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  • GDP Is Up, But Government Unions Ate Your Raise

    Figures released today by the Bureau of Labor Statistics provide less encouragement than today’s GDP report. Total compensation increased by only 1.5 percent in 2009 (without adjusting for inflation) – the lowest increase on record. If a turnaround has begun, workers are not feeling it in their wallets.

    However, this pain has not been distributed equally throughout the economy. In the private sector, total compensation grew just 1.2 percent in 2009. On the other hand the compensation paid to state and local government employees grew 2.4 percent. The average government employee got twice the raise that private sector workers did.

    Why did government workers get higher raises? In the private sector workers compete to produce goods and services that others value. In a recession, production falls and employers have less money to pay raises with. On the other hand, taxes fund government paychecks. Government employees can continue getting raises no matter the health of the overall economy, so long as taxes keep coming in.

    This fact has turned the labor movement into determined tax hikers. Union membership has grown in the government even as it has fallen in the private sector. Three times as many union members now work for the Post Office as in the Auto Industry. In 2009 the numbers crossed: a majority of union members now work for the government. Higher pay for government employees can only come through higher taxes on private sector workers.

    Unions almost never go on strike anymore. Instead, they fight to get more for their members by lobbying for tax increases. Unions spent tens of millions of dollars last year campaigning for higher taxes across the country: Illinois. California. Minnesota. Washington State. Arizona. In many cases they have succeeded.

    The latest example comes from Oregon, where public sector unions outspent businesses 3 to 2 to pass two ballot initiatives raising taxes by $700 million. The unions wanted higher taxes to prevent spending cuts. Had the taxes increases failed government employees in Oregon would have faced cost cutting measures such contributing toward the cost of their health benefits – something they currently do not do.

    Government employees have done well in this recession. Few government jobs have disappeared – unlike in the private sector – and their pay rose at twice the rate of their private sector counterparts. No wonder that government employees are almost three times as likely as private sector workers to believe that the economy is in “good or excellent” shape. The question for policy makers is why should private sector workers have to pay for this?

    Posted in Economics [slideshow_deploy]

    15 Responses to GDP Is Up, But Government Unions Ate Your Raise

    1. Randy,SA TX says:

      its time for the american people to join a union and have some leavage with big companies. if you dont have a union in your company your workers are spineless. ur not am american if your not in a union.

    2. DEG, AR says:

      It is only a matter of time before benefits are cut. There is only so much tax you can take from an non-union person before they get mad as hell. Money for someone else's pension or paycheck is less money they have to pay for their own healthcare or shoes for their kid. The good old days are over and we can't keep borrowing from China. If there is no private sector then there is no taxes generated for government employees. Also, if you think the Medicare and Social Security crowd are going to let you cut into their piece of the pie when money gets tight, you are so in another world.

    3. Todd, Albany OR says:

      …or Randy, you could work hard and stand on your own two feet.

    4. jim says:

      The unions are responsible for the take down of the private sector.the current administration's agenda is to replace the free enterprise system with government union jobs which are non productive,inflated,over payed and have excessive benefits,this is why manufacturing has left the USA in my opinion.i believe,there is a plan to squash imports like the recalls to increase the sales of union made and government owned car makers run by big unions.the new ruling by the supreme court balances the playing field for corporations to match union contributions to buy elections.this is why the administration is so upset over the ruling.the corrupt does not like even odds.

    5. Marshall Thompson, M says:

      Unemployment and underemployment in California hovers around 20% in the private sector. Businesses are leaving the State in droves and yet Sacramento continues to reward public employees with raises to salary and benefits. Public employees are better paid and now have far better pensions than the private sector. I can't imagine why anybody would want anything but a public sector job as they have zero lay-off contracts. We are in a world of hurt out here with $45 billion in unfunded pension liabilities. I guess higher taxes will magically pay for it all. This is not a Democrat or Republican issue; the problem is a clueless, tone-deaf political class that has contempt for regular folks. It is amazing how both parties missread the genuine grass-roots Tea Party revolt. We don't want Nancy Pelosi or Sarah Palin and her $100,000 speaking fee!

