Labor Day 2010 is a mixed bag for American workers. With 9.6 percent of the work force unemployed — more if you count those who are under-employed or have given up — and private-sector salaries stagnant, times are certainly bleak.
But if you are a government worker, things don’t look so bad. In fact, as Rio Grande Foundation has pointed out, state and local government workers make an average of 11.5 percent more than their private-sector counterparts, and their jobs are far more secure.
So, if you are a government worker, you are probably celebrating this Labor Day with a higher salary and better living standard than you had in the past. If you are or previously were a private sector worker, you may not have a job or you face the anxiety of layoffs or compensation reductions.
But how did this situation come about?
That is the topic of a new Rio Grande Foundation report, “A History of Public Sector Collective Bargaining in New Mexico,” by former New Mexico attorney general and organization co-founder Hal Stratton. The fact is that the bloated and overpaid government sector is politically-powerful and well-organized. Over time, they have used this political power, first to break down legal barriers to collective bargaining in the late 1950s and early 1960s, then to use the power to forcibly extract dues from government workers to constantly expand both their political power and the benefits they receive to private-sector workers.
Currently, much of the attention to this issue has been focused on California, a state that allows government public safety workers the right to retire at age 50 after 30 years service at 90 percent of their highest salary. Driven in large part by these extremely generous policies, California is going bankrupt.
The state is projected to have a budget deficit of at least $19 billion this year, and next year the budget gap is projected to grow to $37 billion. To put that in perspective, the entire budget for the government of California is only about $125 billion per year.
Unfortunately, unless New Mexico’s elected leaders dramatically change course, and soon, we will face a similar situation of being unable to pay the bills for a bloated government and excessive government employee benefits.
What can New Mexico do to avert bankruptcy and secure a sound financial future for all workers?
• First and foremost, we must consider abolishing public-sector collective bargaining. Only about half of all states — including New Mexico — allow this practice, and it disproportionately enhances the power of public employee unions. New Mexico should follow the lead of Virginia and other states that do not allow public employees to bargain collectively.
• Secondly, New Mexico must transfer all new hires into defined contribution and out of defined benefit retirement programs.
• Thirdly, it is imperative that New Mexico become a “Right to Work” state in which workers are not forced to join a union in order to hold a particular job.
• Fourthly, policymakers must trim overall state spending and the government work force. New Mexico has the second most state and local workers per private sector employee in the nation. This needs to change.
• Finally, New Mexico needs to stop relying on federal largesse for economic development and instead adopt low, flat, fair and equitable tax and regulatory policies that will encourage private-sector growth.
The fact is that these are dark times for all workers. The intent of our policy recommendations is not to denigrate the contributions of public sector workers, but to recognize that government is not and cannot be an engine for long-term economic growth. We as Americans and New Mexicans rely on the private sector to create innovative products, improve living standards, and ultimately pay the bills for what government programs do exist.
There has never been real balance between the public and private sectors in New Mexico, and the situation has begun to get out of hand nationally as well. To change this, we must understand that things did not have to be this way and they can and should be changed for the betterment of our economy and society as a whole.
Paul Gessing is the president of New Mexico’s Rio Grande Foundation, an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.