The battle lines are drawn – public unions vs the middle class

This is one post where people may see that at my core I’m a moderate with progressive undertones.  So to those who were hoping that I was pure progressive – I offer my apologies in advance.  Like most democrats – I deviate from the party line on some matters.

While everyone has their eyes peeled towards the federal budge deficit – the elephant in the room is the burgeoning disaster within state, county and local governments.  New York State – where I reside has a mind numbing budget shortfall of $10 billion. Since our constitution demands that we balance our budget – this is truly a frightening number.

Let me state at the outset that much of the trouble at the state and local level has to do with “trickle down” theory gone awry.  The natural result of low federal taxes is that the mandates keep coming but the only thing that actually trickles down to the states and cities are the mandates – which are now largely unfunded.   The squeeze at the top is simply passed along until it simply has no place else to go.

I believe in unions – but I also believe in being reasonable and realistic:

Last year I sat in White Plains City Hall where there was a showdown between our newly elected mayor and the unions representing the police and fire.  The mayor and the council pretty much dug their heels in and said – negotiate your steps or be prepared for large layoffs.  The city was facing an eye popping 19% increase in municipal taxes if nothing was done.

I’ve got nothing against unions.  BUT – most of the public union employees have been getting their steps and raises in the midst of flat or falling salaries and blizzards of pink slips in the private sector.  What is left of the middle class in the private sector in our area is a battered and brutalized shell of a once vibrant core. Yet in New York, public union salaries have gone up 14% over the past 4 years.  Now they are expected to swallow hard and take a near 20% increase in their property taxes?  Politically it was not doable at all and the unions should have realized it.  Stupidly, they held their ground and the first wave of pink slips went out. Y

The unions appeared to stunned.  The only question I have is “WHY?”  Why in the midst of the biggest recession since the great depression of the 1930s where deflationary pressures are everywhere and the streets are lined with pink slips and salary reductions should the unions be surprised that they would be expected to share the pain?  What on earth did they expect?  Did they really think the mayor or city the city council could permit a 19% increase in municipal taxes when people are unemployed and home values are tanking?  Do you want to send home values down further – because a 19% tax increase will do that quite handily.  Then you are back the next year with the same problem because the tax base erosion results in a flood of tax grievance filings.

Let the political posturing begin….

Here we are again – have the same discussion this year – with the public sector still arguing for step increases in spite of the carnage of the previous year. Meanwhile some republicans such as Jeb Bush and Newt Gingrich  are arguing that states should declare bankruptcy to force unions to their knees.   Great idea – NOT.   The situation is better described in today’s New York Times editorial “Their Real Agenda” Like the editorial suggests, this little tactic could send shockwaves through the bond markets.

The game playing has to stop…immediately and solutions need to be found that don’t include socking it to the already battered private sector employee.   Balancing the budget off the backs of the underemployed and underpaid is no longer a viable solution.

Who represents “We the people”?

My guess is that that is pretty much no one.  The democrats support the union interests while the republicans support business interests.  Since we are no longer in the loop of power  the fate of  private sector employees and business people like myself  continues in a downward spiral.  Already the private sector is the new working poor while the  public union members are now the middle class. Meanwhile, the wealthy reside on Mount Olympus.  It is truly a sad state of affairs.

But I will say this to the democrats who favor union salaries over tax relief for the middle class:  Do you want to keep losing elections?  Then keep doing what you are doing.   Many democrats  have suggested that  the private sector is “jealous” and that’s why we want unions brought short.  PLEASE! Nothing could be further from the truth.  The trouble is that this new  middle class while  can not be supported on the backs of the new working poor as we sink further and further into poverty.

Major caveat to all of the above:

The above comments are based on the system as it exits in New York State.  Other states are not nearly as generous with their employees. And in many states – public service is a euphemism for indentured servitude.   I’ll site one example to bring the magnitude of the problem home.  In my city the cost of educating one child in our school system exceeds the median property tax paid by home owners  one child by about $10,000.  From what I can dig up – depending on municipality – fixed costs much of them salaries, benefits and legacy costs – account for 75% of this cost. Further, median salaries for teachers in my city are a hair under $90k.  For a college professor in my former field – the median is closer to $70k. The upper strata is about $90-95k and a Ph.D. is the minimal requirement. So this is way out of whack with the private sector.   State aid has helped but that is drying up and the schools have their eyes peeled on a massive property tax hike. Cuomo is threatening a tax cap – which though not ideal – would prevent decimation of the housing sector and massive forced sales. This is a trajectory that can not continue.  At $26k per child per year you are talking about $312k to educate each child. And in many cases that education is found to be wanting in an increasingly competitive world.

© 2011 – RMGHicks – http://www.therobberbaroneconomy.com – All rights reserved.

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3 Responses to The battle lines are drawn – public unions vs the middle class

  1. Cletis says:

    Ruthmarie, like you, I am not rigid in my liberalism. This is an important post and you make excellent points regarding the at-times rigidity of unions. I am UMW all the way by heritage and inclinatio but…too much is always too much.

    I posted your “Exceptionalism” piece today and I look forward to future commentaries you may choose to contribute. I hope you are well.

  2. RMG says:

    Hi There! I’m preparing something for you – What I’m writing came out waaaaay tooooo loooong and difficult to read. I’m trying to simplify. As to the above post. Too many see only the need to boost union salaries with the idea that this will “lift all boats.” but the disconnect between non-union private sector jobs and public jobs is so severe at this point that this is no longer a valid argument. The other issue is that you can’t ask those who are worse off to lift the not so badly off. Further, the trajectory NY is on can’t continue. We have are always either first or second for the highest property taxes in the nation. That can’t continue the way it has been.

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