Friday, March 04, 2011

AFL-CIO Chief Adept with Speech from Mouth's Two Sides

Today's WSJ offers AFL-CIO President Richard Trumka "equal time" on the issue of public-employee unions.

Trumka offers the usual litany: unions are responsible for the existence of the middle class, without them the rich would get still richer at the expense of the working person, this is really all about warfare against the middle class, etc. No need to respond at this point: the song remains the same.

But there is something we feel obliged to point out.

First, Trumka asserts that unions are all that stand between the middle classes an penury. That's why we need them so very much.

Then, to dispel the notion that public employees are overpaid, he says that public employees earn less than their private-sector counterparts, when controlling for education.

We suspect on the latter point he can say that truthfully, if it is truthful at all, only because he excludes benefits. But that's not our point.

Our point is that private-sector workers are organized at a hugely lower rate than public employees. Yet, apparently, they earn more. Yet, apparently, unions make their workers better off.

So unorganized workers earn more than unionized workers, but we should protect unions to protect the prosperity of the workers.

That, Mt. Trumka, makes perfect sense. Thanks for helping us see the logic of your position. We find ourself firmly persuaded.

9 comments:

Steve Finnell said...

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Jon A. Alfred E. Michael J. Wile E. SWNID said...

You are invited not to spam our blog.

JB in CA said...

To prove your point against Trumka, what you really need to do is make a four-way comparison among unionized public employees, unionized private employees, non-unionized public employees, and non-unionized private employees—all while adjusting for education level, etc. That way you have a better chance of ruling out mere correllation. You would also need to consider whether public employee unions have any indirect effect on private sector compensation. E.g., you would need to determine whether public employee unions indirectly affect private employee compensation by forcing the private sector to compete for limited talent, thus driving up salaries. And by the way, notice that if public employee unions do have this particular effect on private employee compensation, Trumka's assertions may not be inconsistent after all.

[Speaking of inconsistency, aren't the business leaders who now complain that public pension plans are more generous than 401k's the same folks who earlier argued (before the recession) that replacing their companies' pension plans with 401k's would result in a more prosperous retirement for their own workers? Just a reminder that no one has a special claim on inconsistency.]

Here's what a couple of experts say about the question of income vs. total compensation:

http://www.pbs.org/newshour/bb/politics/jan-june11/wisconsin_03-01.html.

One of the experts says that after adjusting for education and skill levels, public employees are compensated (including pay and benefits) 7% less than their private sector counterparts. The other expert disagrees. He says the studies are inconclusive with respect to pay, some showing public workers earning more than their private sector counterparts, some showing them earning about the same. He also says that the big difference is in benefits, implying that public workers are more highly compensated. (Unlike the first expert, however, he gives no statistics to support either claim.)

To be honest, I haven't studied the evidence, so I'm not in a position to determine which of the two is closer to the truth. But I do have an anecdote about how the lack of a union affected faculty pay at a private Christian university some time ago. (I should note that the university in question is not SWNID's employer.) After years of good will and being told that the school couldn't afford to raise salaries because the money just wasn't there, some faculty members decided to research the issue for themselves. What they found was that pay for their faculty was in the bottom 10% of faculty pay at comparable universities, whereas pay for their administrators was in the top 10% of administrator pay at comparable universities.

Now, the point I'm trying to make is not that those administrators were evil people. No doubt they thought they were doing the right thing. The point is that until the faculty members organized and started looking out for their own interests, those in charge of the purse strings took advantage of them. And that was at a Christian institution! How much more would non-Christians exploit their workers if those workers had no organization—i.e., no union—to look out for their interests?

That's not to say, of course, that unions never need correcting. They often do (as do governments, and businesses, and universities, and ...). But at the same time, they serve a valuable purpose. I hope we realize that and don't get to the point where we throw out the baby with the bath water.

JB in CA said...

To prove your point against Trumka, what you really need to do is make a four-way comparison among unionized public employees, unionized private employees, non-unionized public employees, and non-unionized private employees—all while adjusting for education level, etc. That way you have a better chance of ruling out mere correllation. You would also need to consider whether public employee unions have any indirect effect on private sector compensation. E.g., you would need to determine whether public employee unions indirectly affect private employee compensation by forcing the private sector to compete for limited talent, thus driving up salaries. And by the way, notice that if public employee unions do have this particular effect on private employee compensation, Trumka's assertions may not be inconsistent after all.

[Speaking of inconsistency, aren't the business leaders who now complain that public pension plans are more generous than 401k's the same folks who earlier argued (before the recession) that replacing their companies' pension plans with 401k's would result in a more prosperous retirement for their own workers? Just a reminder that no one has a special claim on inconsistency.]

JB in CA said...

Here's what a couple of experts say about the question of income vs. total compensation:

http://www.pbs.org/newshour/bb/politics/jan-june11/wisconsin_03-01.html.

One of the experts says that after adjusting for education and skill levels, public employees are compensated (including pay and benefits) 7% less than their private sector counterparts. The other expert disagrees. He says the studies are inconclusive with respect to pay, some showing public workers earning more than their private sector counterparts, some showing them earning about the same. He also says that the big difference is in benefits, implying that public workers are more highly compensated. (Unlike the first expert, however, he gives no statistics to support either claim.)

To be honest, I haven't studied the evidence, so I'm not in a position to determine which of the two is closer to the truth. But I do have an anecdote about how the lack of a union affected faculty pay at a private Christian university some time ago. (I should note that the university in question is not SWNID's employer.) After years of good will and being told that the school couldn't afford to raise salaries because the money just wasn't there, some faculty members decided to research the issue for themselves. What they found was that pay for their faculty was in the bottom 10% of faculty pay at comparable universities, whereas pay for their administrators was in the top 10% of administrator pay at comparable universities.

Now, the point I'm trying to make is not that those administrators were evil people. No doubt they thought they were doing the right thing. The point is that until the faculty members organized and started looking out for their own interests, those in charge of the purse strings took advantage of them. And that was at a Christian institution! How much more would non-Christians exploit their workers if those workers had no organization—i.e., no union—to look out for their interests?

That's not to say, of course, that unions never need correcting. They often do (as do governments, and businesses, and universities, and ...). But at the same time, they serve a valuable purpose. I hope we realize that and don't get to the point where we throw out the baby with the bath water.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

As long as folks appreciate that unions tend to work against macroeconomic realities and so against the long-term prosperity of workers, we have no objection to their long-term survival.

We insist that it is their paradoxical macroeconomic effect that has led to their sharp decline in membership. The notion that this is really the result of the triumph of capital in class warfare is, well, absurd.

PS, re defined benefit pensions versus the 401(k), what all them nasty Wall Street billionaires said was true and is illustrated by what's happening: the only way a defined-benefit pension can be superior for the modal worker is for it to be funded at an unsustainable level, and since a superior plan that is bankrupt is not superior, the 401(k) wins.

Game, set and match.

JB in CA said...

The notion that this [sharp decline in membership] is really the result of the triumph of capital in class warfare is, well, absurd.

So who was saying otherwise?

Jon A. Alfred E. Michael J. Wile E. SWNID said...

You aren't saying that, of course, JB. But the pro-unionists, like Trumka and including Trumka, are out in force with this post hoc absurdity.

Jim Shoes said...

As an example of the class warfare card being played on this, read this mess, from a writer who's taken seriously enough to be featured on the MarketWatch (!) web site.