Over past decade, government compensation skyrocketed while private sector shrunk
Some unionized state workers are marching in protest over contract negotiations, but taxpayers are the ones who should actually be upset.
“[S]tate government employees argued that they've already made enough concessions over the last decade and don't want any more cuts,” reported MLive.
But, as the article notes, state taxpayers are spending an extra $160 million this year on employees — mostly going toward the rising costs of pensions and health care. As Michigan Capitol Confidential reported earlier this year, the average Michigan government employee’s compensation now exceeds six-figures for the first time, with costs increasing from $97,889 in 2010-11 to $104,067 in 2011-12 per average employee.
The union representing most of the workers, UAW Local 6000, says on its website that it is protesting because "state workers are under the gun" and health care costs will "literally bankrupt" some union members.
But state employees are actually making 31 percent more than in fiscal year 1998-99, with benefit costs 75 percent higher, both adjusted for inflation. Perhaps the union should have some sympathy for Michigan taxpayers, who saw their median household income fall 19.2 percent over that time period.
These tough negotiations are not limited to state government. Re-aligning the benefits packages more toward private-sector averages would save a lot of money, and help head off the fiscal problems Michigan is heading toward as retirement pension and health care benefits continually are underfunded.
A study by James Hohman, assistant director of fiscal policy, shows that benchmarking all state and local government employee benefits in Michigan to the private-sector average would save $5.8 billion annually.
It's not fun to hold down anyone's pay or benefits, but taking an increasing amount over the past decade from a shrinking private sector to fund government benefits has led to fiscal problems. The state simply cannot continue to see an increase in public employee costs relative to private workers.
(Editor's note: This story has been slightly edited since its original posting.)