In a Wall Street Journal Op-ed this week, Tim Pawlenty makes the case that the need for worker protection from exploitation, which lies at the foundation of labor unions, has reversed in the case of public-sector unions. Taxpayers need protection from public unions, not the other way around, Pawlenty asserts:
Government employees today are among the most protected, well-paid employees in the country. Ironically, public-sector unions have become the exploiters, and working families once again need someone to stand up for them.
[…]
Federal employees receive an average of $123,049 annually in pay and benefits, twice the average of the private sector. And across the country, at every level of government, the pattern is the same: Unionized public employees are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt.
Check out this video for a fitting public pension reform parody. It likens government employees, receiving generous pensions thanks to public-sector unions ability to milk taxpayers, to Aristocrats:
Last week, I blogged about the looming crisis concerning state pension liabilities, and about the efforts by some Republicans in Congress to reign in state spending before the Fed will call taxpayers to bail-out states. Three Republicans introduced a bill which seeks to limit states’ ability to fund irresponsible, out-of-control spending. In particular the bill would require states, wanting to sell tax-exempt bonds, to report their current liabilities to the Treasury Department. My take on the bill, reposted here:
While private sector unions are constrained by the fact that higher business costs lead to lost sales and fewer jobs, public sector unions face no such constraint, and even well-intended government officials trying to reign in state and local pension liabilities have little bargaining material to go up against unions. This bill would do much to constrain states and localities from spending irresponsibly and it would force public unions to cooperate with government officials to do what’s necessary to reign in ever-growing pension liabilities.
In his WSJ piece, Pawlenty presents three suggestions for reform:
First, we need to bring public employee compensation back in line with the private sector and reduce the overall size of the federal civilian work force. Mr. Obama’s proposal to freeze federal pay is a step in the right direction, but it falls well short of shrinking government and eliminating the pay premium enjoyed by federal employees.
Second, get the numbers right. Government should start using the same established accounting standards that private businesses are required to use, so we can accurately assess unfunded liabilities.
Third, we need to end defined-benefit retirement plans for government employees. Defined-benefit systems have created a financial albatross for taxpayers. The private sector dropped them years ago in favor of the clarity and predictability of defined-contribution models such as 401(k) plans. This change alone can save taxpayers trillions of dollars.
The crisis in state pension liabilities is real. If the government doesn’t stop its support for out-of-control state spending, expect to see taxpayers bail out state government retirees next.