Wednesday, December 17, 2008
Public Employees & the Recession
New Yorkers, I have gradually learned, refer to the Recession of 1973-75 in hushed tones of fear as the time that NYC nearly became Cleveland. Will this recession be just as bad? Since last spring, the Independent Budget Office has been predicting dire tax losses from rising unemployment, falling property values, and a frozen credit market. The fiscal effects are masked by the limited recession-elasticity of the City's taxes. (Distress sales, for instance, temporarily boost revenue from the transaction tax). But everyone's bracing for disaster over the next two years.
All of which leads one to ask whether the public employees -- especially, the uniformed services -- will be re-negotiating their extraordinarily generous deals. In particular, Bloomberg and Patterson have been trying to put the "20 and out" benefit (retirement at full pension after 20 years) on the table. Back in the bad old days of 1973-1975, Felix Rohatyn was able to induce Victor Gotbaum, head of District Council 37 to accept wage and benefit concessions to save the City. Will we see a repeat of history a quarter-century later?
Don't count on it. Bloomberg has been notoriously ineffective at reining in the public employees' power. District Council 37 and the uniformed services have won wage increases that far outstrip inflation and private-sector pay. Under the Obama Administration, they have far greater hopes than they did in the 1970s of getting the Feds to foot the bill of the City's largesse. Recent history seems to confirm the old Wellington-Winter hypothesis that public sector unions are the ultimate Olsonian group, enjoying both the insiders' power of political organization and the power of an economic cartel.
I suspend judgment on the normative question of whether public sector unions' power is a good or a bad thing. Perhaps this power should be treated as a welcome vestige of genuine working class power in an increasing inegalitarian society. As a pure matter of positive prediction, however, there is less room to debate: The wage and benefits package that the public sector has managed to extract will, if left unaltered, bankrupt the City.
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I, for one, would be interested in hearing Messrs. O'Donnel and Slater talk about some trade-offs: Would they support asing public sector workers to give back something if that meant we could lower teacher-student ratios in NYC schools? What if it allowed health clinics to service more low income clients?
(I know, I know. The answer is that magical tax revenues will appear from somewhere, without any corresponding harm to the economy. So no choices need be made...)
Posted by: dcuser | Dec 24, 2008 12:00:28 PM
As Brian suggests, you were not merely trying to pass along a couple of stories about public workers for the giggles of it, as any academic might about other academics. You were trying to make a generalized point about public employment -- with ideologically slanted anecdotes that are not data and can be honestly contradicted by others with, I would suggest, more experience with the world of public sector employment.
People do respond to incentives, but incentives aren't always purely monetary. I've seen many cops, firefighters, teachers and others who work in the public sector (many of whom do not fit the class "proletarian" model of older leftist theory) do hard and admirable work because, for example, they felt they had a calling for their job, a desire to serve the public, often at some sacrifice to themselves.
Are some public workers, professors, professional atheletes, actors, private workers of all kind, etc., lazy, incompetent, etc.? Sure. But there are lots of reasons for good and bad performance, and in my experience, union-negotiated pension funds aren't high up there in reasons for bad performance.
But I'm off to light the hanunkah candles. Happy holidays to all.
Posted by: Joseph Slater | Dec 22, 2008 5:42:32 PM
brian, if i "demean blue collar workers," that means that you "demean" academics every time you talk about unproductive scholars/faculties. and, fwiw, pharmacists, health inspectors, and teachers-three of my five examples--are not blue collar workers in any event. and, while my comments are anecdotal, i've read enough about the subject to have an informed about the role of muni unions in nyc's fiscal situation--though again, i don't blame the unions for getting what they can for the workers they represent, i blame the politicians for being irresponsible and incompetent, primarily by backloaded compensation through pensions so it becomes future politicians' problem, while keeping the budget in check short-term.
happy new year
Posted by: david bernstein | Dec 22, 2008 3:59:24 PM
Gee, David, if you can't bloviate in the comment section of a blog, where can you bloviate? As Professor Slater pointed out, you don't "know" anything about municipal unions and NYC govenrment, you just have a handful of anecdotes with which to demean blue-collar workers. I am sure in the anecdote game I can beat you (I've even met Al Shanker, and I can tell you all about what life was like for teachers before the union, and also about how the unions saved the city in 1975, when they should have let it go belly up, but the unions by then had been co-opted etc.), but what's the point? Have a good holiday!
Posted by: Brian | Dec 22, 2008 1:51:02 PM
joe, i didn't 'slur' anyone. people respond to incentives. i'm a professor. i obviously have nothing against professors. but that hardly means that i wouldn't point out that the tenure system as it currently exists means that there are many professors, in law and otherwise, who, shall we say, 'underwork' given their salaries and perks. and they are, almost to a person, not unionized. would you deny that regarding professors? and if not, why would you assume that municipal workers faced with similar incentives are substantially different? because they are members of the heroic working class, unlike the cosmopolitan intellectuals of the professoriate.
