The backlash against public employee unions

The Scott Walker victory in Wisconsin this week showed just how unpopular public employee unions have become in the US.

Nearly four out of ten voters who have a union member in their household still voted in favor of Walker, the Republican who shredded collective bargaining rights for public employee unions.

This is speculation, but I would bet you a cup of coffee that many of those “union households” who went Republican weren’t from families with ties to government work.

The reason? Public sector workers have continued to win contracts that bring solidly middle class benefits, while the rest of the unionized (and non-unionized) work force has seen sharp declines in wages and benefits.

Even within the labor movement there is growing tension over this disparity.

After all, a big chunk of those government worker wages and benefits aren’t paid by corporations or by rich folks’ income taxes.

They’re paid through property taxes, which is (depending on your point of view) either a perfectly fair flat tax or a really unfair regressive tax.

Whatever your political leanings, the result is that means middle- and working-class homeowners pay the same rate as the one percenters.

The result has been huge tax pressure on precisely those families who can least afford it, and on families who are seeing their own quality of life erode.  That is a formula for severe resentment.

And we’re seeing that conflict play out  here in the North Country and across the US.

In Democratic New York state, Governor Andrew Cuomo’s popularity soared after repeated confrontations with public sector unions.  Voters in relatively liberal California have also been voting eagerly to curtail pension benefits for public workers.

One interesting factor here is that a growing number of Democrats are leading the “fight” against public employees and their benefits.  This from the Wall Street Journal.

San Jose Mayor Chuck Reed, a Democrat elected in 2006, blamed cuts in city services such as library hours and police staffing largely on rising pension costs. … ‘Now that we are getting control of retirement costs, we can cautiously start to restore services,’ Mr. Reed said.

Chicago Mayor Rahm Emanuel — a former top Obama administration official — is also locked in a pitched fight with public sector workers.

This week, the Washington Post urged the leaders of public employee unions to heed these warning signs and come back to the bargaining table.

They would do better to engage governments in a good-faith effort to restructure and preserve public services for the long term. States and localities face genuine financial problems, and the unions share responsibility for them.

Interestingly, I head a similar message this week when I spoke to unionized workers at the Horace Nye nursing home in Elizabethtown, which was sold by the county on Monday as an effort to cut costs.

Shawna Barber, a nurse from Mineville, said there was strong support among employees talking with county leaders and accepting concessions.

“We tried to, we talked to the union about that. We were willing over there to give up anything we had to give up. And because this county’s a whole union, they would not let us do it,” she said.

Unions argue that these kinds of cuts reflect a race to the bottom in a society where income inequality between the wealthy one percent and the rest of us is emerging as a defining factor in public life.  There’s some real truth to this.

But sometimes political truth is far more powerful and immediate than statistical truth.

When people pay their property taxes every year, they don’t feel pinched by the rich and the super-rich.  When they see their services being cut, while paying more in taxes, they don’t blame Donald Trump or the Koch brothers.

They feel like they’re being fleeced by the teachers, prison guards and highway workers who live right next door and who are experiencing a significantly better quality of life.

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133 Responses to “The backlash against public employee unions”

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  1. Pete Klein says:

    There was a big mistake made by all levels of government years ago when benefits were increased as a way to avoid paying higher wages. It seemed like a good idea at the time (kicking the cost of an employee down the road to retirement) but eventually became a problem when pay for government workers began to edge closer to pay in the private sector.
    This is a perfect example of the chickens coming home to roost.

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  2. mervel says:

    I think there is resentment. However I think the vote in Wisconsin may not be a direct barometer. From the reports I have heard many people were really upset by the use of a re-call vote just because one side didn’t like the political stands someone makes.

    I think further it kind of makes the case against public unions. The point of a union is to give labor some of the bargaining power that the owners of capital have. The problem with public unions is that there is no capital, you are negotiating against the taxpayers. So in this case the Unions said even though we basically did get what we want, we didn’t like this guy who stood against us; we will re-call the politicians who didn’t play ball with us. It smacked of classic union bullying, it was a strategic error.

    I do support unions they need to be out organizing fast food chains and retail, I have little sympathy for public unions.

