Big Labor-Controlled Government Payrolls Still Bloated

‘Framing’ Prevents Needed Stimulus – Economic View – NYTimes.com

Shiller on government jobs: who’s “framing” whom? – Public Sector

Is Ivy League celebrity economist Robert Shiller really unaware of the fact that the share of all employee compensation consumed by heavily unionized state and local government payrolls soared from 2000 to 2010?  (Photo credit:  The National Post)

In the 2012 elections, Big Labor’s #1 objective is ensuring that state and local government payrolls, of which 42% are under union monopoly-bargaining control, continue to grow at the expense of private-sector payrolls, of which fewer than eight percent are unionized.

Union kingpins know that, with rare exceptions, when government payrolls grow, their forced union dues-fueled wealth and power grow as well. And in recent years they have benefited greatly as Big Labor featherbedding and counterproductive work rules sharply increased real taxpayer costs for compensation of state and local government employees.

In fact, U.S. Bureau of Economic Analysis (BEA-NIPA) data show that from 2000 to 2010 the share of all private-sector employee compensation that is consumed by state and local government payrolls soared from 15.2% to 18.2%. In 2010, each additional percentage point equaled $63 billion in increased taxpayer costs.

However, thanks in part to a mounting public backlash against monopoly-bargaining and forced-dues privileges for government union bosses, America’s private sector has recently regained a small amount of ground on our union-ruled government sector. In 2011, state and local compensation consumed 17.4% of all private-sector compensation. That’s still a far higher share than the year before George W. Bush’s first term began.

Big Labor is determined to stop the private economy from catching up with Big Government’s expansion. And it is now being assisted in this crusade by media-savvy academic economists like Yale University’s Robert Shiller.

Echoing union-label President Barack Obama, Shiller contended in a New York Times op-ed early this month (see the first link above) that cutbacks in state and local government payrolls since July 2008 are rendering communities across America less “livable†and preventing a robust economic recovery. He totally ignored the fact that state and local compensation costs were still consuming a near-record high share of private-sector wages, salaries, benefits and bonuses in 2011, the last year for which data are available.

On Labor Day, E.J. McMahon of the Manhattan Institute (MI) posted a thoughtful response to the Shiller op-ed on MI’s PublicSector Inc. blog. (See the second link above.)

McMahon pointed out that the rapid growth in state and local government payrolls that went on for many years and until well into the Great Recession is even more extraordinary when one considers that the “markets†for key services furnished by public employees are expanding very slowly nationwide and actually shrinking in many states:

[P]ublic schools are by far the biggest government employer — and the need for school employees is determined by the number of school-age children, not by total population. As it happens, the local government education sector has accounted for fully half the reduction in state and local payrolls cited by Shiller. But relative to pupil enrollment, local school employment remains higher than it was in 2000, the peak of the nation’s last sustained economic expansion. . . .

Police departments are another big category of government employment. But here, too, there’s a question of productivity that Shiller ignores. For example, New York City’s Independent Budget Office has just issued a study suggesting that the city could realize an increase in patrol hours if the average police shift was extended to 10 or 12 hours (with a proportional decrease in police work days per year).

While school employment relative to pupil enrollment is only a little higher now than it was in 2000, payroll costs for taxpayers are far higher .  That’s largely due to the spread of teacher union-backed contract provisions encouraging healthy and able educators to retire while they are still in their 50’s. From 2000 to 2011, the share of all private-sector compensation consumed by state and local government education compensation rose from 7.6% to 8.8%, even though the number of 5-17 year-olds nationwide increased only one-eighth as rapidly, in percentage terms, as the total U.S. population.