Sunday, January 24, 2010

For the First Time, More Union Workers Work in Government versus Private Sector

"Those darn union workers! They are killing private industry - industry after industry!"

Another batch of dogma down the tubes....

It is clear now with government wages substantially outpacing the private sector, along with (in general) far better benefit packages, the United States is on one of two paths, in reaction to globalization / loss of jobs / deflating of wages in the private sector.  Either (a) a resurgence of the union shall occur as "labor" lashes back against "capital", or (b) a serious backlash will happen against those who remain in unions - which according to this New York Times article, for the first time, is dominated not by the those in the private sector, but those in the public.  Keep in mind this is absolute number of people - we are not even talking % terms in which the discrepency is huge.  (see below for those numbers)

I am not sure which path we go down - with the worship of capital in this country, even by those who are being hammered relentlessly - my original thought that the U.S. would look more "Europanized" as labor scrambles to protect itself might not happen.  I will be very interested to watch how neighbor reacts to neighbor throughout the country, as one (in the private) sees the other (in the public) retiring early, with full benefits while the other is working as Home Depot as a greeter well into their 70s to make ends meet. It's already happening as we speak, but I don't think the masses "get it" yet.

The next few bailouts of state workers....err, stimulus... err, "job creation plans" should be an interesting tell on how the private sector worker is going to take this.  As will the tax increases that will be shrouded under the tired line of "we need to keep policemen and firemen on the job" (which is a great cover for almost every agent of government to receive the same protection)  Can you hear the VAT in your future?  Put your ear to the ground and listen closely... the first tremors are approaching [Dec 11, 2009: NYT - Many See the VAT Option as Cure for Deficits]  As we continue down this path of global wage arbitrage (private sector), if current trends persist... you ain't seen nothing yet in terms of wage/benefit discrepency.

I had promised to write about the new study on "wage discrepancy" between public v private in December but never got around to doing a blog entry... but if you did not hear the news, please see this USA Today story:  some enjoyable snippets, 1 out of every 5 government employee now makes at least $100K -- before benefits or OT.
  • The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data.
  • Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession's first 18 months — and that's before overtime pay and bonuses are counted.
  • The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.
  • When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.
In summary:
  • The growth in six-figure salaries has pushed the average federal worker's pay to $71,206, compared with $40,331 in the private sector.
Again this is just salary - we are not even touching on the benefits.  Just keep that in mind as the next plea for taxpayer dollars is shouted out as a necessity (as backdoor bailouts for states)....which should arrive at this week's state of the union.  Why not a stimulus for small private business instead? 

On the the New York Times story on unions:

  • For the first time in American history, a majority of union members are government workers rather than private-sector employees, theBureau of Labor Statistics announced on Friday.
  • In its annual report on union membership, the bureau undercut the longstanding notion that union members are overwhelmingly blue-collar factory workers. It found that membership fell so fast in the private sector in 2009 that the 7.9 million unionized public-sector workers easily outnumbered those in the private sector, where labor’s ranks shrank to 7.4 million, from 8.2 million in 2008.
  • "There has been steady growth among union members in the public sector, but I’m a little bit shocked to see that the lines have actually crossed,” said Randel K. Johnson, senior vice president for labor at the United States Chamber of Commerce.  (why be shocked?  in private you threaten to take work overseas, in private you gladly add more jobs ... after all it's just a few more mills... or a new metro park tax)
  • According to the labor bureau, 7.2 percent of private-sector workers were union members last year, down from 7.6 percent the previous year. That, labor historians said, was the lowest percentage of private-sector workers in unions since 1900.
  • Among government workers, union membership grew to 37.4 percent last year, from 36.8 percent in 2008.
Let us stop right there to let that sink in.  1 in 13 private sector workers is in a union.  1 in 3 public sector workers are.  I just want the people who listen to the fire tongue ramblings of a certain political party who speak up of the "evils of unions" on private industry ("they cost jobs") to realize how two faced their words are.   Should one not throw rocks at glass houses?

  • The overall unionization rate edged lower, to 12.3 percent last year from 12.4 percent in 2008.
  • Notwithstanding the recession, government employment grew last year, inching up 16,000, to 22,516,000, according to the bureau.  (recession? what recession?)
  • “At the same time the country is being squeezed, public-sector unions are a rising political force in the Democratic Party,” he said. “They depend on extra money for the public sector, and that puts the Democrats in a difficult position. In four big states — New York, New Jersey, Illinois and California — the public-sector unions have largely been untouched by the economic downturn. In those states, you have an impeding clash between the public-sector unions and the public at large.”
  • Assessing the drop in private-sector unionization, Paula B. Voos, a labor relations professor at Rutgers, said, “It’s a sad commentary on the ability of private-sector workers to unionize.”
The full BLS study is here - with some interesting snippets.  You might ask for example why Texas has such relatively low taxes versus other large states?  Please avoid your eyes...

Texas (the second largest state in terms of the number of wage and salary workers) had one-fourth as many union members as New York (the third largest), despite having 1.9 million more wage and salary employees.

[Jan 5, 2010: - US Public Pensions Face $2 Trillion Deficit]
[Dec 4, 2009: Public Workers Continue to Live the Good Life in New Jersey]
[May 8, 2008: It Pays to be a Firefighter in Vallejo]
[May 7, 2008: Vallejo, California Votes for Bankruptcy]
[Dec 16, 2007: California in a State of Fiscal Emergency - Coming to a Theater Near You]

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