The Wealthy Public-Sector Worker: A Myth Debunked

by: Paul Krugman, Krugman & Co.

The Wealthy Public-Sector Worker: A Myth Debunked
A firefighter tries to cut a hole in the roof of a burning house on Roseville Avenue in Newark, New Jersey. (Photo: Richard Perry/The New York Times)

Whenever the subject of state and local governments' fiscal plight comes up here in the United States, conservatives engage in spittle-flecked denunciations of unions and their crazy pay packages.

Jonathan Cohn tells us in an online piece for The New Republic, published in August: "Conservatives say that excessive public employee pensions exemplify the greed of unions (which sought these generous benefits for public employees) and inefficiency of government (which agreed to pay them). If local and state governments are struggling financially, these conservatives say, they should figure out some way to reduce or revoke those promised benefits, rather than come to Washington and beg for help from the taxpayers."

So, how much truth is there to the theory that massive pension liabilities and bloated benefits for public workers are increasing our financial woes? According to an analysis by John Schmitt at the Center of Economic and Policy Research, state and local employees are paid more, on average, than private-sector workers - about 13 percent more. But Mr. Schmitt's data also shows that this is actually a false comparison: state and local workers are somewhat older than private-sector workers, and they are actually much better educated (about 23.5 percent have advanced college degrees, as opposed to 8.9 percent in the private sector). About half of all state and local workers are teachers and academic administrators - which means that they're college-educated, at minimum.

Think about it: How many ambitious young people say, "My goal in life is to become a high school teacher - that would put me on easy street"?

It is true that in this country, police and firefighters get pretty generous pay packages, but they also pull people from burning buildings.

State and Local Spending, Wages and RetirementIf you still believe, despite this evidence, that public workers are paid more than they should be, how big an issue is this, really, for state and municipal budgets?

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I looked at finance data from the U.S. Census and got the composition of nonfederal government spending shown in the graphic on this page. You'll see two things. First, wages and retirement benefits don't take up an unreasonably large piece of the pie. Second, subtracting a few percentage points either in pay or retirement benefits would not actually make a big difference.

In the end, this is a phony issue.

---------------------------------------------

BACKSTORY: Dwindling Benefits

On Aug. 31, a judge in San Francisco cleared the way for an initiative that would save the city about $170 million - which, if passed by voters, would require city workers to pay more into their pensions and for health care. The Associated Press reported that the union representing the workers had sued to prevent this issue from being included on the November ballot, citing employees' contractual rights.

Such legal challenges have given American conservatives some leverage in recent economic debates. They argue that unions have exacted overly generous entitlement packages for public-sector workers from weak local governments, and that the onus lies with these retirees to reduce their financial expectations - just as those working in the private sector have been forced to do.

The Pew Center on the States has released a study showing that by the end of 2008, state governments faced a $1 trillion shortfall in payouts. Some pension agreements guarantee these payouts, and in most states taxes have filled the gap.

In an effort to address this problem, Colorado passed a law this year reducing a guaranteed annual cost-of-living increase for state retirees. A group of pensioners affected by the change filed a lawsuit in hopes of reversing the legislation, maintaining that they should not be penalized for the bad decisions of the state's pension fund managers.

Supporters point out that such plans were offered as incentives for workers' public service, sometimes in place of Social Security benefits.

Copyright 2010 The New York Times.

Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007).

All republished content that appears on Truthout has been obtained by permission or license.





     

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Of course it's a phony

Of course it's a phony issue, but nearly all the issues being raised by conservatives are phony issues, calibrated to stampede poorly-educated voters, who don't go online to check out issues, and may not know how to read a pie-chart. This strategy seems to work in the US, and maybe elsewhere.

Throwing facts at such issues is all that analytical types, like myself and Krugman, know how to do. But mere fact are not highly persuasive in the US of today.



noted. but let's consider,

noted. but let's consider, for example, the firefighters and police packages, with retirement at 20 years in many cases. There are far too many of local cops and firemen, as each municipality is a fiefdom with lots of patronage. Why does a small town with a low crime rate need 50 cops and a SWAT team? And why do we need all those firmen? They don't actually "pull people out of burning buildings" very often. For for most part they sit on their duffs day in and day out.



