Public Sector Unions

Ready, Disclaim, Fire

Earlier today, newly-elected Michigan Governor Rick Snyder released his "Citizens’ Guide to Michigan’s Economic Health." The general purpose was to provide an easy-to-understand presentation of the state’s finances, and to encourage local governments to do the same. These are of course laudable goals, but one of the report’s major findings, also mentioned in the governor’s press release, was a familiar one:

Average annual compensation of state employees (including salary, wages, and benefits) was over twice the average annual compensation of private sector workers in 2009.

As might be expected, many reporters and editors dutifully ran this outrage-inspiring finding as a headline (also here and here), even before the report was officially released: State workers make twice as much as private sector workers. Governor Snyder rolled out the report as part of his presentation to the Business Leaders for Michigan Summit, in which he spoke about the state’s fiscal situation.

I’ve already discussed how these gross comparisons of public and private sector workers – whether nationally or in a single state – are invalid. That is, they compare two completely different groups of workers: Public employees, who are mostly professionals, and private sector workers, many of whom work in lower-wage, lower-skill jobs. But this time, you don’t need to take my word for it. After featuring the “twice as much” finding in a header and pull-out quote, the governor’s report says it directly:

However, this analysis does not compare private and public sector employees with similar jobs, years of experience, or education.

Let me translate that for you. It means: This comparison is meaningless.

Meet The Bureaucrats

You needn’t look far to see that state public employees are under intense scrutiny. Politicians and other commentators are using rhetoric that is simplistic and often misleading. But, in the debate over their relative value, these state workers have an additional problem: I get the strong feeling that most Americans have little idea what they do.

If you ask the average person to describe what a public employee does, you might hear the word “bureaucrat." Those who wish to dismantle large chunks of the public sector have come to use the term as the pejorative for all public servants (most often in the federal government context) - probably in the hope that it will conjure up images of large government buildings filled with endless rows of faceless, overpaid desk workers collating papers.

So, who are these state public employees? What are they actually doing? These are very basic questions, yet they are rarely addressed in detail, at least not lately. And, let’s be honest – in one way or another, our tax dollars do pay for these workers’ services, and regardless of your views on state budget troubles, it’s always good to know what you’re paying for. Luckily, of course, the question is easily answered. In the simple table below, using 2009 data from the Occupational Employment Statistics program of the U.S. Bureau of Labor Statistics, I present the breakdown of state government workers by occupational category (note: these categories are comprised of varying numbers of similar detailed occupations, and while my examples in the table are the largest, they are not the only ones in each category).

In order to summarize this table, let’s suppose you’re invited to a party to meet ten people, who are a roughly representative sample of the 4.5 million state employees across the nation. Let’s meet the bureaucrats!

Death Of A Teacher Union Icon

The New Year brings sad word of the passing of Szeto Wah, celebrated Hong Kong democracy activist, legislator, and teacher union leader. He died on January 2 at the age of 79.

Once recognized by Time Magazine as one of the 25 most influential people in Hong Kong, and known by millions as "Uncle Wah," Szeto came to prominence in the 1970s as the firebrand founder of the Hong Kong Professional Teachers Union (PTU), which he led from 1974 to 1990. He was also a founder and leader of the Hong Kong Democratic Party, served in the Hong Kong legislature from 1985 to 2004, and was the founder and chairman of the Hong Kong Alliance in support of Patriotic Democratic Movements of China. The alliance was the leading organization offering support to the pro-democracy movement in Mainland China, which organized yearly protests on the anniversary of the Tiananmen Square massacre.

While condolences flow in from all over the world, the political question of the day in Hong Kong is whether or not the Chinese authorities will allow exiled democracy activists back into Hong Kong to attend Szeto’s funeral. Wang Dan, one of the most prominent of the Tiananmen Square democracy leaders, said that, for him, the loss is personal: "Uncle Wah has always been my personal mentor and a leader in the democratic movement. The greatest achievement he has made has been to pass on his beliefs before he left us. The younger generation now remembers June 4," he said.

We at the Shanker Institute also feel this as a personal loss. We met Szeto in 2002, when he travelled to Washington D.C. to deliver the Institute’s Albert Shanker Lecture. In it, he credited Al Shanker with helping to shape his political and organizational perspective:

GDP: Government, Democracy, Prosperity

Public spending has been under relentless attack in the U.S. since before President Ronald Reagan first took office.  The notion that “shrinking government” grows the economy, builds character and may even save our immortal souls is now one of the verities of our political discourse: public=bad; private=good. Indeed, it was the central belief uniting Tea Party members during this year’s campaign. Research and experience don’t support this conviction, but here we are.

The massive government spending that was deployed to push the economy back from the brink of depression has aggravated the always inflamed passions on this issue. With red lights flashing and sirens wailing, anti-spending Tea Party-backed politicians are now riding to Washington to slay – or at least rein in – the beast of government.

This is the narrative we live with.

There is an alternative narrative however, supported by years of research, that tells a different tale, one in which public spending is a positive good, for the economy and society. In this narrative, public spending rises naturally as societies prosper and voters – demanding better infrastructure and better public services for themselves and their families – understand the need to pay for the kind of society in which they want to live.

Teacher Contracts: The Phantom Menace

In a previous post, I presented a simple tabulation of NAEP scores by whether or not states had binding teacher contracts.  The averages indicate that states without such contracts (which are therefore free of many of the “ill effects” of teachers’ unions) are among the lowest performers in the nation on all four NAEP exams. 

The post was largely a response to the constant comparisons of U.S. test scores with those of other nations (usually in the form of rankings), which make absolutely no reference to critical cross-national differences, most notably in terms of poverty/inequality (nor to the methodological issues surrounding test score comparisons). Using the same standard by which these comparisons show poor U.S. performance versus other nations, I “proved” that teacher contracts have a positive effect on states’ NAEP scores.