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  3. Newt says:

    I would seriously like to know what the difference in pay and benefits for public employees is between states that are heavily unionized, and those where this is either limited, or prohibited (I believe there are some). This would mostly be the Northeast, upper Midwest (excluding, of course, Wisconsin), and California vs. the South and many Western states.

    Are public employees in, say, South Carolina or Texas poor, oppressed, arbitrarily abused or dismissed , and lacking in decent retirement benefits? This may be heretical for a retired NYS public school teacher to say, but if so, I am unaware of it. I have always believed that our union protected our rights and benefits from incompetent, self-serving, and/or tyrannical administrators and politicians, but I wonder just how true this is compared to non-unionized states.

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  4. Ken Hall says:

    I have never belonged to a union; however, my father was a member of the Watertown Electrical Workers Local for most of his working life. It appears to me that the disdain with which “public sector” employee unions are held is an engineered situation managed by the 1%ers in an effort to convice half of the 99%ers to distrust the other half, same same, as they do in politics.

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  5. myown says:

    “The Scott Walker victory in Wisconsin this week showed just how unpopular public employee unions have become in the US.”

    Not sure I agree with that assumption, although I will say the Conservative campaign to demonize public employees has been very effective, especially aided by a pliant press that just regurgitates the latest biased union employee blast from conservative stink tanks like the Empire Center.

    One could just as easily say Walker’s election showed the Citizens United decision and massive amounts of special interest and “foreign” money can determine an election. Walker raised $30.1 million – his opponent $3.9. And most telling, 66 percent of Walker’s money came from out of state while only 26 percent for his opponent.

    http://www.rollingstone.com/politics/blogs/national-affairs/wisconsin-recall-a-big-win-for-big-money-20120606#ixzz1x7D6SLMU

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  6. Brian Mann says:

    I think it’s clear that the Citizens United decision was a big factor in Wisconsin.

    But it’s not just conservative Republicans who are raising concerns about public employee unions and their compensation.

    The decision to sell the Horace Nye nursing home in Elizabethtown was spearheaded in significant measure by two Democrats.

    Democratic politicians from California to Illinois to New York are big in this fight.

    –Brian, NCPR

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  7. mervel says:

    Newt I would say it is certainly true. I think they have done a good job.

    Part of the issue is that public sector unions also have political power over the people they are negotiating with and unlike a union negotiating with a corporation and the shareholders, to capture more of the profits they deserve, public sector unions are negotiating fiscally against taxpayers. The better deals they get the more taxpayers have to pay.

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  8. mervel says:

    But I don’t “blame” the unions at all that is there job, the problem is on the other side, the inability of politicians to effectively negotiate with public unions. Walker had it wrong you don’t take away the right to negotiate. But Christy probably has it right, you go in and negotiate hard and sometimes you don’t budge.

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  9. mervel says:

    In the long run Unions are good for the country.

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  10. myown says:

    Conservative, big-monied interests successfully destroyed unions in the private sector to increase profits and now they are after public sector employees in order to pay less tax on those profits. The decline of the middle class is directly related and proportional to the decline of all unions.

    That “Democratic politicians from California to Illinois to New York are big in this fight” shows just how effective the anti-union movement has been. Politicians simply reflect public opinion and there is no question the concerted crusade against public employees has affected the public’s attitude about unions.

    And again, the press is quick to headline any union bashing no matter how isolated or distorted the information may be. Yet, there is very little press coverage or outrage about the latest obscene ratio of CEO pay to worker pay, or that Federal taxes on income and capital gains are the lowest in 60 years or that the disparity in wealth and income in the US is the worst it has been since just before the Great Depression, etc., etc…

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  11. Paul says:

    Citizens United also allows union money from out of state to pour into Wisconsin to help that “cause”. Did that happen? If it didn’t happen maybe the unions in general were not really that sympathetic to the cause either. It sounds like a pretty big political miscalculation.

    Unions were not “destroyed”. They were legislated out of existence in some cases since the original need for them no longer exists.

    “The decision to sell the Horace Nye nursing home in Elizabethtown was spearheaded in significant measure by two Democrats.”

    Brain do you think that move was mostly about union busting? That seems to be the implication of your comment. Were there serious issues with salaries and benefits being too generous there?