Posted by: david bernstein | Dec 21, 2008 4:43:49 PM
Brian, instead of bloviating about ideology from your own rather tenuous ideological perspective, why don't you post something that actually suggests some knowledge of NYC government, budgeting, and municipal unions? Oh, yeah, it's because you don't actually know anything about any of these topics. But really, why should that stop you?
Posted by: david bernstein | Dec 21, 2008 4:38:21 PM
David, here is some unsolicited advice. I know you're a hard-working guy, well-informed about evidence law, very productive. But on certain subjects you're competely nuts, and in ideologically predictable ways. I feel like I'm living in a moment in the early 1950s, when Stalinism was about to be fatally discredited. Except today's Stalinists are free market utopians, whose fantasies--about the working classes, and academics, and the future--are completely unhinged from any actual facts or evidence. The collapse of capitalism, which we are witnessing, may not be quite as dramatic as the collapse of Soviet Communism, but it will hopefully leave a certain ideological vision suitably discredited. Follow the good lead of Dick Posner, and adjust to the times!
Posted by: Brian | Dec 20, 2008 8:27:10 PM
Should I apologize for (perhaps) mis-labelling your slurs on working men and women who happen to be employed by the government?
The point, of course, is that we could match anecdotes all day, and their plurals would still not be data.
Posted by: Joseph Slater | Dec 20, 2008 6:48:51 PM
and btw, as i mentioned, the horrible way the city is run well predates municipal union power. the difference is, in the old days little was expected of you, and you got paid little in return. the former has mostly not changed, while the latter, especially in terms of pensions, has. and i could add stories that have nothing to do with unions per se, like the many no-show jobs at city hospitals doled out as patronage
Posted by: david bernstein | Dec 20, 2008 6:44:39 PM
"Color me absolutely shocked that David Bernstein purports to have 'real world' anecdotal evidence that unionized public workers are lazy."
Who said they were lazy--for example, running a second business on government time is evidence of hard work, not laziness. working like a dog your last year on the job to boost your pension is also not evidence of laziness. one sanitation i knew who worked from 6 to 9 am every day spent much of the rest of the day working hard on philanthropic endeavors.
but if your job only requires you, in practice, to work a few hours a day, and you get no added career or other benefit from working harder, it's going to be a rare individual who volunteers to work harder, and indeed, your colleagues might harm you if you work 'too hard'--eg one city pharmacist i knew when he was new on the job filled something like 5 times as many prescriptions per day as the norm--and was promptly told that he better cut it out, and that he was welcome to join the card game that commenced at 10:30
Posted by: david bernstein | Dec 20, 2008 6:38:04 PM
Color me absolutely shocked that David Bernstein purports to have "real world" anecdotal evidence that unionized public workers are lazy. That is so out of character for him. I could counter with my experience, in various cities, of truly hardworking, dedicated, and underpaid unionized teachers, cops, firefighters, etc. whom I have known both personally (as friends and family members) and as clients when I was in practice. In all sincerity, I guarantee it would all be true.
Or maybe we could realize that the debate over whether public sector workers in New York state should have the basic right to unionize and bargain collectively is over. And that public sector workers in the U.S. have fewer rights under labor laws than their private sector counterparts do in almost every way (restrictions on what they can bargain over, bars on strikes, etc.). And that public sector workers in the U.S. have fewer rights under labor laws than their public sector counterparts in pretty much every other advanced industrial democracy.
And maybe even, per Patrick's post, that trying to blame cops, firefighters, teachers, and streetsweepers for huge, multifacited economic problems facing the country in general is both inaccurate and somewhat churlish.
Posted by: Joseph Slater | Dec 20, 2008 11:57:46 AM
undoubtedly, unions can get a lot of benefits for the workers who belong to them, and that's fine. there are generally limits, though, based on the economic viability of their demands. the municipal unions of nyc benefit from political power, the lack of market competition for their services, and the fact that nyc politicians, including guiliani when he was mayor, buy them off with short-term cuts that balance the budget in exchange for long-term expensive promises that will bankrupt future gov'ts. nyc has managed for the last two decades anyway because of the revenue from wall street, which is now disappearing, and something has to give
Posted by: david bernstein | Dec 20, 2008 4:06:15 AM
None of the arguments above depend on NYC public employees being "the poster children for the oppressed workers of America," and, while your anecdotal evidence is interesting if not entertaining, it is still just that: anecdotal, and thus doesn't get us very far in either direction of the discussion.
Incidentally, when I worked as a carpenter for a local non-union contractor here in town (very few construction trades are unionized here) I heard all manner of horror stories about unionized workers in the trades: it turned out many if not most of them were more fiction than truth. But it did help convince many of my fellow workers that they were virtuous, hard-working Americans (not far from that Protestant ethic thing) who didn't need no stinkin' unions, as they could fend for themselves (self-made man ideology). It's not too funny to think of the few occasions when I broached the topic of unions (just out of curiosity to see what my fellow workers thought) how some would a bit nervously and "jokingly" ask me if I was a communist! And most of my co-workers were college graduates. Fact is, we did work hard, but had a lot less to show for it than our union counterparts (you lost a lot of money if you got sick, and few were able to save significantly for retirement). Moreover, the unions had apprenticeship programs that tended to make for consistency in quality, something that is notoriously lacking among non-union workers where quality is hit-and-miss, as one who aspires to do excellent work hopes to catch on with a contractor who just so happens to employ a master craftsperson one can learn from. I happened to work with someone who underwent his apprenticeship in England, and I suspect I learned more from him in several years than many of the carpenters I came across learned in a lifetime in non-unionized trades.