    6. Scott B., Portland, says:

      The public employee unions here in Oregon were actually lobbying to get more funds to cover the cost of losses in their pension funds. By law, the unions were supposed to get an increase in tax contributions into their pension funds to cover losses from market downturns. They are by law supposed to receive a 100% increase in taxpayer contributions. The union pensions normally receive pension contributions of 3% of their pay. Because of the amount of the pensions fund losses, the pensions are now supposed to receive 6% contributions to cover losses.

      Not all Oregon state agencies have funds to cover the 100% pension increases. The funds would have to come from funds that should go to services. State agencies typically pay about 75% of their funds on payroll. A 3% increase to cover union pensions is a lot of money.

      To cover the losses the public employee unions lobbied to get two tax increase measures passed: Measure 66 and Measure 67. Measure 66 increased taxes on "the rich." Measure 67 converted Oregon's $10 minimum corporate tax, which was basically just a fee for doing business in Oregon as a corporation, into a sales tax.

      We Oregonians always took pride in the fact that we were one of the few, if not the only state in the union, that has no sales tax. Measure 67 changed that. We now have a sales tax. So the unions not only increased a tax, but they created a new tax method for sucking money out of Oregon's already deathly anemic economy.

      One of the arm twisting techniques used by the unions was to threaten to reduce the number of days of school. They said it would mean more 4-day school weeks. Working parents can't afford that. We can't afford time off work because our kids aren't in school. In today's work environment in Oregon, taking more time off can be unofficial grounds for firing. That, I believe, was the real issue that led to the measures being passed.

      The net result is that the unions now have more the losses covered on their pension investments. They also created a sickening new source of taxes in the process.

      The US has a separation of church and state. What is needed now is a separation of public employee union and state.

    7. Pingback: Heritage: Unions Ate Your Raise &laquo Publius Forum

    8. Pingback: Heritage: Unions Ate Your Raise : Stop The ACLU

    9. Pingback: Heritage: Unions Ate Your Raise | Right Wing News

    10. Cletas Rains, Wellin says:

      I agree with what Scott B. stated in his comments. My question is, who is going to reimburse the losses to the pension funds of those in the private sector? These unions expect these same people who have suffered similar losses to their pension plans to reimburse their pensions through higher taxes. This amounts to a double whammy to the private sector employee who is suffering through this economic down turn. In our part of the country we are hearing the same from the public unions even with massive layoffs in the aircraft industry and the supporting businesses. Where do the unions think this tax money comes from?

    11. Pingback: President Name SEIU Union Chairman to Deficit Reduction Commission

    12. Fast Fact Checker (M says:

      You inserted "without adjusting for inflation" parenthetically, why? That got me thinking. Correct me if I am wrong, because this is not my field of research, but with the help of Google I found that U.S. inflation was (annually): 0.3558% in 2009, 3.8396% in 2008, 2.8482% in 2008, and etc. And, from the same Bureau of Labor Statistic report that is cited and linked in the article, we find that, "Wages and salaries also increased 1.5 percent for the current 12-month period [2009], slowing from a 2.7 percent increase for the 12-month period ending in December 2008." Meaning, of course, that while wages have tended to remain stagnant over the long duree – since the late 60s – the irony here is that those who did have jobs in 2009 saw a real and somewhat unusual increase in their purchasing power. Also note that private sector workers, despite the larger increase in 2008 actually saw a real decrease in the value of their income in 2008. Thus you fail to discover or reveal to your readers, by not making the obviously required inflation/CPI adjustments to income numbers, the real movements and conditions involved. I believe you did this to aid your editorial position taken. This further sophistication of the data impacts on a larger argument – right or wrong – that public sector workers are in competition with tax paying workers in the private sector. Should I expect more from Heritage, or not, in the future?

    13. Pingback: Why Not Work for the Government? Federal Workers Make Twice As Much | The Foundry: Conservative Policy News.

    14. Burk, CA says:

      ".. never go on strike any more." Hmmm. Would you advocate that more workers go on strike, to increase their share of income, on a competitive basis? It seems that would go some way to redressing the more significant leakage of higher GDP, which went to profits and the wealthy, as the overall government share stayed stable over recent decades.

    15. Pingback: Ate government | UsaDirectWorld

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