Wisconsin, Closer Than You Think
link Hundreds protest Wis. plan to cut worker rights – Yahoo! News.
For most Canadians, what happens in Wisconsin may appear distant and abstract to the degree that they are aware at all. But what is happening there may be regarded as a seminal event in years to come. Anyone paying attention to the news will know that the most pressing issue facing all governments, which means all citizens, is the spiralling and unsustainable debt being accumulated at all levels of government. On the west-coast here in Canada, this may have escaped a large part of the population who are mainly concerned with their cholesterol intake or eating sustainable seaweed.
In the U.S., the prime battle going forth in the next generation will be between public sector employees and private sector employees. The old wisdom was that public sector employees are paid less than their private sector counterparts because of better job security and less onerous work. This old wisdom has never been more erroneous than it is now. Sheltered from the vagaries of the economy which impact workers in the private sector, public (and that means typically union) employees have been able to ride out most economic downturns. Shrewd bargaining and effective lobbying by labor have enabled their flock to benefit from regular pay increases and covetous retirement and medical coverages not affordable to many private sector workers. This is all nice when things are going well. This is not so nice when economies take prolonged downturns and the cost of maintaining such programs keeps ratcheting up even as revenues to support them fall. A link to the Reason Foundation website gives a more thorough discussion of this:
http://reason.org/news/show/public-sector-private-sector-salary
There are only two ways to resolve this. Increase taxes to pay for the entitlements, or decrease entitlements. This is elementary school logic and math. If you want to keep your teenager in designer clothes and exotic vacations, better hope that you’re making enough money or else shop at the Gap and stay home for the holidays. In some parts of the world, you can always sell the teenager, but I digress. There has never been a case in my recollection when the public sector have been forced to make wage sacrifices in order to maintain fiscal balance. I do recall that they have suffered the horror of no pay increase for a short time, but the cycle of pay and benefit increases happen again at first opportunity. In other words, the baseline never goes down. This sounds like we’re picking on the poor union worker, but in fact this applies to all who are directly or indirectly in the employ at any government level. In our neck of the woods, we have the head of the ferry corporation making a million dollars a year and whose contribution to efficiency is to raise fares regularly. Apparently, to retain someone of this qualification and skill, a million dollars is the going rate. Naturally, our hero claims that he could make much more money in the private sector but is doing a public service by taking only this pittance. That’s quite the bluff. Are there no good poker players in government?
It begs the question of whether someone could be found who would and could perform the same job at $800,000… or $600,000…. or $300,000. Extrapolate this to all sectors of the public arena which includes, teachers, firefighters, policemen, university administrators, sanitation workers, meter readers, clerks, librarians, medical administrators and administrator administrators. It makes little sense to guarantee wage and benefit increases every year if the tax paying private sector does not expand enough to sustain it. For the better part of the last 2 or 3 generations, tax increases have funded all kinds of laudatory and non laudatory expenditures whether or not it was responsible. The expression used most often is ‘kicking the can down the road’ for the ensuing administration. That can is approaching a brick wall.
The same battle in the U.S. will happen in Canada as well, and particularly on the west coast. A recent Vancouver Sun article which includes a database on public sector salaries was quite illuminating, http://www.vancouversun.com/business/public-sector-salaries/index.html . An intriguing statistic revealed that the number of civil servants making over $100,000 per year rose by 22 percent in just two years and as well, those public servants being paid greater than $200,000 per year number 750. This of course does not take into account benefits and retirement concessions. It’s unlikely that statistic is matched in the private sector.
Given all of these high salaries, you would think things all run tickety boo. As if. We still get cost overruns, bureaucratic bungling and shortcomings in service resulting in the predictable tax increases. Not that this isn’t expected of all government programs. Why can’t we just have it with smaller payrolls?