Seems the Public vs Private debate is not just an Irish issue

woodseb · 29-03-2010 09:01AM #1

great article in the WSJ today

http://online.wsj.com/article/SB10001424052748704281204575003101210295246.html?KEYWORDS=government+pay+boom

The Government Pay Boom
America's most privileged class are public union workers.

It turns out there really is growing inequality in America. It's the 45% premium in pay and benefits that government workers receive over the poor saps who create wealth in the private economy.

And the gap is growing. According to the U.S. Bureau of Labor Statistics (BLS), from 1998 to 2008 public employee compensation grew by 28.6%, compared with 19.3% for private workers. In the recession year of 2009, with almost no inflation and record budget deficits, more than half the states awarded pay raises to their employees. Even as deficits in state capitals widen and are forcing cuts in services, few politicians are willing to eliminate these pay inequities that enrich the few who wield political power.
.............

...........

So if your state is broke, this is a major reason. Eventually, governors, state legislators and city council members are going to have to decide whether protecting America's privileged class of government workers is a higher priority than funding such core functions of government as public safety. Something has to give. It's time to close the biggest pay gap in America.

some of the numbers in the full article are frightening.....

Count Dooku · 29-03-2010 10:21AM

More from US
A New Aristocracy?

London School of Economics, 17 June 2009
Public sector pensions aristocracy

murphaph · 29-03-2010 10:39AM

Oh, how I recognise this...

Lifelong Democratic Party activist, Speaker of the California Assembly and two-term mayor of San Francisco, Willie Brown, delivered an epiphany on this topic in the San Francisco Chronicle recently. The motivation for his missive is unknown, but at the age of 76 he is unlikely to seek public office again. In short, he has reached a stage in his public profile where he does not need to worry about what some future constituents might think. In a few short sentences, Mayor Brown laid out the unholy alliance between state politicians and public sector unions. The civil service system, originally designed to limit politically driven patronage, has turned into a vicious cycle where public employee unions finance the election of politicians in exchange for ever greater pay and benefits.

As Brown put it, "The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers." For a politician this is a surprising and heartening display of candor.

My bold. Could have been written about Ireland except the civil servants started out on better terms when benchmarking came on the scene! Being a teacher or a guard was always a good job in Ireland. Benchmarking just made it even better.

aoboa · 29-03-2010 10:58AM

Private sector wages in the US have been stagnant since the 1970's.
The fact that PS wages have grown is not the problem. The problem is that private sector wages have not.
This is partly the reason we're in the mess we're in because to compensate for falling wages Americans turned to living on credit. They lived on credit cards and refinanced their homes as the grew in value and spent the money too.
There's a ton of research and articles all over the web about this.

The_Honeybadger · 29-03-2010 11:05AM

aoboa wrote: »

The fact that PS wages have grown is not the problem. The problem is that private sector wages have not.

Not sure this makes much sense, I'm not an economist but surely PS wages should be benchmarked against private sector ones & inflation, i.e. when private sector wages are stagnant PS ones should remain so also?

Scofflaw · 29-03-2010 11:13AM

Minor point, and one I'm sure people will be aware of - the WSJ is now a Murdoch outlet. Murdoch outlets don't seek to reflect public opinion, but to shape it to a particular right-wing agenda.

cordially,
Scofflaw

aoboa · 29-03-2010 11:16AM

mickeyk wrote: »

Not sure this makes much sense, I'm not an economist but surely PS wages should be benchmarked against private sector ones & inflation, i.e. when private sector wages are stagnant PS ones should remain so also?

In the private sector the expectation is that profits will increase year on year. The first hit is on wages through stagnation or offshoring of jobs. The percentage that wages represent on the balance sheet of multinationals has been steadily shrinking for decades.
This same stress doesn't apply to public service who are paid not least from the taxes on the increased profits of the private sector.
Worker organisation is 'actively' discouraged in the private sector in the US and so the pressure on wages there is flat or, these days, downwards.

woodseb · 29-03-2010 02:03PM

Scofflaw wrote: »

Minor point, and one I'm sure people will be aware of - the WSJ is now a Murdoch outlet. Murdoch outlets don't seek to reflect public opinion, but to shape it to a particular right-wing agenda.

cordially,
Scofflaw

in fairness, the journal always had a right wing agenda well before rupert acquired it....it shouldn't take away from some of the facts in the article

Head The Wall · 29-03-2010 02:13PM

More of it here

As union member pay increases so do union dues, which is how California public employee unions can come up with $30 - 40 million in campaign contributions every election cycle. It also gives them cash to bury any effort at reform that would impair their benefits or limit their power. Few politicians are courageous enough to battle against this union power. So pay and benefits go up along with the percentage of unionized jobs year after year.

rightwingdub · 29-03-2010 04:04PM

Besides Ireland and the US is there any other countries at the moment who are having bitter public vs private sector divide. I heard the private sector is quite peeved off in the UK with the public sector.

