Part 6: Let's lay this myth to rest once and for all!

As detailed in the previous blog post, the research by the Center on Wage and Employment Dynamics of the University of California concluded the following:

"Following the 2010 elections, multiple states took action to curtail collective bargaining rights arguing that public sector unions were a major cause of state budget deficits. A close examination of the available evidence finds that the claim that public sector unionization leads to greater deficits does not withstand scrutiny."

"The public sector workforce has not been growing relative to the population; this is true in union and non-union states alike. There is no correlation between the share of public workers in unions and the size of the public sector workforce. This belies the notion that public sector unions are increasing the demand for their product."

"Compensation has fallen as a share of state expenditures over the last twenty years; this is true for both high and low-union states. Controlling for education, experience and other relevant factors, public sector workers are not more highly paid than their private sector counterparts. Public sector unions provide workers with a voice on the job and enable members to choose their form of compensation. This has generally led to a greater share of compensation paid in health and retirement benefits than in cash wages. "

"Budget deficits were primarily caused by the housing crisis and subsequent economic downturn which resulted in a decline in revenues as the economy contracted. Finally, controlling for the decline in housing prices, we find no statistically significant correlation between union density, union strength and the size of state budget deficits."

"For states to address their budget deficits, the most important factors are national economic growth and a resolution to the housing crisis. Solutions that focus on cutting state and local budgets can be expected to further weaken the economy."

Before ending, let's look at one last thing specific to our state. Much groaning can be heard that the cost of public pensions has risen to unsustainable levels. Here's an interesting chart from the website of the New York State Teachers' Retirement system showing employer contribution rate (ECR) since the 1920's:

Note that the ECR is based on a 5-year rolling average of the performance of NYSTRS investments. This means that the losses incurred in the financial collapse of 2007-2008 will soon work their way out and be replaced by the large gains of recent years. Unless there is another collapse, it is reasonable to assume that the ECR will decrease in coming years. 

Finally, if you'd like to have all 6 of the posts in this series combined as a nice pdf that you can download, print, and tape to the nose of that annoying relative or neighbor who is among the group saying that "everybody knows that public employees earn more than those in the private sector," click here for just such a file! [NOTE: When originally posted, the links in the pdf did not work. That problem has been corrected.]