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  12. Paul says:

    From the press coverage it sounds as if Wisconsin voters make their voting decisions entirely on ONE issue and that nothing else matters to them. I am sure this is not the case. Remember the press is trying to sell papers and ad space. They had to make a horse race out of this. Remember how close this was going to be? All eyes on Wisconsin (don’t forget to support our sponsors)! Please, don’t we have better things to do?

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  13. TaxCap says:

    20 yrs and retire for life? What a deal. A long period of politicians pandering to unions in return for votes now means government workers have pensions and health care that most everyone else can only dream of. So in this generally anti-tax mood, it is easy to see why politicians get support for decisions like Horace Nye.

    Now politicians get more votes for saying “hey, these people get paid too much”. All public sector workers should see this freight train coming at them and have their unions course correct. If they don’t politicians will find another way to stop this gravy train, like privatization.

    Is all this fair? Hard to say. It certainly is a big change.

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  14. Paul says:

    They had a great piece of Jon Stewart about this Wisconsin recall. It was just humor but it had some truth in it. They were interviewing a democratic union supporter that spearheaded the recall. They asked him what was it that Walker did to deserve a recall? Did he break a law, did he solicit a prostitute, what? The guy explained about the curbs on CB rights. So the interviewer asked him: So he did something that he promised voters he would do and you disagree with?

    If they had given all the money spent on both sides to NYS to set up some private not-for-profit nursing homes for poor people we would not have had to have this discussion or yesterdays.

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  15. Larry says:

    myown:
    CEOs don’t set their own pay, it’s determined by stockholders. CEOs who make money for their stockholders are highly compensated. Why is that a problem? The same is true of employee compensation and relations with unions: everything is done on behalf of, and with the approval of, stockholders. Stockholders are primarily part of the 99% everyone loves to go on about. Even one share of stock gives you a voice. Use it if you’ve got it.

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  16. Paul says:

    Public service sector pension funds are some of the largest institutional investors we have (NYS is a big one, I think CA is the largest). They have a huge shareholder voice in decisions made by publicly traded companies including decisions like CEO compensation.

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  17. If Clapton is God, Warren Haynes is Jesus says:

    Ah yes, the shareholder and his/her power to determine CEO compensation. If only it were as easy as you own a share, you have a vote. The reality is CEO compensation is usually controlled by the board members of corporations and/or those that own VERY large amounts of voting stock. That is to say, not typically small time investor Joe who’s 401K, or Roth IRA, or NYS pension fund membership gets him/her a seat in the board room where CEO compensation, and incidentally, in some cases, Board membership compensation is determined.

    Just owning a stock doesn’t even guarantee voting rights much less the right to determine employee compensation or the right to approve or not approve union contracts. If only it were that simple. For instance, does Thomas DiNapoli, as sole trustee of the NYS Pension Fund, a fund which owns shares in literally hundreds of companies decide what compensation the CEO of Citibank is awarded? Hardly…..

    My point with this rant is to point out that shareholders and their ability and power to determine compensation for the officers of corporations is not as clear cut and guaranteed as some would have you think.

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  18. myown says:

    “20 yrs and retire for life? What a deal.” That is another intentional distortion that does not apply to the majority of public employees and is used to divide the middle class and pit worker against worker.

    “CEOs don’t set their own pay, it’s determined by stockholders.” In reality CEO pay is determined by a company’s Board of Directors, who are usually similar corporate executives and cronies of the CEO. The CEO’s compensation package is then approved by stockholders of which the majority is held by large institutions and wealthy individuals. And CEO pay is not related to the company’s success. There are zillions of examples of CEOs that got huge raises and golden parachutes even when the company lost money or the stock price declined or even went bankrupt.

    The issue is the increased gap in CEO pay to workers. In 1965 the CEO to worker pay ratio was 24:1. In 1978 it was 35:1. In 1992 it was 126:1. In 2010 it was 243:1. Why is the ratio ten times higher than 45 years ago? Crony capitalism and the decline of unions in the private sector is why.

    It is interesting how quickly people begrudge public employees and their unions for wanting a middle class slice of the economic pie while they staunchly defend the right of a few to outlandish corporate entitlements. As Warren Buffet has said, the wealthy have waged stealth class warfare against the middle class for the past 40 years and have won.