Anecdotal, to be sure, but I thought you'd enjoy a good (and true!) story.
Posted by: Patrick S. O'Donnell | Dec 19, 2008 8:02:42 PM
oh, and in my grandfather's defense, he did everything that was asked of him, and unlike the vast majority of his colleagues, was not 'on the take.'
Posted by: david bernstein | Dec 19, 2008 6:14:47 PM
i actually grew up around many nyc public employees--neighbors, members of the synagogue, patients of my father's, etc. the stories one would hear were remarkable--sanitation workers who worked only a couple of hours a day, maintenance workers who found time to operate large-scale private businesses during working hours, grossly incompetent teachers who couldn't be fired and were finally put at a desk to do busy work because they couldn't be put in a classroom, people retiring at age 40 at more than their last year's base salary thanks to doing huge amounts of overtime the final year which counted toward their retirement pay, and so forth. my own grandfather was a city employee, a health inspector, in the days before the pensions were so generous, and before the unions, but even then, i'm told he'd get to work at 9 am and usually be home in time for lunch at noon, after which he went to sleep for the rest of the afternoon. so, critics of rick, who likely have never met a NYC public employee, spare us the sanctimony--nyc public employees are not exactly the poster children for the oppressed workers of america, and those with knowledge of the political history of nyc know that the public sector unions almost bankrupted the city, thanks to the acquiesence of mayor lindsay.
Posted by: david bernstein | Dec 19, 2008 6:09:32 PM
I'm with O'Donnell and Slater. And, unlike Professor Slater, "when I think of greedy, overpaid folks in New York City," I think of NYU law professors!
(This is a joke. Rick, you are never boring!)
Posted by: Brian | Dec 18, 2008 5:39:37 PM
Fortunately, a few sharper minds have preceded my reply so I can leave the nitty gritty labor law stuff to others eminently more qualified.
I was tempted to accept the intemperance charge, but instead I’ll simply say that, in this instance, one man’s intemperance is tantamount to another man’s righteous indignation.
As to the first question, it was your post that chose to highlight the Independent Budget Office’s prediction of “dire tax losses from rising unemployment, falling property values, and a frozen credit markets” for the City. So, one might reasonably entertain the expectation that this would lead to a discussion of the larger economic forces that contributed to this dire financial situation (etiology), or what economic strategies and policies the City might pursue in collaboration with larger government entities (the state of New York to the federal government). For it is well known at this juncture of the ongoing crisis that larger municipalities such as New York City as well as states like California cannot rely on economic bootstrapping to save themselves. Well, there’s nothing inherently wrong with thwarting expectations, but in this case one might reasonably infer something was amiss, for you chose to focus instead on what was tendentiously termed the “extraordinarily generous deals” that were the outcome of collective bargaining agreements, the outcome of which were the equal responsibility of both parties at the table.
I began to think: how can these two things be connected? Surely one (the bargaining agreements) did not cause the other (the City’s apparent imminent fiscal crisis). And in point of fact one of the quotes from Cohen and Rogers was intended to provoke us into looking at such things within the larger picture such that we appreciate how the economic system encourages and rewards this particular form of economic rationality among workers in labor markets and thus it is not at all troubling or at least it is understandable that they look out for their individual and collective self-interests at the bargaining table. Nonetheless, is the wage and benefits package these public sector employees (oops, I meant to say ‘workers’) have bargained for responsible for the City’s economic woes: not at all. Will they lead to its bankruptcy? Impossible, at least in the sense that we could hold them causally responsible for such a thing. At worst, these agreements might be seen as symptoms of much larger economic forces, but we shouldn’t confuse them with the illness itself. To insinuate otherwise is reminiscent of the Republicans’ recent attempt in Congress to use the negotiation over a possible automakers’ bailout to extract further concessions from the autoworkers, as if they were somehow to blame for the dire straits these companies find themselves in (while the companies are not wholly to blame, I think it’s fair to say their myopic investment and management decisions amount to aiding and abetting their financial morass). Nonetheless, could a collective agreement lead somehow to the City’s bankruptcy? Only in the rather attenuated sense of the straw that broke the camel’s back or as some sort of tipping point or catalyst, but even that scenario seems unlikely if only because a bargaining agreement with such precipitating power would not be in the individual or collective rational economic interests of the employees. Unionized public sector employees are in no way responsible for the fact that past agreements are now christened “fiscally unsustainable,” so to focus on them is to lose all sense of proportion with regard to macro-economic and micro-economic causality. I was happy to see your reply at least acknowledge the City as a party that may be (or may have been) unwilling to “confront the impending crisis."