It's not the averages that

It's not the averages that get the Knservative Knickers twisted ... It's the outrageous specific examples ... The CA Con Camp Lieutenant making over $150K annually and the non-officer prison guards making over $150K annually ... Sure! They are the exceptions ... But that's the equivalent of 24 hours per day 365 days a year at an average hourly pay of over $17 bucks an hour. If you think that passes the smell test, I've got some black & white striped cats to sell you.



I love the idiots like

I love the idiots like anonymous who stated "noted" and then proceeded to say firemen sit on their duffs all day and they don't pull people out of burning buildings enough to earn their pay. What the hell do you want? Untrained firemen who sit at home making $5 an hour and then bring buckets to your house when it's burning down? These guys train constantly and risk their lives to save others. But they don't do it enough for you? If the job is so great why don't you do it moron?



I don't get it. Clinton and

I don't get it. Clinton and Gore gutted the public payroll, but Republicans want more blood. It is as if they hate government and those who work for government.
Let's instead design government, from local to federal, to be lean, dynamic, and effective.
And by the way, anyone can be wealthy. Anyone. Get out of the lemming lines (home ownership, stock-based retirement funds) and pay attention. Work, save, and practice focused investing. Told my friends to buy Apple in 2003 and one did. Guess what happened?



It's class war, pure and

It's class war, pure and simple, and we working stiffs are getting our butts handed to us on a daily basis. The Republicans and their conservative Billionaire Wall Street masters need to be put back in their places.

Teddy Roosevelt considered the wealthy investor class as being "malefactors of great wealth" and "the men who seek gain, not by genuine work...but by gambling." It's not that Roosevelt was against wealth, but against those industrialists and Wall Street speculators whom he considered cheats.

"I know the banker, the merchant, and the railroad king," he famously said," ...and they also need education and sound chastisement."



I'd like to be a firemen,

I'd like to be a firemen, but for every opening hundreds of people apply. Great pay, benefits and you get paid to sleep during your 48 hour shift, then five days off. Firemen should do 8 hour shifts like everyone else, they would be more ready and alert too. I'd also give them a few other admin tasks during their spare time.

Compare the most dangerous jobs in the USA, and policemen and firemen don't even make the top 20.

Also, those pay comparison studies do take into account age and education, so this article is a lie.



The Republicans won't be

The Republicans won't be happy until we pay them to work. How we pay? What do your children look like? Yes, even your sons! Take a good look, because when the GOP is done with them, they will be completely used up - if not dead.



Just for the hell of it,

Just for the hell of it, let's concede that public pensions are too high. And let's follow conservative prescriptions to cut them. How exactly will that improve the state's economy? Immediately you have thousands of retirees with reduced spendable income. That will surely reduce the amount of spending and depress the state's economy further. State pensions get spent every month. Taxes are paid on those purchases. The net result is that the state gets little bang for its buck; the money it saves in paying out benefits it loses in reduced tax collections.



To Anonymous @ 00:00 on

To Anonymous @ 00:00 on 9/10/10: You obviously don't know what firemen do, or how they spend their time while on duty. Yes, provision is made for sleeping time when on continuous 24- or 48-hour shifts; much of the non-call time is spent in continuous training, so assigning additional "administrative tasks" is/would be a non-starter.

Perhaps police officers and firemen DON'T hold the "most dangerous jobs in the USA" but those jobs are dangerous enough to warrant higher pay/benefits. And perhaps you think you'd like to be a fireman.

No matter the numbers of applicants for openings, MOST police and fire departments hire on the basis of qualifications, including written and physical test performance. So maybe you could improve your chances of getting hired by better preparation for the qualifying tests, unless, of course, you'd rather just complain about the number of applicants, or the "unfair" wages/benefits provided to those already in the two professions.

If you think the Krugman "article is a lie" then maybe part of your test prep would be to try to improve your reading and logic skills.



"I don't get it. Clinton and

"I don't get it. Clinton and Gore gutted the public payroll, but Republicans want more blood. It is as if they hate government and those who work for government.

Let's instead design government, from local to federal, to be lean, dynamic, and effective."

Fredboy's comments really struck a cord. I've worked for over twenty years in a field closely tied to construction and engineering. For the last two years I've been working for a local government agency, after being laid off and out of work for the better part of a year.

