cow was struck by lightning and the man fell to his knees crying in despair. An angel appeared to him and asked him what he could do to make things better. The peasant thought for a while and said "Kill my neighbor's cow."
This seems to be your position. A better alternative would be to improve the wages and benefits of private sector workers through unions.
Posted by: Joseph at February 21, 2011 05:02 PM
Maybe Wisconsin doesn't want to bargain with a union that seeks nearly a million dollars from taxpayers to fund viagra for union members. Obviously, the rank and file would rather that the viagra money be spent on salary and pension.
I don't think anyone is naive here. Public employee union leaders have taken advantage of taxpayers which has opened the door for conservatives to reduce union power. Pretty simple.
By the way, if you look at any video of the demonstrations, I see mostly white people and I see some extremely offensive signs. Why are there no 'mainstream' media reports citing the overwhelmingly white crowds and the hate signs like they did with the tea party? Media bias? Naw, couldn't be.
Posted by: tj at February 21, 2011 05:58 PM
Teejee- I thought I set you straight last time, but here you go again spouting your clueless out-of-state takes.
There will be no layoffs if the bill does not go through because 1. The state unions have already said they'd take the added pension and health insurance contributions for their members, and if Walker had a brain, he'd take them. 2. There have already been scores of retirements in state service, as anyone familiar with a Wisconsin state agency knows.
As mentioned before, this is not a bill to do anything to help Wisconsin fiscally or economically. It is a power grab and a union bust, and anyone that says otherwise should be disqualified from seriously discussing the matter further.
Sincerely, an actual Madison, Wisconsin resident.
Posted by: Jake at February 21, 2011 07:07 PM
tj, having been to the capitol repeatedly during all this I can assure you there are many people of many races there. I have seen hundreds of blacks, asians, and latinos at these protests. They are surely in the minority among protestors, but that is because Southern Wisconsin is overwhelmingly white to begin with. Unlike tea party rallies, which often take place in southern states where a third of the population is black yet only boasts one or two token representatives of the black community, the rallies at the capitol have, if anything, over-represented ethnic minorities relative to their proportion of the local population. I'm not sure where you found the videos you're referring to, but they are surely no substitute for actually being here and taking a panoramic view of what's going on.
Posted by: Addison at February 21, 2011 09:46 PM
"We in Latvia went through public and private austerity cycle"
I notice the 'We" in your statement. That's an important point that appears lost on the Wisconsin republicans.
Posted by: wally at February 22, 2011 05:58 AM
In Latvia it was easy as there is little legal protection in terms of wages. They can go up, can go down, there is no clause saying they can not. There are no unions, neither private worker, nor public. So everything happened more or less simultaneously, with public workers only slightly (
In the USA, I assume, the private sector has long ago done to its employees ( e.g. by sacking them-as I understand, the unemployment mostly comes from private sector) what the republicans are now trying to do to the public sector.
So I see it as fair, delayed action. Private sector ( except Wall Street) did what situation required, no its time for public sector.
Or did the UJSA public sector already suffer job/pay cuts in 2009 and 2010?
Posted by: Ivars at February 22, 2011 08:06 AM
In Latvia, with public workers only slightly ( 1 year) behind the private workers in going into austerity cycle by salary reductions, firings, health insurance denials, perk reductions or total dismissals etc. Reality is what it is- everyone has overspent,whole state has overspent, most of citizens are over leveraged, as is state everyone has to bear the cost of hangover.
What we have done, with a relatively small delay between private and public sector workers.
Posted by: Ivars at February 22, 2011 10:39 AM
I may be "behind the curve," but you are completely out of touch with reality. Where was my old high school friend Jim Doyle spouting anything about deficits on the order of $1.5 billion to $2 billion in WI? I just googled "Wisconsin budget deficit" and got to the official Legislative Audit Bureau numbers. For 2011 they are looking at a deficit of $117.2 million, of which $55.2 million is due to Walker's tax cuts.
Uh, Walker did not run on a platform of ending collective bargaining for state workers. He ran on cutting deficits, although his first move was to increase whem with his tax cuts for businesses. He pulled a bait and switch, although all kinds of national commentators, including even George Will, who usually avoids outright lying, still claiming that this is all about the budget and not cracking the unions. As it is, current polls show Walker now favored by 43% to 53% against in WI, with the unions getting favorables over 50% and the protesters and state employees coming in at over 60% support.
You also are sadly out of touch with reality.
Posted by: Barkley Rosser at February 22, 2011 12:46 PM
Most private sector workers do not have the benefit of working for an employer with enough market power that would allow a union to extract rent. In fact, many may resent their inability to get into such a position. So it may be hard to find sympathy for unions among the voters.
Posted by: don at February 23, 2011 10:23 AM