Sleepy · 29-03-2010 05:33PM

Definite moaning about public sector conditions over here in the UK too.

Idbatterim · 29-03-2010 05:34PM

I wish FG would nail their colours to the mast and say we are for reform and reverse benchmarking in the PS. (Im not going to like giving my vote to FF again, but as long as FG dont state their intentions on PS reform and pay and have Kenny as leader thats where my vote will be going unfortunately! To a "pisspoor party that happen to be slightly better than the rest." That or a new party gets founded! We in the private sector are in a large majority and we are allowing this s**t to happen! Also how is that being rightwing, anything here that isnt to the left of centre is referred to as being radical right wing!

danman · 29-03-2010 05:45PM

rightwingdub wrote: »

Besides Ireland and the US is there any other countries at the moment who are having bitter public vs private sector divide. I heard the private sector is quite peeved off in the UK with the public sector.

Payscales in the UK are way below the levels here.

Example:- my wife worked in the UK public service. After 10 years she was at the top of her scale.

She moved the the Irish public service 1 and 1/2 years ago and the pay masters wouldn't recognize her experiance as equivilant to working in the Irish PS. (ironically, she trained some of her new bosses, but it still didn't count) They would only start her on point 3, I think.

Guess what?
Her starting salary on point 3 (3 years in service) was 35% higher than she was on in the UK....!!!!!

Exact same job.
Better perks, but exact same job.

In fairness, she does seem to think that the service she provides is better run here. It's a new service, staffed by a young workforce.

She left behind a lot of union type attitudes in the UK, she's happier all round. The service has been around much longer over there, so the union attitude is ingrained.

irishh_bob · 29-03-2010 08:32PM

Idbatterim wrote: »

I wish FG would nail their colours to the mast and say we are for reform and reverse benchmarking in the PS. (Im not going to like giving my vote to FF again, but as long as FG dont state their intentions on PS reform and pay and have Kenny as leader thats where my vote will be going unfortunately! To a "pisspoor party that happen to be slightly better than the rest." That or a new party gets founded! We in the private sector are in a large majority and we are allowing this s**t to happen! Also how is that being rightwing, anything here that isnt to the left of centre is referred to as being radical right wing!

i really dont know what fine gael are at , thier opportunity is huge , thier is a sleeping giant of middle ireland private sector workers who have no voice yet populist kenny continues to hedge his bets , he seems happy to merley form a coaliton with labour per usual , if that is the height of both him and his partys ambitions then providing cowen is replaced , i myself may opt to vote fianna fail , keeping labour out is more important to me than getting fianna fail out , the ball is firmly at fine gaels foot but have they the courage to kick into an open goal

irishh_bob · 29-03-2010 08:33PM

danman wrote: »

Payscales in the UK are way below the levels here.

Example:- my wife worked in the UK public service. After 10 years she was at the top of her scale.

She moved the the Irish public service 1 and 1/2 years ago and the pay masters wouldn't recognize her experiance as equivilant to working in the Irish PS. (ironically, she trained some of her new bosses, but it still didn't count) They would only start her on point 3, I think.

Guess what?
Her starting salary on point 3 (3 years in service) was 35% higher than she was on in the UK....!!!!!

Exact same job.
Better perks, but exact same job.

In fairness, she does seem to think that the service she provides is better run here. It's a new service, staffed by a young workforce.

She left behind a lot of union type attitudes in the UK, she's happier all round. The service has been around much longer over there, so the union attitude is ingrained.

unions are much stronger in ireland than in the uk

rightwingdub · 29-03-2010 09:12PM

irishh_bob wrote: »

i really dont know what fine gael are at , thier opportunity is huge , thier is a sleeping giant of middle ireland private sector workers who have no voice yet populist kenny continues to hedge his bets , he seems happy to merley form a coaliton with labour per usual , if that is the height of both him and his partys ambitions then providing cowen is replaced , i myself may opt to vote fianna fail , keeping labour out is more important to me than getting fianna fail out , the ball is firmly at fine gaels foot but have they the courage to kick into an open goal

I fully agree, keep Labour out of government unfortunately Kenny is so spineless he will always try to appease Labour, I would support either a FF-FG or FG-FF government, with neither Cowen or Kenny as Taoiseach.