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  19. Paul says:

    “That is to say, not typically small time investor Joe who’s 401K, or Roth IRA, or NYS pension fund membership gets him/her a seat in the board room where CEO compensation, and incidentally, in some cases, Board membership compensation is determined. ”

    That isn’t really accurate here is a good example of the kind of weight that the CA pension fund has, where they were helping call the shots at Citigroup:

    “Calpers calls for heads to roll at Citigroup”:

    http://www.independent.co.uk/news/business/news/calpers-calls-for-heads-to-roll-at-citigroup-over-allegations-of-poor-corporate-governance-6171142.html

    Clapton are you aware of the “Calpers effect” on stock prices? These groups (of mostly unionized employees) holds a lot more weight than you give them credit. But it is hard to portray your group as a “poor working class stiff” when you are throwing this kind of weight around. I think it is good that they have it and they use it, this isn’t a criticism in their participation. But we can’t pretend it doesn’t exist.

    Here is a recent example in NYS:

    http://www.reuters.com/article/2012/05/29/us-chesapeake-newyork-idUSBRE84S0X520120529

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  20. If Clapton is God, Warren Haynes is Jesus says:

    Paul,

    That article is nearly 10 years old. How much of an effect did the CA pension fund have in the recent dust up at Citycorp when there were calls to fire the CEO or cut his significant salary as a result of their multi-billion dollar loss in credit swaps?

    Your article also illustrates my point in that the largest public pension fund in the country still only has complete control of .5 % of the voting stock of this huge international corporation. Even if they gain more control by proxy (not necessarily an easy thing to do by the way) they still have a very uphill climb when it comes to controlling the governance of a large corporation.

    And where did I use the term “poor working class stiff?” I said they were small time investors will little to no direct control over CEO, Board of Director compensation or union contracts.

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  21. If Clapton is God, Warren Haynes is Jesus says:

    And note that your second article mentions one VERY wealthy individual who owns 7% of the voting stock. That one wealthy individual, the famous corporate raider, Carl Icahn, will probably have more leverage in deciding Chesapeake’s future than the thousands of employees that are members of the NYS pension system. Again, my point is that owning stock does not necessarily equate to control of employee compensation, It’s simply more complex than that.

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  22. Larry says:

    I guess it is easier to scapegoat CEOs and the mythical 1% than to face reality. Some people are envious of what others have. People who have worked hard for what they have are not the problem.

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  23. Peter Hahn says:

    According to David Brooks, comservative NYTimes writer, unionized public employees make about 5 percent more than non unionized public employees.

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  24. Peter Hahn says:

    The problem as someone above mentioned is that deals were agreed to that couldnt be honored. pensions were agreed to, but they didn’t put enough money in the pension fund to cover it. They planned to get 20 percent interest or so, which turned out to be grossly unrealistic. This is chickens coming home to roost. It’s mostly municipal police and firefighters.

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  25. Larry says:

    Peter, you forgot teachers.

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  26. myown says:

    “Some people are envious of what others have. People who have worked hard for what they have are not the problem.”

    Exactly! The double standard! Why do people resent what public employees have? Do you think they haven’t worked hard?

    What I resent is that many private sector employees don’t have unions anymore to fight for them. That worker wages have stagnated for 30 years while CEO pay has skyrocketed. That both husband and wife need full-time jobs to support a family. That the chances of upward economic mobility in the US is less than countries of Europe.

    The conservative movement has orchestrated a deliberate and masterful propaganda campaign to divide the middle and lower classes by fostering envy and resentment of public employees and their benefits while robbing the middle class blind with tax cuts for the wealthy, tax subsidies for big corporations and a blank check for military contractors.

    We have to wake up. You don’t need to take the conservative bait and be an apologist for the rich CEO while resenting the comparatively minor benefits that hard working public employees get in comparison. You should be arguing for private sector employees to gain back some of the benefits they lost over the past 30 years.

    The economic pie in the US is big enough to accommodate a strong middle class and have enough left over for enough people to still be obscenely rich. It is simply a matter of policy and political will. Unfortunately, big corporations and the wealthy have controlled the policy the past 30 years and convinced the public that their best option is to support the conservative agenda with the false hope that it will increase their chances of becoming wealthy too while resenting anyone on their own economic ladder that is doing better than they are.

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  27. Peter Hahn says:

    Larry – I didn’t forget them (teachers). They don’t get to retire after 20 years.