As I indicated at the end of that post, however, the picture is of course far more complicated. Dozens of factors – many of them unmeasurable – influence test scores, and simple averages mask them all. Still, given the fact that NAEP is arguably the best exam in the U.S. – and is the only one administered to a representative sample of all students across all states (without the selection bias of the SAT/ACT/AP) – it is worth revisiting this issue briefly, using tools that are a bit more sophisticated. If teachers’ contracts are to blame for low performance in the U.S., then when we control for core student characteristics, we should find that the contracts’ presence is associated with lower performance.  Let’s take a quick look.

A Hypocritical World Bows A Little More Deeply to Workers' Rights

What to think? The UN Human Rights Council (UNHCR) last week approved by "consensus" the creation of a "Special Rapporteur" on freedom of association and assembly. Special Rapporteurs are empowered to investigate, monitor and recommend solutions to human rights problems. In this instance, the Rapporteur will review members’ compliance with a UN resolution on these fundamental rights.

The first reaction to this development, of course, must be skepticism, leavened with deep suspicion. The UNHRC’s membership is usually heavily weighted toward nondemocratic states which routinely infringe on citizens’ right to freedom of association and assembly, including many nations with a majority Muslim population. As a result, the Council, formerly the UN Commission on Human Rights, has a long record of pursuing any and all human rights allegations against Israel with single-minded fury. So, when such a body, with such a disgraceful record, creates a Special Rapporteur on any subject, it necessarily sends a shiver down the spine.

Still, it is interesting. What makes the resolution intriguing is that Russia, China, Cuba, and Libya – who love to grandstand at the Council – opposed the Special Rapporteur and "disassociated themselves" from it, though they chose not to upset the "consensus" applecart by calling for a vote. Their objections make interesting reading. To sum up, they are all for freedom of assembly and association (sort of). They just don’t need some UN guy snooping around, raising questions, talking to people, and writing reports. Even worse, if they don't cooperate with the snooper, he’ll write a report about that.

Well.

Performance-Enhancing Teacher Contracts?

** Also posted here on “Valerie Strauss’ Answer Sheet” in the Washington Post.

Please check out our two other posts (here and here), which present summaries and discussions of the actual evidence on the relationship between unions and test scores.

For years, some people have been determined to blame teachers’ unions for all that ails public education in America. This issue has been around a long time (see here and here), but, given the tenor of the current debate, it seems to bear rehashing.  According to this view, teachers unions negatively affect student achievement primarily through the mechanism of the collective bargaining agreement, or contract. These contracts are thought to include “harmful” provisions, such as seniority-based layoffs and unified salary schedules that give raises based on experience and education rather than performance.

But a fairly large proportion of public school teachers are not covered under legally-binding contracts.  In fact, there are ten states in which there are no legally binding K-12 teacher contracts at all (AL, AZ, AR, GA, LA, MS, NC, SC, TX, and VA). Districts in a few of these states have entered into what are called “meet and confer” agreements about salary, benefits, and other working conditions, but administrators have the right to break these agreements at will. For all intents and purposes, these states are free of many of the alleged “negative union effects."

Here’s a simple proposition: If teacher union contracts are the problem, then we should expect to see higher achievement outcomes in the ten states where there are no binding teacher contracts.

So, let’s take a quick look at how states with no contracts compare with the states that have them.

Public Apples, Private Oranges: A More Ripened Look

In a previous post, I criticized articles in the USA Today and elsewhere (all citing data from the conservative Cato Institute), which claimed that federal government workers earn almost twice as much as private sector employees (including salary and benefits). I argued that en masse comparisons of public and private sector workers don’t tell us much, since the jobs that comprise the two sectors are very different.

For a more useful comparison, we need to understand not only that most public sector workers are professionals, but also that they tend to be more experienced, and more quickly promoted, than the typical private sector employee. For example, a lead research scientist will earn more than his or her staff scientists, whether they are working in the public or the private sector. So, if public sector employees in a given occupation tend to be more experienced or have more authority or responsibilities, they will appear “overpaid” even though they are not.

So, how does the public/private wage gap look when we compare professionals in the two sectors by both occupation and experience/responsibilities?

Selling The State

In a recent post, we discussed the explosive growth in privatization of public services, including one town that recently privatized everything and everybody. Along similar lines, this week, the Wall Street Journal published a story about desperate state and local governments, squeezed by declining revenues, selling or leasing public property to private interests. The reporter notes:

Cities and states across the nation are selling and leasing everything from airports to zoos—a fire sale that could help plug budget holes now but worsen their financial woes over the long run.

The notion that we should cede public services to the private sector has assumed the status of quasi-religious dogma in recent years. There was a brief time during the earlier, more dire days of the current recession during which many began to question this market fundamentalism. Such dissent continues in some circles today. But you wouldn’t know it looking at actual policy.

Things may even be getting worse. Cash-strapped governments have stepped up efforts in a new area: privatization of public assets.

The Jobs Imperative

With today’s Senate passage of the new public sector jobs bill, the federal government’s role in stimulating the economy is once again in the limelight. The use of public dollars to leverage jobs in the private sector is even more controversial. Historically (and today) U.S. business wants government to "get out of the way," and let market forces determine outcomes (at least until they themselves need to be bailed out). The priority is "maximizing shareholder value." The fewer workers you need to do that, or the lower their cost, the better.

Still, some worry that the axiom of maximizing shareholder value lately has been taken to a destructive extreme. One of those is Andy Grove, former CEO of Intel and still a consultant to the U.S. chip-making giant. In a recent interview in Business Week, Grove noted that U.S. business is "...largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better."