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Blog of Mass Destruction

Low Taxes, Recession Created Deficits

By The Reverend Published: February 25, 2011

Progressives have rightly pointed out that what Tea Party-elected state governors are doing is exploiting the recent economic downturn for political gain. Union workers, public or private, tend to support and actively work for Democratic candidates and progressive initiatives. Therefore, denying or dismantling union workers collective bargaining rights will result in a weaker opponent for Republicans moving forward.

Historically, Republicans have been anti-labor, anti-union. Today, conservative voters still characterize unions and union workers as communists, as enemies of the state, even though union membership has dwindled to less than 12% of all American workers today, down from a high in the 30% range some 50 years ago.

So, it should come as no surprise that today's fight to eliminate collective bargaining rights one state at a time has nothing to do with state budget deficits.

The executive director of Policy Matters Ohio, Amy Hanauer, in testimony before the Ohio Senate's Insurance, Commerce and Labor Committee on February 17 presented the following evidence that collective bargaining rights are not creating state budget deficits....

In truth, states with and without collective bargaining rights faced similar budget deficts in 2010. States with NO collective bargaining rights for public employees saw an average budget shortfall of 24.8% in 2010 while states with collective bargaining for ALL public employees has an average budget shortfall of 24.1%.

For the 42 states with some (or all) collective bargaining rights for some (or all) public workers, the budget deficit averaged 23%. These numbers are all very close. The right of public workers to unionize is not driving the state revenue crisis.

If public sector collective bargaining rights were creating, or exacerbating, state budget deficits....then one would expect to find evidence of higher deficits, on average, in the states who allow collective bargaining. If public sector collective bargaining rights were creating, or exacerbating, state budget deficits.....then one would expect to find evidence of lower deficits, on average, in the states who do not allow collective bargaining.

The problem is, that evidence is simply not available. It doesn't exist.
Instead, this evidence exists....

Some states that forbid collective bargaining for state workers....Arizona, N. Carolina, Nevada....face some of the highest state budget deficits going into 2011, all exceeding 30%. And some states that allow and encourage collective bargaining....Montana, Massachusetts, New Mexico, S. Dakota....are in better budgetary positions with deficits under 10%.

In her report, Ms. Hanauer, also included research findings disputing the notion that unionized state employees are paid more than their private sector counterparts or that state employees receive more in benefits than their private sector counterparts.

The wages and salaries of state and local employees are 11 and 12 percent lower, respectively, than those for private sector workers with comparable education and experience.

Over the last two decades, earnings for state and local employees have generally declined compared to similar sector workers.

Benefits, such as pensions, make up a greater share of compensation in the public sector.

Including benefits, state and local employees still have lower total compensation. On average, total compensation is 6.8% lower for state, and 7.4% lower for local workers, relative to comparable private sector workers.

What is clear from these findings is that state employees are not compensated more than their private sector counterparts....public employees are actually compensated less. What is clear from these findings is that states with, or without, collective bargaining rights for state employees have the same on average budget deficits.

What, then, is causing all these state budget deficits?

...Ohio's budget problem is a revenue crisis, caused by a weak economy and ill-advised tax reductions that have deprived the state of needed revenue. Eliminating collective bargaining is not going to solve a revenue crisis.

What's missing from the Village discussion over deficits, what is avoided at every turn by conservatives hell-bent on eradicating unions.....is the right-in-front-of-our-noses fact that the country is still reeling from one of the worst economic downturns in our nation's history. Of course, state and federal revenues are down. Millions upon millions have lost their jobs.....nothing other than lower tax revenues COULD be the result.

What's missing from the Village discussion over deficits, what is avoided at every turn by conservatives hell-bent on rewarding the nation's wealthiest with even more wealth.....is the fact that state and federal income tax rates, the primary sources for all governmental revenue, are at their lowest levels in 60 years.

Finally, to take a crisis caused by a collapsed national economy, a crisis made worse by recent and historic tax cuts.....a crisis not created in any way by unionized governmental workers.......and to distort that crisis in a way that places the blame, the responsibility, for the crisis on collective bargaining rights for those who earn in wages and benefits, on average, less than their private sector counterparts.....is not simply inaccurate, dishonest and unfair.

It's evil.

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