August 27, 2012


The huge cost of public unions : Spending we can't sustain (MICHAEL MARLOW, 8/24/12, NEW YORK DAILY NEWS)

[R]esearch I recently completed finds a solid empirical relationship between public sector unions' concentration and the size and cost of state government, suggesting that what's good for the public sector employee goose might not be good for the taxpayer gander.

Over the last three decades, union membership in the private sector has fallen precipitously, from 24.2% in 1973 to just under 7% in 2011. Over the same period, public sector union membership jumped by 14 points, from 23% to 37%.

The different directions of these trend lines have much to do with the nature of public sector employment. For instance, unlike the private sector, public sector wages that exceed an employee's productivity don't directly threaten employment -- if you need proof of this point, head down to your local DMV office.

The excess cost of overpaid public employees is deflected onto taxpayers. Many states, including my home state of California, are learning the hard way that there's a limit to this tax-and-spend cycle.

The stability of public sector employment is reflected in Bureau of Labor Statistics job tenure data, which find that median tenure for a government employee is anywhere from 37% to 97% higher than in the private sector. And recent research published in the Journal of Economic Perspectives concluded that the salary and benefits of state and local government employees is as much as 21% higher than of private sector employees doing similar work.

And the political power of public workers is undeniable: The American Federation of State, County and Municipal Employees spent $87.5 million in the 2010 election, leading all independent groups.

Tenured, well-paid and politically powerful -- all would suggest a link between union concentration and the size and cost of government. My study tested this hypothesis, and over the period of 2003 to 2010 found that a 10% increase in public union membership expands government by as much as 4.25%.

Posted by at August 27, 2012 5:41 AM

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