I am also delighted to learn that you are “genuinely undecided about…the desirability of the enormous influence of NYC’s public sector unions on city government.” It’s now clear that you are not “normatively neutral” and perhaps the “bullshit” charge achieved the salutary effect of prompting you to clarify your views on unions. All the same, it is not now nor has it ever been the role of unions qua unions to “address the needs of the dependent poor,” that’s a social welfare function of government insofar as private charity cannot always and everywhere nor efficiently or effectively fit the bill (see Goodin’s Reasons for Welfare: The Political Theory of the Welfare State, 1988).
I should inform you that I lack both the capacity and opportunity to “leave the comfy bubble of clenched fist campus ‘radicalism’” (now that’s a line worthy of Ann Coulter or Rush Limbaugh) if only because I’m not a member of any such bubble owing to the fact that I spend a paltry several hours a week on a community college campus, being on a semester-to-semester contract that is as comfortable as a poor tenant’s month-to-month rental agreement. I spend more time doing landscape maintenance for our condominium association than I do teaching. What is more, having entered the academic world in my mid-forties only further enhances my sense of distance from the comfortable confines of the ivory tower (I’ll admit to exploiting what little institutional affiliation I do possess when trying to get something published). Never mind all that, guilt by association will do: it’s an accusatory rhetorical trope we grew accustomed to during the presidential campaign. I admit to being unsure as to what is meant by “pretentious academic political piety,” although it has a fine ring to it and hints of something nasty. Whatever you decide to call me, it’s perhaps most prudent that it not be an “academic,” especially if it contains only pejorative content.
At the risk of more irrelevancies and hand-waving I also cannot see what Tawney’s “guild socialism” has to do with anything, but then again you probably did not read the book I cited, as it’s a layperson’s guide to the personal and socio-cultural economic values enshrined in and encouraged by our economic system and the deleterious effects these can have over time on our moral psychology (some relevant quotes are found in a comment to a MoneyLaw post by Jim Chen https://money-law.blogspot.com/2008/12/curtains-on-cowboy-philanthropy-cruel.html#links). It is no more about socialism than Marx’s three volumes on Capital were about communism. The book can help us better understand the behavior of those on top of the financial system who played a leading role in the current crisis, as well as possible reasons for the number and scope of recent financial scandals, a subject of more pressing economic relevance than the bargaining power of public sector unions.
By “workers” I mean, loosely, those (non-capitalists, i.e., do not belong to the capitalist class) who are forced or compelled to sell their labor power (the exceptions serving to entrench the rule) and are structurally liable or vulnerable to exploitation by the capitalist class. Capitalist and working classes can be defined in terms of relations, behavior and endowments having to do with property, markets, exploitation and power (behaviors include such things as ‘working vs. not-working,’ ‘selling vs. buying,’ ‘lending vs. borrowing capital,’ ‘renting vs. owning land,’ and ‘giving vs. receiving commands in the management of corporate property’). Again, loosely, a class is “a group of people who by virtue of what they possess are compelled to engage in the same activities if they want to make the best of their endowments.” (For further discussion see Jon Elster’s work on Marx and Marxism and Erik Olin Wright’s work on classes).
Posted by: Patrick S. O'Donnell | Dec 18, 2008 4:22:13 PM
Rick (and perhaps Hans):
Teachers are not a good comparison, because a substantial proportion of private school teachers are in heavily-subsidized religious institutions. Catholic Schools, for example, often provide housing and other in-kind benefits for teachers (which are not included in various salary surveys). Religious schools also appeal for workers/teachers through the idea that they are doing a service for God and the church and thus should be satisfied with relatively lower wages. Nothing wrong with any of that, but it's not a good comparison.
Rick, you say that public sector unions "seem to do better than private sector unions in boosting wages." But that's not the same thing as saying "public workers are better paid." Direct comparisons in pay are harder. Data is all over the map in part because public sector labor laws vary so much state to state (and even within states or for specific occupations). Some public sector labor laws don't allow bargaining over significant benefits, e.g., pensions; some public sector labor laws don't allow bargaining over compensation (the main statute governing most federal workers). And as Rick says, it's hard to compare some public sector jobs (cop, firefighter) with any particular private sector job.
But some comparisons are possible, Rick, do the public law schools in your area pay their secretaries and janitors more than the private law schools?
Generally, in the long history of public sector work, the tradition has been that public workers generally have lower take-home salaries, but often more dependable benefits and often more job security.
Posted by: Joseph Slater | Dec 18, 2008 1:53:26 PM
Joe Slater asks Hans Bader:
"Care to back up your claims ... that public employees are, generally speaking, much better compensated than their similarly-situated private sector counterparts?"
Concerning public versus private school teachers' salaries, the National Center for Education Statistics, run by the Department of Education reports that
"[p]rivate school teachers earn base salaries, on average, less than two-thirds of average public school teachers' salaries; and principals earn slightly more than half of their public school counterparts' salaries. Private school teachers, on the other hand, are more likely to receive in-kind compensation: 15 percent receive tuition waivers for their children, 20.2 percent receive free meals, and 7 percent receive housing support (table 3.13). Such in-kind compensation is rarely available to public school teachers. On measures of job satisfaction, private school teachers are more satisfied than public school teachers (table 3.12). They feel that they generally have more influence on school discipline and curriculum policies and more control over their classroom textbooks, content, techniques, grading, and discipline (table 3.11)."
