If You Ask the Wrong Questions, You Get the Wrong Answers

Josh Marshall published a rant from a reader today explaining, I guess, why some people are anti-union. A snippet:

On my Son’s little league team, one of his teammates father was a teacher in the LAUSD. He told me that he wouldn’t know what to do if he had to work in the summertime. Really? I’ve only been doing it for a quarter century. But I do see his point, working has put a bit of a crimp in my life. Especially in the summertime. Actually, in reality, work is my life.

In addition to this, the LAUSD fires like 1 teacher a year, and it usually cost big money and lengthy litigation to get rid of absolute pond scum. Of course, once you don’t have accountability, you get the obligatory sex scandal, which has rocked the LAUSD this year, with multiple instances of teachers engaged in inappropriate behavior with students, being moved around the district.

So I think there is a preception that the pay for teachers isn’t great, but not terrible either. But great benefits, a chance for a decent to good retirement, and it seems a bit like, if not a part time job, certainly not a full time job in any sense that I would recognize it. And pretty much limited accountability.

….

Additionally, are we really paying a market wage and benefits? Whenever they hire Firemen or Police Officers it seems like there are 50 applicants for each opening. When the job attracts that ratio of qualified applicants per job, I think that says something about what we are paying versus what we should or could be paying.

That is how non-union people get paid. Based on how much value you offer relative to others. Wages are usually governed by the laws of supply and demand for non-union workers.

Look, I don’t want to argue that unions are a panacea or that they are all good or whatever. There are clearly pros and cons. There is, indeed, a lot of rent seeking and nepotism and so on. But here is the issue. When you look at the major challenges in public policy, is the major problem, really, that working class, union members are doing too well? Is this really what ails the economy?

Of course not.

The major trend that define our current economic woes is the stagnation of median wages for the past 30 years. A secondary — though maybe related — trend is increased level of indebtedness. The demographic that makes up union works is barely treading water, even as national income and productivity increase. So, yeah, while we can debate, in the abstract whether or not union members are overpaid, or their benefits are too generous, it is really a pretty minor issue, and one that is at odds with macro trends. If union members are getting such a great deal, then why have median wages — even of union members — stagnated for 30 years?

The major trend that defines our fiscal woes is the collapse of tax revenue over the past decade in the face of multiple, successive, deficit-funded tax cuts combined with the longest and deepest period of depressed economic performance since the 1930s. There has, yes, been an increase in the structural level of government spending, exclusively due to higher spending on health care. The federal workforce has declined consistently over the past 30 years. And even at the state and local level, government employment has been declining as a percentage of the population. Our deficits are not, in short, due to anything public sector workers are receiving. Again, we can debate, in the abstract, whether government employee benefits are fair or whatever. But regardless, they aren’t the problem in any macro sense.

Union are not the cause of our current problems, nor is union-busting an answer for them. Now, was this always true? I don’t know. Maybe unions were more of a problem 30 years ago, before Reagan. Yes, at that time, a lot of union contracts featured automatic CPI-linked wage increases, that served to spiral inflation. And yes, inflation was a major public policy challenge even if it wasn’t the end of the world either.

But right now, the problem isn’t inflation, and it isn’t out of control spending. It is collapsing tax revenues and inequality that is affecting aggregate demand.

Debating union in the abstract is pointless. The question is, are unions the cause of our problems today? And obviously, they aren’t.

 

 

3 comments to If You Ask the Wrong Questions, You Get the Wrong Answers

  • Personally, I make a pretty big distinction between public and private sector unions. To very briefly summarize my opinion, I think private sector unions – or at least the threat of unions – is a necessary check-and-balance on private employers. Public sector unions, by contrast, are not intended to check the excesses of employers (in this case the people of the US), but to extract greater rents from government.

    There has, yes, been an increase in the structural level of government spending, exclusively due to higher spending on health care. The federal workforce has declined consistently over the past 30 years. And even at the state and local level, government employment has been declining as a percentage of the population. Our deficits are not, in short, due to anything public sector workers are receiving.

    Parsing that a bit, I wonder if you account for outsourcing of government services. While it’s true that direct government employment has decreased, I wonder about employment in government services generally which would include contractors. I don’t have any data on that except for some very specific areas of defense contracting, so won’t speculate except to say that contracting has become a much bigger piece of the pie over that 30 years at most levels of government. It seems to me that any fair accounting of government employment should include private contractors who provide government services.

    Secondly, I agree about health care spending. But one should also mention that health care spending accounts for a large portion of wage stagnation – total compensation increased, but all of it went to ever-greater health care costs.

    Lastly, I would dispute the quoted statement with regard to state and local government since the bulk of government spending at the state and local level goes to personnel costs. I don’t think it’s possible to talk about reducing government expenditures at the state and local level without running headlong into public employee compensation and, by extension, public sector unions.

  • PatrickT

    (1) Declining federal revenue? COLLAPSING revenue? Federal revenue per capita in inflation adjusted dollars has more than doubled since the 1950s. It has gone up in every decade. Federal spending has gone up faster. And that is why we have recurring deficits and massive debt.

    (2) It’s misleading to report that federal workers as a percentage of all workers hasn’t gone up – - the government simply contracts with private employers, who are required to follow the government’s employment policies. You can’t really call CACI or Halliburton or Lockheed’s defense division “the private sector!”

    (3) “Stagnating wages” are a myth.

    (a) Total compensation has not stagnated. Simply, a greater percentage of total compensation comes in the form of benefits – primarily, employer-paid premiums for employer-sponsored health insurance. Health insurance premiums have increased because healthcare costs have increased – and about half the increase since 1980 results from bad habits – - obesity, smoking, drug use, alcoholism, etc…. But because of “community rating,” group health plans are not allowed to perform medical underwriting, the way life insurers are (which is why there is no “affordability crisis” with life insurance). So yes, your paycheck is not growing as fast as it could or should – but the culprits aren’t the CEOs or the Chinese, they’re the people going outside for smoking breaks, and the fat guy down the hall.

    (b) It’s not a closed system. Since the late 1970s, immigration patterns have changed dramatically. We now pull in poorer, less-skilled, workers from South and Central America and fewer Europeans, as a percentage of all immigrants. They do better than they did in their former countries (otherwise they’d go back), but they bring down our averages and medians. If you were going to judge a teacher based on his class’ scores on a test given in June, would you include the test scores of kids who joined the class in May from a bad school district? If those kids make up 5% of the students, and you did include them, you can see how that would skew the median. Don’t do that with income stats!

  • PatrickT

    “Inequality” is also a myth. There’s plenty of absolute upward income mobility. The reason the guy at 80th percentile in the US doesn’t catch the guy at 20th in the US, while the guy at 80th percentile in Sweden catches the guy at 20th in Sweden, is that in absolute terms the guy at 80th percentile in Sweden has a much smaller leap to make – because he starts out a lot closer and because the guy at 20th is just as likely to move down in the absolute as to move up. Every time there’s policy-enforced “equality” it means pushing people back toward the lowest-common-denominator. How does that help anyone?

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