Though I have more education, more real-world experience, more skills and a stronger work ethic than the others in my department, I'm paid $17,000 less per annum than they are, and much less than I made in my old job. The benefits are about the same, actually not quite as good, as I had in my old job.

I agree that our government needs a redesign. From where I stand, it's neither dynamic, nor that effective. There's so much inertia, so much "but that's the way we've always done it," and though there are many talented, hard-working and creative people, they can't make up for the wool gatherers, the clock watchers, and worse.

I work very hard and put in far more hours than I'm compensated for, and though I love what I do and I'm good at it, it's extremely disheartening being treated like a criminal by the local politicians who run the show, and by the citizens, who see the government as the enemy.

Morale is very,very low among my peers - those who really care about their work and about public service. There have been no merit raises, nor cost of living increases in three years, but there are no other jobs out there. I love my work, but hate my job. I don't expect the situation to improve anytime soon, and probably not before I retire or drop dead at my desk.



The corporations have

The corporations have screwed over their employees (while rewarding their shareholders and themselves quite handsomely, thank you very much): corporations STOLEN promised pensions, gutted their health care coverage, and generally treated their workers like crap. So how do those employees (and former employees) respond? They lash out at public employees who have not yet been destroyed by the system. This is not a rational response.

Yes, folks, it is class warfare, but the corporations have cunningly enlisted the very workers they screwed over to attack their equivalents in the public sector, doing the bidding of those very corporations. Pretty clever, don't you think?

Economic elites have the rest of us exactly where they want us: scrabbling amongst ourselves for the few scraps they deign to toss to us. It is ugly, and bound to get uglier, but the elites had better think twice if they think it won't bite THEM in the butts ultimately. Walled compounds may seem safe, but that is only an illusion.

Everyone does better when everyone does better, elites included.

- a college-educated (biology) public employee who has worked hard for a lifetime, and who EARNED every penny of (and contributed 7% of total salary to) the (projected) $3ok pension that's about to begin...



As a law enforcement officer

As a law enforcement officer I can say I have seen many fire fighters pull people (along with dogs and cats) out of burning buildings. But even the ones who never carry someone out of a building, regularly walk into burning buildings to stop them from burning. Anyone who thinks they don't do a dangerous job should try watching them work for a few days.

As usual mr. krugman points out the fault in the lies coming out of the right. Also as usual not enough people will listen to him.



I'm a teacher. It took years

I'm a teacher. It took years of study and hard work to meet the qualifications required for a teaching license. It was so hard. And expensive.
I enjoy what I think is a reasonable salary and hope for a livable pension, but I didn't get into teaching for the money. Teaching is not the first career choice for those who want to make money. It might appeal to those who seek stability and some freedom from daily grind.
Believe me when I say I work hard for the money, and I know what hard work is.
What do these republicans want that complain about people with pension plans and unions? What is wrong with having a social network in place to pick up the pieces when we loose our productive selves? Are we all to live on cans of catfood in our twilight years?
If you dismantle social security what will replace it; gas chambers? These people that are so bitterly anti-union scare the hell out of me. Unions are a guide for the working man. They are not the cause of the financial straits we find ourselves in. We are here due to shortsighted greed and corporate governance. We are run by corporations.
The Tea Party has one thing right, we need to take back the government from corporations and return it to the interests of the citizens. This can only be done by voting. At least that is the first and most important step. Turning out in largess and voting for sane and decent people that have moral integrity and intelligence.
Let's Vote!



Apparently, public-worker

Apparently, public-worker pensions suck our too much money that can be used to fix our local and state broken system such as roads, public transit instead of they increase all fees parking fees, transit fares, licenses fees and so on. When there are budget crisis, polices and firemen always been threaten to cut or to lay off and public safety are dangerous, however, they are always to receive the highest pensions to compare other public workers and private workers, SF ex-chief received 200k pensions for the life time to work city over 30 years. Do they deserve the huge pension? They do not generate any productivity after retiring. They just collect lucky money for the long living life give them gold opportunities... Thank your hard working to protect public safety by using your bodies that are worth more than ordinary people!