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  28. Larry says:

    Peter, 20 years and out or not, teachers enjoy some of the richest benefits this side of MLB players.

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  29. Larry says:

    myown, stop with the “chances of upward economic mobility in the US is less than countries of Europe” fiction already! The US remains the promised land for people seeking to live better lives.

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  30. Paul says:

    Clapton, these huge institutional investors have significant influence, that is just a fact that no one, including Wall Street, can deny.

    You say that money in the hands of large corporate investors has influence but try and claim that when it is controlled by other large investor groups it has no influence. I don’t understand the logic?

    You can find more (and more recent) stores that supports this if you want to search, sorry I did not have time to pull out more.

    I never said that you used the term “poor working class stiff”.

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  31. Paul says:

    Wisconsin is a story about democracy, all the rest of this is smoke and mirrors, a place for folks to vent their frustrations.

    In Wisconsin they wanted a more “conservative” Governor (if you want to call it that) that promised to do certain things. They got it (twice actually!). Sore losers will blame it big money donors or whatever. If he had lost the recall sore losers would have blamed it on big money from the unions.

    In 2008 the country wanted a less “conservative” president. They got it. Sore losers there blamed it on big money donors or whatever (unions were one of the excuses that sore losers there used).

    The same dynamic will happen in November 2012.

    In all three instances the voters have and will decide.

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  32. myown says:

    Larry, I know it must be painful to hear that “socialist” countries have better economic mobility that we do today, but it’s a fact.

    Also, I don’t understand why you resent public employees so much and fawn over wealthy CEOs? Are you saying public employees don’t work hard? Or that their jobs are worthless? As I said, it seems like a double standard to defend huge CEO salaries because they work hard while resenting the benefits hard working public employees have earned.

    I would like to see how successful one of your CEO heroes would be running a company in a country with an uneducated labor force (no schools or teachers), zero security (no police or firefighters), no rule of law (judges), no publically built and maintained highways, railroads and airports. I could go on but I am not sure you can see the benefits government and its public employees provide to enable the private sector to be successful.

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  33. Paul says:

    myown, I think that you may be taking it to a bit of an extreme. I haven’t really seen this drive to eliminate all public service sectors that you seem to be describing. There have been efforts to make changes and efforts to make the systems more sustainable so in the future we don’t end up with the scenario you describe.

    This ultra polarized rhetoric is not helpful. The Governor here (a democrat) is dealing with may of the same issues. When he makes, what seems like a reasonable proposal to modify the system here in a way that still retains very good pay and benefits for union workers, he is also viciously attacked. This dynamic is part of the problem and why things get so out of control like the did in Wisconsin. You have to admit that was a huge waste of everyone’s money.

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  34. Larry says:

    myown: “socialist” countries have better economic mobility that we do today…” Did I miss the huge wave of US emigration to Russia….or was it Spain…Greece? It’s not a fact.

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  35. Peter Hahn says:

    And according to various studies, public employees make a out the same as private sector ones (liberals say slight ly less – conservatives say slightly more – which all depends on how you calculate the value of those pensions)

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  36. Peter Hahn says:

    But the backlash against public employees is irrational – but very real.

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  37. Walker says:

    “In recent years several large studies have found that vertical inter-generational mobility is lower in American than in most developed countries. A 1996 paper by Daniel P. McMurrer, Isabel V. Sawhill found “mobility rates seem to be quite similar across countries.” However a more recent paper (2007) found a person’s parents is a great deal more predictive of their own income in the United States than other countries. The United States had about 1/3 the ratio of mobility of Denmark and less than half that of Canada, Finland and Norway. France, Germany, Sweden, also had higher mobility, with only the United Kingdom being less mobile.” (Wikipedia: Economic mobility

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  38. Larry says:

    On second thought, myown, you may have something. Economic mobility is better in socialist countries – for those who want to “share” the wealth of others. In its purest form it’s called communism, and it doesn’t work. In its watered-down form, including as practised in the US, it breeds a culture of entitlement and chronic economic disfunction.

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  39. Larry says:

    Very nice, Walker, we are all familiar with Wikipedia and its limitations. Bottom line: people vote with their feet and they continue to march straight to the USA! Might be nice if some of them headed for Europe but you can’t have everything.