Idbatterim · 29-03-2010 09:39PM

i agree with a FF and FG coalition, in no way do I ever want to see Labour in Goverment! The thing is we are again back to the fact that everything comes back to money! If Labour or Sinn Fein got into government we are finnished, not just the rich and middle class but also the lower classes and poor! People may say FF are only for the rich, look at the increases in welfare rates over the last decade they are massively above inflation, 50% of private sector workers pay no tax, pensioners have received no cuts despite the down turn. And these in ultra left wing Ireland are referred to right wing! Bring back Michael McDowell make him FG leader, recruit Shane Ross from the Senate too! We need hardliners not poodles like Kenny! LV might be perfect, I could care about age its about ability!

rightwingdub · 29-03-2010 09:50PM

Idbatterim wrote: »

i agree with a FF and FG coalition, in no way do I ever want to see Labour in Goverment! The thing is we are again back to the fact that everything comes back to money! If Labour or Sinn Fein got into government we are finnished, not just the rich and middle class but also the lower classes and poor! People may say FF are only for the rich, look at the increases in welfare rates over the last decade they are massively above inflation, 50% of private sector workers pay no tax, pensioners have received no cuts despite the down turn. And these in ultra left wing Ireland are referred to right wing! Bring back Michael McDowell make him FG leader, recruit Shane Ross from the Senate too! We need hardliners not poodles like Kenny! LV might be perfect, I could care about age its about ability!

Here's an exampled of the following basic rate of social welfare increases from January 2004 till January 2009.

Jan 2004 €135.30 per week
Jan 2005 €148.30 per week
Jan 2006 €165.30
Jan 2007 €185.30 per week
Jan 2008 €197.30 per week
Jan 2009 €204.30 per week

That is roughly a 50% increase in welfare in 5 years, my guess is that the inflation rate for that 5 year period is between 12-17% and it shocks me that people are now so vociferously opposed to social welfare cutbacks.

On the topic itself, the Gilmore solution is tax, tax and more tax. But thats not suprising from a former Marxist.

doc_17 · 29-03-2010 10:14PM

The wall street street is rightwing and heavily alligned with the Fox News Channel. Even the mere mention of Fox News should be enough to kill this. They championed the bush tax cuts that have partly left america with a 1.6 trillion deficit, while the tax cuts themselves only benefited those who earned over $250000. They do not care about the ordinary Joe, public or private. And anyone who picked up a copy of the WSJ and expected to see anything else is naive to the point of being insane.

Although the people who posted on about the unions in the states are dead on correct. They are all partly responsible for the decline in manufacturing in america.

woodseb · 30-03-2010 07:15AM

doc_17 wrote: »

The wall street street is rightwing and heavily alligned with the Fox News Channel. Even the mere mention of Fox News should be enough to kill this. They championed the bush tax cuts that have partly left america with a 1.6 trillion deficit, while the tax cuts themselves only benefited those who earned over $250000. They do not care about the ordinary Joe, public or private. And anyone who picked up a copy of the WSJ and expected to see anything else is naive to the point of being insane.

Although the people who posted on about the unions in the states are dead on correct. They are all partly responsible for the decline in manufacturing in america.

as said before, the WSJ had a right wing agenda for a very long time. News Corp only acquired it in 2007 - you may disagree with the agenda but i think some of the data in the article are quiet shocking for an outsider

murphaph · 30-03-2010 07:32AM

doc_17 wrote: »

The wall street street is rightwing and heavily alligned with the Fox News Channel. Even the mere mention of Fox News should be enough to kill this. They championed the bush tax cuts that have partly left america with a 1.6 trillion deficit, while the tax cuts themselves only benefited those who earned over $250000. They do not care about the ordinary Joe, public or private. And anyone who picked up a copy of the WSJ and expected to see anything else is naive to the point of being insane.

Although the people who posted on about the unions in the states are dead on correct. They are all partly responsible for the decline in manufacturing in america.