It amazes me the volume of

It amazes me the volume of working class people that will treat unions as an evil. If not for unions and workers that collectively stood up for what was decent and right, we(including our underage children) would be standing around outside of factories hoping to get picked by a boss to work that day, for 12 to 16 hours without overtime compensation, no breaks, and for the bare minimum of wages. There would be no regard for health-care or well-being of the employee as the employee would be of a temporary nature. Read your history people, and notice how things are going. There is Strength in Union.



Facts are never persuasive

Facts are never persuasive to wingnuts. Only soundbites. They typically haven't the intelligence to process or analyze a fact and the repugs count on that in their propaganda. It's only designed to get those scumbags elected so they can go ahead ad work against the people they convinced to elect them.



It seem that most of the

It seem that most of the commentor's Have begun to realize that this is not a normal cyclical recession. Unlike any other recession the consumers are not there to bail the economy out. Consumers are becoming very fiscally conservative. The disparity in wages between the classes has been greater than at any time in the history of this country. The distribution of wealth is and has been going to the upper 2% of this countries constituents. Those who have power are richer than they ever have been. Much of their money is invested in debt. Bernanke and the Federal Reserve are doing nothing or virtually nothing. The deflation is stagnating the econmy. The fed's should be raising inflation to reduce real interest rates and debt burdens. The deficit is increasing because the government is trying to offset the lack of private spending. Bernanke could buy and hold the government debt therby making the interest payments on the debt go back to the treasury leaving no debt burden on the government. Instead we are borrowing and the interest on the debt is itself becoming a burden. Wall Street is using the Republican party to advocate, through false arguments, that the deficit is the problem so let's cut Social Security and in truth any idiot could see the fallacy in this approach. What is going on is a class war in true Marxian proportions.



As I write, firemen in

As I write, firemen in nearby San Bruno, California, are struggling to control a huge fire--apparently caused by an explosion of gas in an ill-maintained Pacific Gas and Electric pipe line. Over fifty homes have so far been consumed. The weather in the SF Bay Area has been pretty dry this summer. Many towns and cities are experiencing cutbacks in policemen and firemen. Governor Schwarzenegger, who campaigned against the "special interests"--that is to say, the nurses, the firemen, the police (and "WON!") has been faithful to his promises to companies like PG&E not to let their taxes be raised. Instead, he runs the state on giant loans that will be paid off by taxes on our children and our grandchildren. I am beginning to feel like anyone who buys a 2011 appointment book and begins to enter engagements into it is a raging optimist.



It may be a phony issue,

It may be a phony issue, except that certain "public servants," like Boehner and his VOTE NOTHING cronies make a lot of money, not just from their slaries but from the benes they get and the payoffs they exact from their "constituents." If there wasn't a lot in it for them, why would they fight so hard to keep it from everyone else. Away with them!!!



re: unions i have been in a

re: unions
i have been in a union (baker's union) and
utterly support the right to form a union,
BUT, i always cringe when i hear politicians being supporter by this or that union.
when i was in the baker's union, i was appalled at the self-serving attitude of the union. even reasonable requests by management were dismissed out of hand.
many of my friends have lost their jobs because the unreasonable demands by the union (machinists) caused their local shops to pack up and move to the west or Mexico.
in Boston, we are being held hostage by the police and firefighter's union with unreasonable demands on the taxpayer. etc etc.



One thing that Krugman

One thing that Krugman failed to point out, but which he alluded to, is not only that public employeesare older and better educated, in the private sector there are a lot of minimum wage jobs and part time workers who drag down the average for the private sector. How many wait people and bus boys work for government? How many part time checkers ala Wal Mart? This is a good example of how people can lie with gross statistics. As to the criticisms of fire ;fighters, let's look at an analogy. Modern airline pilots only really fly a plane at take off and landing and probably 90+% of the time those are quite routine. So, let's push for reducing the pay, benefits, and requirements for pilots since most of the time they don't do anything except sit there and shoot the breeze. That way the airlines could reduce the cost of tickets. How many conservatives would volunteer to fly on those planes? You are paying for expertise in emergencies. And firefighters also spend a lot of time answering medical calls. Typical ignorant b.s. by those criticizing.



The conservatives want to

The conservatives want to cut public employee salaries. but the real question - where have all the good jobs gone that made this happen in 2008 or so. because until then, this was not true.



