Kevin Drum is talking public employee pensions:
I should confess here that I’m not a big fan of public employee unions. On my own personal scale of sympathy, I strongly support private sector service unions, I moderately support private sector industrial unions, and I only barely support public sector unions. So no one should expect me to go to the mattresses for public sector benefits. Still, Jon is right: one of the favorite tactics of conservatives is to set the middle class at war with itself. It’s sort of the mirror image of corporate compensation committees, which keep CEO pay forever rising because no one wants their CEO to be paid less than average. With middle-income workers, by contrast, the CEO class exploits jealousy toward better compensated unionized workers in order to ratchet things down. The grocery clerks don’t want to accept an insurance copay? Well, I have an insurance copay, so why shouldn’t they? The truckers don’t want to switch their pensions to a 401(k)? Well, I have a 401(k), so why shouldn’t they? Etc., etc., ever more disheartening etc.
This is a tactic that works pretty well. As union density has shriveled in the private sector, workers don’t really aspire anymore to getting a “good union job,” as they often did in the past. It’s not even on their radar. Instead, they see a small and privileged group of workers who are better off than them even though they don’t work any harder, and instead of wondering why their own pay and benefits are so low, they simply become resentful of this coddled class.
Private sector union density has gotten so low that it’s not clear how much they can do about this attitude — and the odds of increasing union density more than a point or two seem cosmically slim. So now it’s going to be a war of taxpayers against unionized public employees. It won’t be hard, especially in lousy economic times, to convince envious clerks and factory workers that these guys need to be brought down a peg or two. It’s just human nature. But wouldn’t it be better if all these envious clerks and factory workers were instead asking why their pay and benefits haven’t keep up with overall economic growth — which, after all, is all that public sector workers have accomplished? I don’t know what the future of unions is in America, but for now they’re really the only ones who are asking that question and putting some muscle behind it. Until someone else starts doing a better job of it, we still need them.
Thoughts in response:
1) Even if we set aside the whole jealousy argument, and ignore every member of “the CEO class” that makes it (and surely that is a very small class), the need to reduce public employee pensions is apparent on the most clearheaded, unemotional analysis. Those of us in Los Angeles, for example, face the prospect of pension costs consuming a third of the municipal budget by 2015 if nothing is done. Doing something need not be about class warfare.
2) It strikes me as strange to say that it would be better “if all these envious clerks and factory workers were instead asking why their pay and benefits haven’t kept up with overall economic growth — which, after all, is all that public sector workers have accomplished?” The pension deals that most anger the public involve folks who got to retire at age 50, earn 90 percent of their peak salary until death, and determine that peak salary based on gaming the system in a way clearly contrary to the spirit of pension laws that only passed because unions bribed shortsighted and irresponsible politicians operating on misleading actuarial advice.
Imagine for a moment that every worker in California saw their salary rise along with economic growth. Correct me if I’m wrong, but my impression is that the vast majority of these workers would remain unable to retire at age 50, that upon their retirement they’d receive significantly less than 90 percent of their salary in pension payouts, and that the benchmark that determined their pension in the private sector wouldn’t be wildly inflated.
3) Another reason for resentment toward this coddled class is that those of us without fancy union pensions aren’t just being asked to watch as retiring public employees are lavishly compensated from public coffers — we’re being asked to pay more ourselves in taxes to sustain their extravagant benefits, even as our real earnings drop. “Pew estimated a $1 trillion gap as of fiscal 2008 between what states had promised workers in the way of retiree pension, health care and other benefits and the money they currently had to pay for it all,” Ron Lieber reports in The New York Times. “And some economists say that Pew is too conservative and the problem is two or three times as large.”
Do read that NY Times piece. Its assessment of this issue is very close to my own. On one hand, labor contracts should be respected. But in the private sector, retirement deals are checked by the solvency of the company or fund in question, and managers who have an incentive to limit compensation to what is affordable. In contrast, the only check in the public sector is the will of the people imperfectly rendered through their elective representatives. Sometimes that results in insanely generous pensions. But that same mercurial process can take them away.