Government workers in New York fall to earth
Last month, governments across the US shed another 14,000 jobs. That continues a downsizing trend that’s been underway for a long time, accelerating during the Great Recession.
Local, state and Federal agencies have laid off hundreds of thousands of teachers, cops, firemen, counselors, prison guards. Here in New York state, the impact has been profound. This from the Ithaca Journal.
Government jobs have long been a stable and secure career for hundreds of thousands of New Yorkers.
But between December 2009 and December 2010, the federal, state and local governments shed 34,700 jobs — more than any other sector in New York.
That’s in one year. And my guess is that we’re just warming up, with Gov. Andrew Cuomo threatening as many as 10,000 state-level lay-offs next year.
Combine that with the teacher and local government lay-offs that will be triggered by his austerity budget — which cuts pass-through grants sharply — we could easily see another 30,000-40,000 public sector workers go.
If Albany approves a property tax cap, that will curtail funding for schools and local governments even further, almost certainly triggering even deeper reductions.
A generation ago, the impact of this transformation wouldn’t have been so profound. We had a broad-based middle class in America, with relatively small gaps between the haves and have-nots.
But these days, public-sector jobs are one of the last bastions of economic security, especially for minorities, for people in rural areas like the North Country, and people with lower levels of education.
When you factor in the economic vitality sparked by those jobs, the impact is profound.
Obviously, the best case scenario is that we transition in an orderly way from taxpayer-dependent jobs in the public sector to tax-revenue generating jobs in the private sector.
But the reality of America’s modern economy is that many of these government workers will be entering a brutal job market.
Even if they find work, the jobs are likely to be more demanding, with longer hours, lower pay, and fewer benefits, than the world they left behind.
I’m also guessing that we’ve seen the end of the era when government jobs are compensated so generously. State workers in the North Country earn, on average, $20,000 a year more than workers in the private sector.
I don’t know anyone who thinks that is fair, or sustainable.
But in many ways, this change in New York’s economy is every bit as challenging as the collapse of Michigan’s automobile industry, or the decline of manufacturing in Ohio.
All those government jobs created the illusion of solid, stable prosperity. Now, somehow, we have to struggle toward the real thing.
Tags: economy, nys budget, politics
Bret, it’s not a left-right thing. Both parties have favored the policies that have increased corporate power and concentrated wealth at the top. I do think Republicans are a little more blatant about it. But Paulson, Summers, Geithner, Immelt, etc. are all part of the problem. Volker had some good ideas but he is out. Neither party is talking about the decline of the middle class and that the wealthiest 1% of Americans now possess a greater collective net worth than the bottom 90%. The irony is this concentration of income and wealth is counter-productive in the long run, even for the wealthy. Without a vibrant financially healthy middle class to support the economic engine the pie for everyone will shrink. The past 40 years have seen voodoo economics, trickle down and top tax rates cut in half. And what did it do for the middle class? If both spouses aren’t working good luck getting by. One of the reasons the economic recovery is so anemic is that the middle class is running on fumes. The shift over the last 40 years in putting the tax burden on the middle class and away from the wealthy is showing its negative consequences.
JDM –
“New York is the nationwide pension leader, with the country’s highest-funded public pension at 107 percent. Though the state has long been in fiscal turmoil, it has met its necessary funding level every year since at least 1997. State Comptroller Thomas DiNapoli made it his goal to increase the plan’s transparency and ensure it maintains a high level of funding. To make good on this, in 2009, New York passed reforms that raised the retirement age for most new government employees from 55 to 62, and increased the amount public employees are required to contribute to the pension plan.”
http://www.governing.com/topics/public-workforce/pensions/pension-preparedness.html#
In terms of salaries or pay or whatever you want to call it, the first thing you need to do is to get rid of the word “earn” and replace it with “get.”
I say that because “earn” implies effort while “get” doesn’t imply anything other than what someone is paid.
In reality, many people work much harder in low paying jobs than those who get paid much more.
The broad area of entertainment provides a perfect example. There are many actors and musicians who work just as hard as those at the top but don’t get paid anywhere near as much as those at the top. Why? It’s because those at the top star in the movie or sell more records. It doesn’t mean their acting or singing is necessarily better than those who aren’t at the top. It just means they are not at the top and are not generating as much in sales.
Same goes for car dealers and salesmen/women.
It’s all about sales, not about effort.