No it shouldn't. If the data supports their position then it has to be taken on board, otherwise you are dismissing the argument because of the person who espoused it..that's ad hominem stuff.

aoboa · 30-03-2010 07:50AM

Eh, don't let reality get in the way of your ranting.
Read my first post and have a look for any papers written about the stagnation of wage rates in the us since the 1970's.

maninasia · 30-03-2010 08:02AM

aoboa wrote: »

Private sector wages in the US have been stagnant since the 1970's.
The fact that PS wages have grown is not the problem. The problem is that private sector wages have not.
This is partly the reason we're in the mess we're in because to compensate for falling wages Americans turned to living on credit. They lived on credit cards and refinanced their homes as the grew in value and spent the money too.
There's a ton of research and articles all over the web about this.

At core this is the major reason, related to globalisation and offshoring of manufacturing and jobs and growth in other countries competitive abilities.
It doesn't mean that costs can't be controlled in PS of course.

maninasia · 30-03-2010 08:09AM

aoboa wrote: »

In the private sector the expectation is that profits will increase year on year. The first hit is on wages through stagnation or offshoring of jobs. The percentage that wages represent on the balance sheet of multinationals has been steadily shrinking for decades.
This same stress doesn't apply to public service who are paid not least from the taxes on the increased profits of the private sector.
Worker organisation is 'actively' discouraged in the private sector in the US and so the pressure on wages there is flat or, these days, downwards.

As somebody who works in an international corporation I have seen this first-hand. There is severe pressure from the top to show growth EVERY YEAR. If this cannot be acheived by natural growth in the market which may have reached it's peak it will be acheived by rationalisation and cost-cutting, an ongoing process in Western countries over the last decades as populations and demand levels off and competition from foreign companies with lower cost structure grows.

Of course it kills the local market in the end (obvious US has just delayed this effect with use of credit, even now!) but they don't mind, corporate directors don't take into account long term macro effects corporations, they are only responsible for annual revenues to shareholders. The directors pay is not linked to long term results and most directors are not in the job very long, depending on high salaries and bonuses to make as much as they can in the shortest possible time. Shareholders also have a short-term vision due to open nature of trading.

Many democracies are run on short electoral cycles, thereby insuring that it is very difficult for elected governments to take tough measures or 'face reality' without getting booted out of their jobs. Ironically, it is authoritarian states (not all but China is a good example) which often have a longer term view and plan in place. They see themselves being in government for decades and thus see the benefit in long term planning .

To me it all comes down to short-term thinking! Executives and government officials are rewarded for short-term results which are often at the expense of long-term benefits. The system is flawed in my opinion. You will see another big round of corporate bankruptcies coming up in US from next year as their 'junk bonds' come due. It's all been just passing the debt on to the next shareholder or the next government, well that works until nobody is willing or more exactly ABLE to take on the debt anymore.

AlekSmart · 30-03-2010 09:17AM

Jan 2004 €135.30 per week
Jan 2005 €148.30 per week
Jan 2006 €165.30
Jan 2007 €185.30 per week
Jan 2008 €197.30 per week
Jan 2009 €204.30 per week

Rightwingdub has just led a VERY big Bull Elephant into the room and it`s already crapping in the corner.

Never mind the Private vs Public engineered confrontations....unless somebody tackles the Working vs Non-Working divide then it`s Game Over irrespective of whatever "deal" was done last night !!!

murphaph · 30-03-2010 09:26AM

AlekSmart wrote: »

Jan 2004 €135.30 per week
Jan 2005 €148.30 per week
Jan 2006 €165.30
Jan 2007 €185.30 per week
Jan 2008 €197.30 per week
Jan 2009 €204.30 per week

Rightwingdub has just led a VERY big Bull Elephant into the room and it`s already crapping in the corner.

Never mind the Private vs Public engineered confrontations....unless somebody tackles the Working vs Non-Working divide then it`s Game Over irrespective of whatever "deal" was done last night !!!

not forgetting that pensions still stand at 204 a week even though the dole was reduced...I mean, the dole needed to be reduced (and needs further reductions, it's €73 (yes Euro!) a week in the UK!!) but pensions should have been reduced and reduced even more than the dole. Older people have fewer outgoings (most notably accomodation costs) than younger people. FF cynically left pensions alone because pensioners vote more.