I think that it relatively well-established that public school teachers' salaries substantially outstrip their private school counterparts. But, as the NCES study suggests, there are compensations for teaching in private schools that might make the comparison unfair.
For other public-sector jobs, it is even more difficult to figure out the relevant comparison job in the private sector. To whom should one compare city garbage collectors? Cops? Firemen? But Richard Freeman's article summarizes several different studies of the relative wage effects of private and public union membership at page 58 of the article I cited above. Public-sector unions seem to do better than private-sector unions in boosting wages.
Posted by: Rick Hills | Dec 18, 2008 1:39:58 PM
Care to back up your claims -- with something more specific than a reference to U.S. Today -- that public employees are, generally speaking, much better compensated than their similarly-situated private sector counterparts? You say you're a lawyer: who makes the most money in the legal biz, private sector lawyers or government lawyers? And do I read you correctly that you believe public school teachers are, generally speaking, overpaid?
Posted by: Joseph Slater | Dec 18, 2008 1:20:12 PM
Thanks for the sources. And no need to apologize! I've no objection to trading a bit of cheery invective. As for calling unions "cartels," that's not an insult: I'm a card-carrying member of several cartels myself (i.e., bar associations). As for the risk of municipal bankruptcy if the current CBAs are left unaltered, I assume that, if the worst-case predictions of the City's revenue are correct, then my statement is just a fair prediction rather than an insult. Of course, as David Schleicher notes, the CBAs will not remain unaltered if bankruptcy looms: Unlike bondholders' contracts, unions' contracts are fair game for re-negotiation under NY law (an asymmetry that I note but most certainly do not defend).
Posted by: Rick Hills | Dec 18, 2008 12:28:40 PM
Having read over Rick's initial post, Patrick and Joe's response, and now Rick's retort, I have some preliminary thoughts on this whole matter/mess as well (I do specialize in public employment law like Joe, so I feel ideally situated to comment):
1. "I suspend judgment on the normative question . . . ."
Like Patrick and Joe, I find it hard to take this seriously, Rick. You could have simply asked, "can we sustain the current wage and benefits public employees get in this economic environment," but you didn't. Words like, "Don't count it," "extraordinarily generous," and "extract," tell a different story. And you can deny all of this rationally to your are blue in the face, but your professional colleagues are not that tone-deaf.
2. "I really, really loathe pretentious academic political piety."
Really. Something about glass houses here.
3. Having followed the politics of labor law for more than a decade, I understand both Joe and Patrick's frustration that Rick's post seems to blame public workers for the current difficulty NYC is having with recession. But now that Joe has given some explanation about his views, what about calling public employee packages, "extraordinarily generous deals?"
I guess I would like an explanation from Rick on what he considers "generous." Compared to whom? Other uniformed workers in other cities? Other countries? Compared to other job titles like law professor? For my money, and what the uniformed workers of NYC do on a daily basis makes their salaries, benefits, and pensions are more than appropriate? What do you have in mind, Rick?
4. "Twenty and out on the table" - perhaps it is more difficult to be an EMT, firefighter, or police officer than other jobs where one is expected to work longer before retirement, no?
5. And perhaps public employees will negotiate concessions to help NYC through these difficult times - though your normative view is "don't count on it." How do you know? Does your expertise in local government law provide you with the answer? Is it not true that this economic crisis is not like many others and may call for different joint city-management responses?
All in all, Rick, I think you need to re-read your initial post and rather than attack Joe and Patrick for their supposed "academic political piety," ask yourself: "What is it that riles people up about how I write about topics like this one?" As you know, this is not the first time you have provoked these types of response.
If you have written for your post what you then wrote in response to Joe and Patrick, I doubt there would have been a similar response.
Posted by: Workplace Prof | Dec 18, 2008 12:25:16 PM
High public-sector pay robs the poor to enrich the already well-to-do. Public-employee unions profit at the expense of the middle-class and working-class in the private sector, whose taxes pay their salary (and lucrative pension benefits).
USA Today noted earlier this year that public-sector employees are MUCH better compensated than the private-sector employees (who pay their salary through sales, property, and income taxes).
Many public sector employees have compensation packages that exceed $80,000 per year. Pay in the private sector is much lower. Most entire households of people who work in the private sector receive less.
I am a lawyer (at a non-profit), with years of experience, yet I am compensated less than public employees in my county (Arlington County) -- even the less well-paid ones like teachers.
For example, my overall compensation is less than $100,000. By contrast, the average teacher in my county has over $100,000 in compensation -- over $70,000 in base pay for a 10-month year, plus fring benefits worth over $30,000 per year.
Posted by: Hans Bader | Dec 18, 2008 12:24:41 PM
I was almost finished with a reply when something happened, I may have inadvetently pressed something on my keyboard, but I lost all I wrote (this has happened before, so I should have typed it first onto a Word doc.). I have to do some chores now so I hope to get back to you later today.