JDM – teachers work for the school district which in turn negotiates contracts at the local level. Each district has its own contract. The funds come mainly from property taxes, not state taxes. the big “public employee” problem is municipal pensions. not teachers and and not state employees. The other big problem is health care costs.
Not to throw red (or blue) meat on the fire, but one reason there is a pay gap between public and private sector jobs in the North Country is that most public sector workers in the North Country have union representation, and most private sector workers do not. Whether the setting is the private sector or the public, workers with union representation make more. They have a place at the table when the budget, either state or corporate, is drawn up.
So represented workers become convenient targets when times are hard, along with the other end of the spectrum, the chronically poor who consume government services. I’ve worked in both the private and public sectors, as an employee and an employer. If I was working now in the commercial world, I would want to be in a situation where I had some clout in determining my working conditions and compensation.
I wouldn’t want other workers to make less, I would want to make more.
Dale Hobson
NCPR Online
dbw says: “Wouldn’t it have been wiser for those governmental agencies, recognizing the good years wouldn’t go on forever, to have perhaps put a modest amt. into a contingency fund, so they could better meet their obligations now?”
Absolutely! The problem is the rate of contribution for State and Local governments is adjusted according to economic conditions in a perverse fashion. During stock market boom years the rates are reduced – which gives State and Local governments (and taxpayers) an unrealistic windfall. But when the economy is struggling the contribution rates have go back up. If contribution rates had remained the same during the boom years it would have created a “surplus” in the pension system and there would be no need to raise rates now. The lowered pension contribution rates the past number of years essentially allowed NYS and local government to borrow money from the pension system which allowed them to keep taxes lower than they would otherwise been and now that has to be paid back during poor economic conditions. So yes, you are absolutely right – the current system that determines contribution rates is counter-productive, runs opposite to economic conditions and needs to be changed.
Bret sez: “I have a question for some of you with a more liberal bent- why do you get all po’d about a corporate executive making mega bucks, but not the sports stars, hollywood types, drug dealers, auto dealership owners, etc. that aren’t corporate, but are still raking in millions and millions? Oprah doesn’t exactly bust her back on TV..”
Because the corporate execs are often off-shoring jobs, and many of the ones being talked about on this thread–Wall Streeters–got your tax money in the bailouts, Bret. And now they’re the same ones advocating to take your pension away (see the Peterson Foundation types). And I’m sure you work hard, Bret, but Oprah’s work ethic is supposedly legendary. And yes, I’m sick that Goldman Sachs suits have so much influence on our government policy. So are a lot of liberals:
http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405
Here is a story about how Massachusetts- a state the provides a lot of services- has a much lower tax burden than NY. If Mass is able to do this, then why can’t we?
http://www.buffalonews.com/city/capital-connection/albany/article333312.ece
scratchy – interesting article. thanks
I found this info informative, “Soon after the limit was imposed, more fire agencies and schools merged. Some villages got rid of their local police departments. By the end of the 1990s, county governments — which cannot impose their own separate sales tax — were all but abolished, except for providing a few services such as running jails.”
Also, the state had to provide some additional funding to schools. (But I would rather do it that way than thru local property taxes anyway)
There has been a lot of resistance in NY to consolidating school districts and local governments. But I think a property tax cap is coming and it will be interesting to see what adjustments are made.
And if anyone is still reading this here is an interesting article on CEO compensation to compare to the outrageous salaries public employees get.
http://thinkprogress.org/2011/02/07/chamber-ceo-jobs/
dbw – yes
DBW- That’s what Gov’t never does. Lets say we “recover” from this recession/depression. The very second there is a little extra revenue it is a 100% surety that every politician worth his plastic hair will be looking for ways to spend every dime of it and more to re-elected. People say, “You can’t run a Gov’t like a business.” Well, maybe we ought to try it.
Myown, I think the Dems are sneakier about it rather than the Repubs being more blatant. After all GE got some enormous bucks and now the GE guy is in the White House every 5 minutes. You don’t hear about that, there’s no hue and cry from the press or the libs. You guys need to open your eyes just like the Repubs do.
I agree with much of what you say regarding the concentration of wealth, but I don’t think we have any right whatsoever to redistribute (steal) from anyone, rich or poor. That’s where we part ways.
Bret – the manner in which income happens and wealth accumulates is determined by the structure of society and established rules, including taxes. What I am saying is, over the past 30 years the rules were changed and tilted in favor of the rich getting a larger piece of the pie at the expense of the middle class. All I am suggesting is that we change the rules (and taxes) back to where they used to be in order to have a vibrant middle class and more stable society.