Unintended Consequence of Austerity America - Union Rep Share Grew in Private Sector

Reacting to new data from the Bureau of Labor Statistics on union membership, EPI President Lawrence Mishel said:

New data for 2013 on the number and share of workers with union coverage show some interesting trends. Private sector union coverage increased but was offset by an erosion in the public sector, leaving overall union coverage essentially unchanged (a decline of less than 0.1 percent, so rounding up becomes a 0.1 percent decline).  The increase in private sector collective bargaining coverage in 2013 is noteworthy because it happened in 2007 and 2008 but otherwise hasn’t happened since 1979. This was driven by increased union employment in manufacturing and construction, where more than thirty-five percent of net new jobs were covered by collective bargaining agreements. Union coverage has increased in some states that may be unexpected. For instance, private sector union coverage increased in each of the last two years in Virginia, North Carolina, Georgia, Kentucky and Tennessee. Improvements in the private sector have been offset, however, by erosion in the public sector. Between 2012 and 2013 union coverage in the public sector fell from 39.6 to 38.7 percent. The starkest change was in Wisconsin, where union coverage in the public sector fell from 53.4 percent in 2011 to just 37.6 percent in 2013. This suggests that the erosion of public sector union coverage reflects the new anti-collective bargaining policies implemented in several states.

See here.

***It is important to note that much of the growth is due to the offset of job loss in the public sector as a result of austerity along with, as mentioned above, the implementation of anti-collective bargaining policies...so-called "right to work" laws...***

The Madness of Austerity in One Chart

From Mother Jones

January's job numbers were fairly dismal, but the bad cheer wasn't equally spread. Private sector employment, as usual, increased—by 142,000 jobs last month. At the same time, public sector employment declined. Government employment at all levels was down 29,000 in January.Aside from the brief census blip in early 2010, this has been the usual state of affairs for the past four years, ever since the recession officially ended. The chart below shows public and private sector employment indexed to 100 at the end of the recession. Private sector employment is up 6.8 percent. Public sector employment is down 3.4 percent. And that's during a period when population grew 2.3 percent. On a per capita basis, government employment has declined more than 5 percent since 2009, and it's still declining.This is the price of austerity. If public sector employment had been growing normally during this period, we'd have about a million more jobs than we do now and the unemployment rate would probably be below 6 percent. We are our own worst enemies.

See more here.

Austerity Sucks: Another Drag on the Post-Recession Economy Is Public-Sector Wages

By Monique Morrissey

The aftermath of the Great Recession has led to outright wage declines for the vast majority of American workers in recent years, resulting in a full decade of essentially stagnant wages. Though you might expect public-sector wages to have weathered the recession and its aftermath better than private-sector wages, the opposite appears true: While the decline in real public-sector wages started later, it was steeper and ultimately more damaging. According to the Bureau of Labor Statistics’ Employment Cost Index, public-sector wages have fallen by about 1.3 percent in inflation-adjusted terms since 2007, where private-sector wages have been essentially flat (an increase of 0.3 percent). Unlike in previous recoveries, state and local government austerity has been a major drag on job growth and the broader economy. The number of public-sector jobs fell by almost 3 percent in the three years following the recession, while the number of private-sector jobs grew (albeit anemically). The fact that public-sector wages have lagged behind those in the private-sector exacerbates government’s drag on the economy.

Read rest here.

The Legislative Attack on American Wages and Labor Standards, 2011–2012

 

 By Gordon Lafer

This report provides a broad overview of the attack on wages, labor standards, and workplace protections as it has been advanced in state legislatures across the country. Specifically, the report seeks to illuminate the agenda to undermine wages and labor standards being advanced for non-union Americans in order to understand how this fits with the far better-publicized assaults on the rights of unionized employees. By documenting the similarities in how analogous bills have been advanced in multiple states, the report establishes the extent to which legislation emanates not from state officials responding to local economic conditions, but from an economic and policy agenda fueled by national corporate lobbies that aim to lower wages and labor standards across the country.

 See rest here

 

Football Coaches are the New Welfare Queens

Conservatives always complain about the 'Welfare Queens' and the excessive benefits of the public sector workers. Graph below shows the highest paid public sector workers in the US.

For one I'm in favor of cutting expenses with most of these privileged public sector workers.

How unwieldy is your bureaucracy?

The economic reporting on the New York Times is not always very sharp, to say the least. If you read Dean Baker's Beat the Press you should know. Their reporting on Latin America is not much better, I should add. So it's no surprise that their reporting on the economies of the region is weak and a bit biased. Simon Romero tells us recently that in Brazil's "once-booming economy stalls, ... [and] 'super salaries, as they have become known here, are feeding newfound resentment over inequality in the nation’s unwieldy bureaucracies." The piece is on the high wages of some public sector workers in Brazil.

Note that Brazil's economy has not boomed since the early 1980s. Yes it grew fast right after the 2009 recession (7.5% in 2010) because of expansionary fiscal policy, but the reversal of the fiscal stimulus has led to less than 1% growth last year. Between 2003 and 2011 average growth rate was 3.9% (3.6% between 2003 and 2012), good but not a booming economy by any means. But that's fine, the confusion about Brazil's performance is quite common, in fact.

So how large is the public sector bureaucracy in Brazil? According to ILO's LABORSTA total government employment in 2009 was around 10.2 million workers, for a population of slightly less than 200 million. So close to 5.1% of the population. In the US, according to the same source, approximately 22.5 million workers out of a population of close to 310 millions in 2010 were in the public sector. In other words, around 7.2% of the population are public sector employees. And remember that in the US that would be only the civilian public sector employees. If you add the military, which is much larger in the US than in Brazil, then the Brazilian bureaucracy is not that unwieldy. Not particularly large or complex.

But yes the article shows that some workers make huge amounts of money. But is that the norm? Using again the same data source, for the year 2002 (the last one in the series) the ratio of public administration to financial sector wages in Brazil was 0.5, while the comparable number for high income countries would be closer to 0.8 (see this IMF paper for more comparisons). In other words, public sector workers in Brazil on average make less than comparable workers in developed countries. Put clearly, the public sector is not large and its workers are not overpaid.

Don't get me wrong inequality is a problem in Brazil, and corruption, if there is any (which is what the piece suggests), and lack of transparency should also be combatted. But the idea that inequality in Brazil is caused by the high wages of a few public employees, or that this is what is behind the poor economic performance in Brazil is a joke.

The roots of inequality in Brazil run deep (even though inequality fell in the last few years), and if anything is associated with real wages that are too low, public and private sector alike. Median wages have increased only slowly, while minimum wages have grown at a more healthy speed during the Workers' Party administrations. Growth has stalled because fiscal and monetary policy have been tight, even if the latter has loosened a bit in the last year and half. It is time for the reporters at the 'Grey Lady' to stop demonizing the public sector as the cause of all problems. Reagan was wrong, government sometimes is the solution not the problem.