Posted by: Patrick S. O'Donnell | Dec 18, 2008 12:19:11 PM
I sincerely apologize for sounding patronizing. I could say that my "pious bumper sticker slogans" about the work of the uniformed service workers were as substantive as refering to their unions as a "cartel" that will "bankrupt the city," but I don't want to devolve into more sniping.
As to recent studies, what are you interested in? I see two issues your post raises. First, the question of whether public sector unions significantly threaten public finance. As I indicated in my first comment, we have decades of actual experience showing that public sector unions don't generally have that effect. That's true in part because modern public sector labor laws generally provide specific protections against labor agreements that the employer can't afford. For example, many public sector laws specifically require the arbitrators who resolve impasses in labor negotiations to take into account the employer's ability to pay as, in effect, the most important factor. I could provide cites to such laws if you are interested.
As to specific cases of public sector bargaining, the Journal formerly named The Journal Of Collective Negotiations in the Public Sector [now called Journal of Collective Negotiations] contained numerous studies.
Second, you raise Wellington and Winter's broad theoretical critique of the whole idea of public sector bargaining. First, let me stress that we all agree that public sector unions act politically. But a clear majority of states have decided that public workers have interests as workers that call for some collective bargaining rights. So the question becomes, how do we accomodate both concerns?
One classic reponse to W&W, as a matter of theory, was in Clyde Summers, "Bargining in the Government's Business: Principles and Politics, 18 U. Toledo L. Rev. 265 (1987). As Summers indicates, one way the law addresses these issues is to limit what unions can legally negotiate about (for example, pensions are frequently excluded).
Beyond that, in the general policy sense, for the earlier history of policy concerns in public sector bargaining, I will immodestly recommend my book, _Public Workers_, although that might be too much pure history for your purposes. For my take on more recent events, there's my article, "Homeland Security vs. Workers Rights?" in the 6 Pa. J. of Labor and Emp. L. 295 (2004). I also highly recommend the work of Marty Malin on public sector labor issues.
In any event, I again apologize what could reasonably be taken as an intemperate tone in my earlier post.
Posted by: Joseph Slater | Dec 18, 2008 11:39:13 AM
Patrick's and Joe Slater's responses are both so intemperate and oddly tangential to my actual post -- as opposed to what they take to be my ideology -- that they deserve a longer response. Stay tuned for a separate post. But on the narrow topic of what I actually discussed in this post (District Council 37, the uniformed services, and Wellington-Winter hypothesis), here are three responses:
(1) On the sheer irrelevance of Patrick's and Joe's righteous populism: It might certainly be the case, as Patrick notes, that financiers have made too much money, behaved too carelessly, have too much political power, and ought to be taxed more heavily. It most certainly is the case that "workers" (a term used by Patrick more as a sentimental rhetorical trope than a clearly defined conceptual category) should get more money. But what has this to do with the topic of my post?
I am asking about the fiscal sustainability of collective bargaining agreements that lock the City into 5% annual raises, retirement on full pension after 20 years, maximum base pay for the uniformed services close to or exceeding six figures, and a benefits package that excludes any obligation of the employees to pay part of their insurance premiums. It is a simple factual question whether this sort of package is sustainable in the face of declining revenues. The City's Budget Office -- those capitalist-loving bureaucrats -- think not. Patrick's hand-waving about (among other irrelevancies) Tawney's Guild Socialism is just the sort of pious posturing that keeps the City and the Unions from confronting the impending crisis.
(2) Patrick declares that my stated normative neutrality must be "bullshit," because my alleged opinions about "unions in general" are "obvious" to him. Of course, if one inhabits a world in which one's views about unions are no more complex than the "which-side-are-you-on?" slogans displayed by Patrick's post, then I guess that pegging my ideological priors is pretty easy. But, believe it or not, I really do not think that academics ought to place their brains in a bumper-sticker blind trust, reeling off stale populist or conservative mantras in place of facts and arguments. Therefore, I am genuinely undecided about (among other things) the desirability of the enormous influence of NYC's public sector unions on city government. On one hand, they put money in the pockets of a working class constituency and help maintain some income diversity in a very stratified city: That strikes me as a good thing. On the other hand, they do not always address the needs of the dependent poor (although District Council 37 does so far more often than the uniformed services' unions). It is not obvious to me that the best route to a greater level of income equality is to insure that a police serjeant can retire at 45 on a full pension based on a base salary of, say, $90,000 without any obligation to pay any part of his Part B health premiums. The cost of this package will come out of someone's hide, and I suspect that the City's programs for the dependent poor might be cut before the city raises its already atypically high tax burden on an increasingly mobile financial sector. One group that is seriously burdened by this pay schedule are rookie police officers who make a absurdly low salary -- in the mid-20,000s -- in part because the union neglects the interests of incoming officers who do not vote in union elections.
Would it really be a terrible thing for egalitarianism if the serjeants had a bit of a co-payment so that the City would have some slack to pay to keep libraries open longer for low-income school kids? Those are the sorts of choices that one has to contemplate once one leaves the comfy amniotic bubble of clenched fist campus "radicalism" and actually tries to manage a city (or teach local government law, which is my area).