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  40. myown says:

    Paul, my example was to think about how successful a corporate CEO would be in a country with little government or public sector development – and there are many in existence today if someone would like to try it. (as an extreme think Afganistan after US troops leave).

    My point is the private sector in the US has benefitted immensely from a strong governmental presence and the public employees that run it. It is the medium in which private enterprise has thrived. But we have come to take this all for granted and naively think the private sector does it all on its own and therefore is entitled to as much of the economic pie as it wants.

    Are there abuses within the public sector? Sure, just as there are anywhere. But we are intentionally being distracted by these exceptions while failing to fight for middle class and low income families and decent paying jobs in the private sector.

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  41. Larry says:

    Peter Hahn, the backlash against public employees may be somewhat unfair, but it is hardly irrational. There’s nothing that gets people going like listening to a bunch of schoolteachers complain about how hard they work and how they actually have to pay for health insurance.

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  42. Larry says:

    Whoa, myown, now you’re re-writing history! Private enterprise in the US developed with little or no government supervision or regulation. It is the public sector that has grown and prospered under the government protection that developed in response to private sector abuses. Public employees are latecomers to the union movement.

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  43. Newt says:

    Larry, According to this study, http://www.verisi.com/resources/prosperity-upward-mobility.htm the U.S. trails behind the U.K., Norway, Sweden, and Finland (all more socialist than we) in upward mobility. I liked the chart that shows the percentage of sons of fathers who were in the lowest 20% income group with their own income. U.S. leads with 42% in the lowest quintile, with the U.K. in second, with 30%. We also had the LOWEST percentage of the five nations of sons who made it into the highest income 20%.

    There are half-a-dozen more studies out there like it. If you have contradictory one, please cite it.

    You need to adjust your reality to our new, improved, post-
    Reagan/Bush American Economy.

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  44. Walker says:

    The EU in 2005 had an overall net gain from international migration of +1.8 million people. The U.S. in 2005 had 1,122,373 immigrants.
    (Wikipedia: Immigration)

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  45. Walker says:

    “Are there abuses within the public sector? Sure, just as there are anywhere.”

    Just as a small for instance, let’s look at the abuses in the banking and finance industries, that brought us the Great Housing Bubble, the Great Robo-signing Foreclosure Crisis, the Great Recession, etc.

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  46. myown says:

    Larry, I doubt this will burst your bubble but here are a couple of articles that refer to studies showing that the US lags other countries in upward mobility.

    http://www.nytimes.com/2012/01/05/us/harder-for-americans-to-rise-from-lower-rungs.html?_r=1

    http://www.washingtonpost.com/opinions/the-downward-path-of-upward-mobility/2011/11/09/gIQAegpS6M_story.html

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  47. A major problem is not just that governments used increased pension benefits to kick the can down the road instead of better wages in the present, they also underfunded the pension funds figuring they’d make it up later. Guess what? It’s later. And who gets to pay the price? The folks who accepted promises of a good pension later.

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  48. Paul says:

    “My point is the private sector in the US has benefitted immensely from a strong governmental presence and the public employees that run it.”

    myown, I get your point. Not quite sure I would word it that way. There is no debate that we benefit from, and need, the work of these public sector employees.

    As for the “pie” reference. I would avoid that. We don’t really have a system here where we slice up the pie and divvy it up so we need to frame that some other way. Our system is quite competitive.

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  49. myown says:

    Larry says, “There’s nothing that gets people going like listening to a bunch of schoolteachers complain about how hard they work and how they actually have to pay for health insurance.”

    And if someone said, “There’s nothing that gets people going like listening to a bunch of rich CEOs complain about how hard they work and how they actually have to pay taxes despite getting the best health insurance, a private jet, country club membership, stock options, etc. etc.” But I suppose you would consider that an unfair “class warfare” comment because the CEO is entitled to his benefits – no matter how outlandish.

    Again, why do you think public employees like teachers and police do not deserve the benefits they worked hard for?

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  50. Paul says:

    “The EU in 2005 had an overall net gain from international migration of +1.8 million people. The U.S. in 2005 had 1,122,373 immigrants.”

    When I lived in France I remember reading daily about bodies washing up in the south of France on beaches that had come from small boats taking immigrants from North Africa and “dumping” them in the sea. They paid almost a thousand US dollars to get driven a half mile from shore and thrown overboard. Sad.

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