A Proposal

Considerable turmoil had emerged in Wisconsin over the cuts and changes Governor Walker has proposed for union state workers.  At the core is the belief that unionized public employees have created an unsustainable situation.  While most people understand the problems that business monopolies cause, they fail to realize that a union is really nothing more than a monopoly for labor.

For capitalism to work effectively there must be choice and competition.  This is what spurs the innovation and creativity that bring about the best value for the consumer.  Unions have, for the most part, failed in the private sector because they restrict this innovation and creativity. Instead of looking to increased productivity, unions restrict choice for the employers so they can use threats and intimidation to force increases in paid and benefits.  As such, they ultimately priced themselves, and their companies, out of business.

This is bad enough when used with private businesses, but even here the market’s ability to self-correct can work. Unlike private companies, however, governments cannot go out of business.  In addition, unions in places like Wisconsin can force people to join, and then use the money they collect to become a strong political force.  In short, they can work to put those who are politically obligated to the union, in a position to negotiate with the union.  When this happens who represents the people who have to pay the bills?

The result is that whereas  government employees once were paid less that the private sector, but were compensated with somewhat better benefits and security, now both their pay and benefits far exceed the private sector.   According to the US Bureau of Labor statistics report, public sector workers get paid a third more than private sector workers, while getting over two thirds more in benefits.

Those defending the status quo, claim the study was not a fair comparison and while they make a few good points there are some serious problems with their claims.   One problem, for example, is that while government employees tend to be better educated than the private sector is this because they need more education to do their job, or is this yet another way to inflate their salaries?  It also ignores the productivity of the private sector vs. the public.

So given this, here is one proposal.   As long as public sector employees are making more on average than private sector employees, ban any further net increases to wages and benefits, including cost of living increases. This would then over time bring public sector payrolls back into line with the people who must pay the bills.   This calculation should put productivity into the mix.  That way if federal workers were more productive, then their higher pay would be warranted.  It would also give the public sector much more of a stake in the health of the private sector that must pay the bills.

This is not meant as a total solution, but it would be an important step in bringing the runaway and stifling cost of government under control.  After all, it boils down to a simple question: why should public sector employees get more than those who must pay the bill?