ALL SW costs need to come down. I have a family on RS living in a house I own (my old home). Their RS forms an artificial floor in rents. I personally don't want RS reduced, but my heart tells me it's the right thing to do for the country. It's not the taxpayer's responsibility to pay my mortgage and it's not my kid's responsibilty to pay for it in a generation if we just borrow it. WE lost the run of ourselves and kept electing FF back in, despite there being no fundamantals upon which to base our economy.

I think this is a turning point for Ireland. Either we go the way of the mediteranean countries or the way of the more conservative, prudent northern countries. I hope to (a protestant lol) Christ that we choose the more austere way and get back to basics. Plasma TVs and flash cars are not important.

Idbatterim · 30-03-2010 10:24AM

If the rent supplement was dropped, would the cost of renting for everyone come down? Its not like most landlords are in a take it or leave it position! The biggest hindrance to lowering wages, social welfare is still the huge cost of property here if you are renting or buying.

murphaph · 30-03-2010 10:46AM

Idbatterim wrote: »

If the rent supplement was dropped, would the cost of renting for everyone come down? Its not like most landlords are in a take it or leave it position! The biggest hindrance to lowering wages, social welfare is still the huge cost of property here if you are renting or buying.

The landlords (like me) with some room to manouvre will lower rents to hold onto tenants. The landlords with no room to manouevre (mortgaged to the hilt and possibly already subsidising the mortgage from their other income) will be forced to sell up and take the hit.

You can rest assured, RS is providing an artificial floor in rents in general. If it were reduced, rents would reduce (like they did last time it was reduced). Obviosly the effect would be more noticable in less desirable areas and outside big cities.

I predict there will be large scale consolidation in the rental sector, ie, larger companies will form who will begin to buy up rental properties from landlords in trouble and will run the thing in a very differnt way. It's quite common in Germany.

irishh_bob · 30-03-2010 12:11PM

Idbatterim wrote: »

i agree with a FF and FG coalition, in no way do I ever want to see Labour in Goverment! The thing is we are again back to the fact that everything comes back to money! If Labour or Sinn Fein got into government we are finnished, not just the rich and middle class but also the lower classes and poor! People may say FF are only for the rich, look at the increases in welfare rates over the last decade they are massively above inflation, 50% of private sector workers pay no tax, pensioners have received no cuts despite the down turn. And these in ultra left wing Ireland are referred to right wing! Bring back Michael McDowell make him FG leader, recruit Shane Ross from the Senate too! We need hardliners not poodles like Kenny! LV might be perfect, I could care about age its about ability!

mc dowell was a crap politican although a brilliant man , the obvious one to bring back to lead fine gael is ivan yates , irish people need to like thier leaders , yates is not only a right winger ( by irish standards ) on economic issues , he is hugeley charismatic and personable

irishh_bob · 30-03-2010 12:17PM

murphaph wrote: »

not forgetting that pensions still stand at 204 a week even though the dole was reduced...I mean, the dole needed to be reduced (and needs further reductions, it's €73 (yes Euro!) a week in the UK!!) but pensions should have been reduced and reduced even more than the dole. Older people have fewer outgoings (most notably accomodation costs) than younger people. FF cynically left pensions alone because pensioners vote more.

ALL SW costs need to come down. I have a family on RS living in a house I own (my old home). Their RS forms an artificial floor in rents. I personally don't want RS reduced, but my heart tells me it's the right thing to do for the country. It's not the taxpayer's responsibility to pay my mortgage and it's not my kid's responsibilty to pay for it in a generation if we just borrow it. WE lost the run of ourselves and kept electing FF back in, despite there being no fundamantals upon which to base our economy.

I think this is a turning point for Ireland. Either we go the way of the mediteranean countries or the way of the more conservative, prudent northern countries. I hope to (a protestant lol) Christ that we choose the more austere way and get back to basics. Plasma TVs and flash cars are not important.

pensioners and old people are spoiled to a redicolous extent in ireland but dont expect this to change anytime soon , irish people are sentimental chumps when it comes to certain social groups and old people are one of those groups , that said , thier are practical considerations at play too , inherritence has always been a big issue in this country , wondering how much aunt molly will leave me is a rural obsession , ive said it before , during the protests against the medical card reforms at the end of 2008 , many in the crowd were middle aged people , no doubt worried that thier inherritence might be spent on pills and doctor bills

woodseb · 30-03-2010 12:34PM

don't forget the OAPs vote too;)

Seems the Public vs Private debate is not just an Irish issue

Comments