Let's see, since 2000

Let's see, since 2000 military personnel got a 84% raise, fed employees 32% while civilian wages rose just 9%.

http://www.marinecorpstimes.com/news/2010/09/gannett-marine-military-communities-among-most-affluent-090510w

Maybe we should freeze govt salaries so we can afford health care for taxpayers as well as their civil "servants".



What we have is really a

What we have is really a failure of our education system. How can people with even a high school education be so dumb? A lot of the reason public wages etc. are higher than private is the last 30 years the "conservatives" have connived with monopolistic corporations to drive down wages, destroy unions, and generally misinform the public as to the economic realities of what they were doing. Cut wages and pensions by 10% and you save about 3% of the total budget. Big whoop. The stage is set to do the same thing as Reagan's trickle down did back then. Things get worse, the cure is more of the same medicine. How long before the patient either dies or wises up?? I don't know.



Hate and anger demand

Hate and anger demand Action. As long as One is Happy, or Content, there is no demand for Action and we'll Go With The Flow.
So who is happy and content? People with union jobs or decent salaries (at least they should be...) and some sort of pension plan. Sort of like the Middle Class that once was...
The middle is worth fighting for.
The Middle Class is clearly under attack, for whatever reasons cannibalizing itself. AstroTurf is delicious! Get used to eating it cause that is what's on the menu.
The best way to protect your interests is to VOTE!
Keep in mind that your opponents recognize that it starts with at the local level!
We need to organize again and take control of the situation as it is already out of hand.
Vote, Vote and Vote



I have yet to figure out why

I have yet to figure out why WHO spends the money makes any difference. If you cut a government worker's wages, then is that helping or hurting the economy (assuming spending is the key economic driver)? If you increase a worker's contribution to his/her pension, then isn't there going to be less spent on other things, like consumer goods?
We already experimented with lower taxes (the TWO Bush tax cuts) and what happened: the gap between the rich and the rest of us got wider and middle-class real income actually declined over the past decade, not even counting the recession.



There actually are people

There actually are people who are always eager to post comments on blogs and news articles about the "overpaid" teachers and how they aren't any good because of the test scores of the kidlets. I'm usually just as eager to post a reply that I think it is the defective kidlets nowadays that are hard to teach. They come to school lacking in basic social skills and seem perplexed when instructions are not in the form of questions. -M.G.



I live in a small town with

I live in a small town with a volunteer fire department. You all could try that solution in NYC or LA if you think the firemen could get from their day (or night) jobs to the fire in a time to do any good, given the streets crowded with slow-moving vehicles. There are lots of solutions to our problems. Trouble is, if you stop and really THINK about how they would work in reality you find that the majority don't.



Not too long ago, Matt, I

Not too long ago, Matt, I got an e-mail from an irate parent who wanted me to explain how it was that here son felt criticized by me when I remarked negatively on her son's performance on a quiz in college. The implication was that I had no right to criticize her son. I did not explain anything to her, and the boy withdrew from the class. I have to wonder whether children so raised are going to be able to make it in a world in which, already, China is supporting us in our thoughtless and undisciplined lifestyle. Soon, our young may be good for nothing except invading other countries--and of course, not very good at that.



Well, wright gregson, if you

Well, wright gregson, if you get your tax-cuttin' ways and your dumping on the rank-&-file ways, I just hope someone shows up if your bakery has a fire. I can't see lazy guys in suits throwing buckets of water on it that will do any good . . . I can't see lazy guys in suits showing up (except the Insurance guys, of course).



I believe that there are

I believe that there are forces in the US who want to do away with all health care and all pension / retirement benefits. These people do not care for you or your family. They are looking to benefit themselves.

The Middle class is becoming a lost group that will go the way of freedoms for the average worker. That is why the workers must stick together and demand a part of the benefit package. Many of the young people will get sick as they get older and will not have the same benefits as the older workers.

People want you to believe that you can stand up against the companies as an individual. How many people would have been let go without the union or a group of workers behind them? Many of the conservatives try to split people so they can deal on an individual basis not as a group.

The legislators in many of the states crying over the workers benefits have their benefits far exceeding the workers. How many of the legislators have changed or removed their benefits to save money? I wish people would read about the wasteful money the legislators appropriate every year. The people, the children and the future is what we should be looking towards. This is the battle not the removal of future assistance.



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