But I guess that I have tipped my ideological hand: I really, really loathe pretentious academic political piety.
(3) Joe Slater patronizingly assures me that "[a] significant amount has been written on public sector collective bargaining since Wellington and Winter... You should check some of it out." Unlike Patrick, Joe does not offer any examples of that "significant amount of literature." For my part, the best empirical study of public sector unionism of which I am aware is Richard B. Freeman, Unionism Comes to the Public Sector, 24 J. of Econ. Lit. 41 (1986). This is a pretty old study, but I do not know of a more thorough update, so I'd be curious about all of that literature that Joe says I ought to read. Freeman incidentally partially confirms and partially disconfirms the Wellington-Winter hypothesis. He confirms W-W's claim that public sector unions use their political influence to get a better deal than their private-sector counterparts. But Freeman rejects W-W's claim that inelasticity of demand for public services boosts public-sector wages (pp 51-52), because Tiebout competition and the sorts of institutions described by David Schleicher's intelligent and helpful observation place caps on what unions can demand.
In New York City, of course, demand for public services might be more inelastic than the average city, simply because NYC is pretty big and, therefore, faces less Tiebout competition than smaller towns. Every study of New York City public-sector unions seems to confirm that they have enormous power. Jewel & Bernard Bellush, Union Power and New York: Victor Gotbaum and District Council 37 at 239-73 (1984) argues that DC 37 is the new city "machine." Again, this partially confirms Wellington-Winter.
But undoubtedly Joe has more recent literature that he will share -- and I'd welcome the citations much more than more pious bumper-sticker slogans about cops' moral worthiness. The issue is not whether we like cops more than brokers: The issue is whether and how this city can be governed in a fiscally sane way. The notion that public-sector unions are a perfect power broker for the public interest strikes me as just as implausible as the Republican vilification of public-sector unions.
Posted by: Rick Hills | Dec 18, 2008 8:09:12 AM
I agree with many of the points Patrick O'Donnell made. Broadly, when I think of greedy, overpaid folks in New York City, I tend to think of the Wall Street types more than, say, street sweepers or the "uniformed services" folks who do stuff like run into buildings after terrorist attacks.
More specifically, a clear majority of states permit public sector bargaining, and the dire predictions of union opponents have not come to pass. This is in part because public sector laws usually include specific mechanisms to avoid financial peril to the public employer (e.g., mandatory arbitration procedures to resolve bargaining impasses in which arbitrators are obliged to consider financial impact on the employer and in which arbitration decisions will be reversed if the arbitrators fail in that task). And, as D. Schleicher observes, there are other controls on public finances outside of labor laws.
A significant amount has been written on public sector collective bargaining since Wellington and Winter -- scholarship which studies the several decades experience we have had with this since W&W wrote. You should check some of it out.
Posted by: Joseph Slater | Dec 17, 2008 5:59:30 PM
Rick -- One wrinkle that has changed since the 70s in NYC is the Financial Control Board law, passed in the wake of the 70s crisis (whisper -- it's like the word cancer at the beginning of brighton beach memoirs). If the City goes bankrupt or near bankrupt or too far into deficit, it goes into something that looks like receivership under the FCB. This should have a huge effect on negotiations if it looks like the city is going to come close.
Posted by: D.Schleicher | Dec 17, 2008 5:35:27 PM
Here's bit more fuel for the fire from the Business section of today's Los Angeles Times (https://www.latimes.com/business/la-fi-lazarus17-2008dec17,1,4019512.column):
...[R]eal wages -- the value of people's paychecks adjusted for inflation -- have stagnated or eroded for most of the last 30 years
Meanwhile, productivity and consumer prices have soared.
"A typical working family had less income in 2007 than it had in 2000," said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank in Washington. "The inflation-adjusted wage of most workers is actually no higher than what it was in 1973."
And things may only get worse. The International Labor Organization, a United Nations agency, said in a recent report that the deteriorating global economy will result in lower wages for millions of workers worldwide next year.
It predicted that real wage growth in industrialized countries such as the United States would fall from an average 0.8% this year to minus 0.5% in 2009. U.S. inflation, meanwhile, is projected to run 1% or 2% next year.
"Slow or negative economic growth, combined with highly volatile food and energy prices, will erode the real wages of many workers, particularly the low-wage and poorer households," ILO Director-General Juan Somavia said. "The middle classes will also be seriously affected."
From World War II until the mid-1970s, real wages largely reflected advances in productivity. As the value of what workers produced went up, so did paychecks.
That changed as the clout of labor unions waned and as businesses increasingly sought to boost profits by introducing new technology and transferring jobs to wherever people would do them for less money. Companies and their shareholders got wealthier, while the pay of average workers went nowhere.
According to the U.S. Labor Department, real wages averaged $19.05 an hour in 1978. This year, the average real wage -- again, adjusted for inflation -- is $18.23 an hour. That means workers today are making less than their fathers.
