Public Employee Unions Don’t Get One Penny from Taxpayers (But the Big Lie That They Do Is Everywhere)

All of this is meant to serve another, Bigger Lie – even more ubiquitous — that the cost of public workers is killing state budgets. As Bill O’Reilly put it with typical understatement, state “governments can’t afford to operate” because of “union wages and benefits.”

Here’s another factual baseline: those “cadillac” pensions we always hear about public workers getting actually average $22,000 per year and amount to just 6 percent of state budgets. Some states’ pension funds have problems because they’ve been raided to pay for tax cuts, but in aggregate, pensions aren’t eating up state budgets. Andrew Leonard, writing in Salon about what he calls  “the imaginary public sector pension fund crisis,” notes that because the stock market has recovered to a great degree, “those horrible ‘shortfalls’ everyone has been making such a big deal of are already in retreat.”

As economist Dean Baker notes, it was Wall Street, not a bunch of teachers and firefighters, which is to blame for the gaps that do exist. “Most of the pension shortfall,” he wrote, “is attributable to the plunge in the stock market in the years 2007-2009. If pension funds had earned returns just equal to the interest rate on 30-year Treasury bonds in the three years since 2007, their assets would be more than $850 billion greater than they are today.”

Public workers’ salaries are another 28 percent of state budgets. They get paid less than comparable workers in the private sector, even including benefits. The problem, as far as an honest debate goes, comes from the word “comparable.” Last week, USA Today (mis)informed its readers that workers in the public sector make more than in the private, a claim it backed up with misleading averages. The article only quoted in passing an economist who pointed out that their “analysis is misleading because it doesn’t reflect factors such as education that result in higher pay for public employees.” It’s actually meaningless, as public workers are twice as likely to have a college degree and have, on average, more years on the job than workers in the private sector.

State and local employees’ wages and salaries have virtually nothing to do with the budget gaps which many states are grappling with – that too is a result of the recession caused by Wall Street, not Main Street. According to the Center for Budget and Policy Priorities, “State tax collections, adjusted for inflation, are now 12 percent below pre-recession levels, while the need for state-funded services has not declined. As a result, even after making very deep spending cuts over the last several years, states continue to face large budget gaps.” According to Census data, states’ social welfare payments to struggling individuals and families increased by around 25 percent between the first quarter of 2007 and the last quarter of 2010.

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