Over the same period, productivity has risen nearly 150%, while consumer prices have more than tripled. [....]
Mishel at the Economic Policy Institute said long-term prosperity would remain elusive as long as pay and productivity remained disconnected.
"There's an expectation that when you produce more goods and services, everyone moves ahead," he said. "But that no longer happens."
It would be nice to think employers who have benefited so enormously from advances in technology would treat workers fairly by once again linking pay to productivity.
But that hasn't been the case for more than three decades, so it's naive to think businesses will do this of their own accord. [....]
Posted by: Patrick S. O'Donnell | Dec 17, 2008 2:22:45 PM
Please pardon several typos in the comment above.
Posted by: Patrick S. O'Donnell | Dec 17, 2008 1:45:50 PM
"I suspend judgment on the normative question of whether public sector unions' power is a good or a bad thing."
Bullshit plain and simple (well, bullshit smells better than this). Oh please, be honest with us, it's all too obvious what you think about their power and probably about unions in general.
It's just so precious how some law professors and, alas, their students in the blogosphere, have seized upon an extremely dire economic downturn/recession/crisis to scapegoat workers (or tenants over at Concurring Opinions), especially organized ones, of which there are far too little. Instead of posts addressing what the banks have done with their billions, we get posts attacking what workers do and have done to better their position in a society where money, status, and class count for all-too-much. Fortunately, there are some law profs with both hearts and minds and the will to direct them in the right place: for example, Professor Elizabeth Warren of Harvard, who sits on the Congressional Oversight Panel that has begun public hearings on what's happened to all that money, as it seems it's NOT EVEN TRICKLING DOWN TO THE REST OF US (See: https://www.latimes.com/news/nationworld/nation/la-na-bailout17-2008dec17,0,124318.story):
"[T]here is little evidence of what effect these billions of dollars are having on us," said Elizabeth Warren, the Harvard University law professor who chairs the panel.
Warren has repeatedly asked Treasury Department officials for an explanation of their strategy and how the bailout is supposed to help solve the credit crisis, but so far her panel has not received any answers.
The same issues are being raised by the Government Accountability Office and Treasury Department Inspector General Eric Thorson.
Democrat Harry Reid of Nevada, the Senate majority leader, said at the hearing that major banks were failing to increase lending, despite getting most of the first $350 billion allocated.
"It is just not helping at all," Reid said.
Before Congress gives the Treasury approval for the second $350 billion of the rescue plan, Reid said in an interview, he intends to tighten restrictions on how the money is spent.
The senator said he intended to make sure that additional spending is targeted to help families in foreclosure. Reid said the exact plan will depend on recommendations from Warren's panel, which is supposed to provide monthly reports to Congress and advise it on regulatory reforms.
In a later interview, Warren said the Treasury Department should have a lot of leverage to compel banks to do more, given that taxpayers have handed over billions of dollars and in many cases are now shareholders.
"If the Treasury cannot devise a program that moves money into the economy, then they are failing in their mission," Warren said.
Although criticism of the Troubled Asset Relief Program, or TARP, is growing in Washington, the hearing Tuesday was the first attempt to gather information from one of the communities most deeply troubled by the credit crisis.
But let's not discuss this, rather, let's bash workers looking out for their self-interests, for only banks, financial institutions and corporations are permitted to think first and foremost of their economic self-interests, not workers, renters, consumers, the very folks that are the backbone of any economy. What a privileged life you law professors must (and have) lived. It disgusts and angers me.
I would implore you to ponder carefully (and do call upon whatever residual powers of empathy reside within you) to the following from Joshua Cohen and Joel Rogers' book, On Democracy (1983):
"There is a characteristic economic rationality to the actions of workers encouraged by capitalism. In the face of material uncertainties arising from continual dependence on the labor market under conditions of the private control of investment, it makes sense for workers to struggle to increase their wages."
"As a result of their control of investment, the satisfaction of the interests of capitalists is a necessary condition for the satisfaction of all other interests in the system."
"[T]he welfare of workers remains structurally secondary to the welfare of capitalists, and the well-being of workers depends directly on the decisions of capitalists."
"The interests of capitalists appear as general interests of the society as a whole, the interests of everyone else appear as merely particular, or 'special.'"
And consider the following from Michael Luntley:
"[W]hen we live in an economy organised under the aristocracy of Capital, our labour power must become our defining property on pain of failure of that economy."
"We must rearticulate the criteria, the goals, that define our agency in the social world and which provide the reference groups which alone can carry the traditions necessary for moral life to proceed. We must rearticulate the authority of the Good. In doing this we must articulate the more specific goals and standards for the variety of human institutions we find in modern society and stand these goals in opposition to the market criteria of capitalist success. [....] The possibility of society being organized by the dictates of the Good, the possibility that we organize our institutions to bring about moral life in society (a civil society), requires that we inhibit the forces of capital that have dislocated our moral purpose."
And then spend an evening of privileged comfort reading R.H. Tawney's The Acquisitive Society (1921).
Posted by: Patrick S. O'Donnell | Dec 17, 2008 1:37:03 PM