This summer California Governor Arnold Schwarzenegger ordered 200,000 state workers to take mass pay cuts, forcing them to receive the federal minimum wage pay of $7.25 per hour. The cuts were undertaken in the name of balancing the state’s budget. Similarly, Florida state officials promised cuts in state workers’ pay by as much as three percent for 2011, while state senators cynically raised their own pay (following an additional cut in state worker pay last year).
Illinois Republican Gubernatorial candidate Bill Brady is promising a massive 10 percent budget cut should he win this fall, on top of the already announced 18,000 layoffs in the public sector this year. Brady framed his proposal to freeze state workers’ pay as an inevitable necessity during tough economic times: “let’s face it, the private sector’s gone without a pay raise, and in many cases pay cuts, over the last four years.” Brady’s suggestion that state workers have had it too good for too long is a common theme among America’s business-dominated officialdom, which is increasingly attacking public sector pay and benefits as unsustainable.
The most obvious problem with the neoliberal narrative above is that it distorts the true levels of pay and benefits received by public sector workers. This strategy is common among Republicans and an increasingly business-oriented Democratic Party – those framing public workers as greedily enjoying excessive pay at the expense of those in the private sector and those who are suffering under the economic crisis.
Recent empirical studies of state and private sector pay raise serious questions regarding conservative dogmas and propaganda. The Political Economy Research Institute and The Center for Economic and Policy Research report this month that state and local workers do technically earn more, on average, than private sector workers, but this is primarily because they are older and more highly educated. These workers, the study finds, benefit from greater levels of experience and training, but are actually less well paid when compared to private sector workers of a similar age and qualification level. The Economic Policy Institute reports that, “after controlling for education, experience, hours of work, organizational size, gender, race, ethnicity and disability,” public employees are undercompensated, earning 3.7 percent less than those in the private sector in similar work conditions.
The claim that public workers are overpaid is a myth. The above findings are important because they suggest that public sector workers shouldn’t become scapegoats in light of the major budget crises under which 37 states are currently suffering. Further complicating conservative propaganda is the inconvenient fact that major cuts in state and local employee pay will do little to balance budgets and save money. Public sector wages and worker benefits account for less than 30 percent of all state and local spending. Furthermore, as economist Paul Krugman reports, cutting a few percentage points from pay or other worker benefits would have a negligible impact on balancing state budgets. Mass layoffs and pay cuts in the name of fiscal austerity are also likely to hurt state budgets in the short term, as firing tens of thousands of employees in each state will almost certainly be accompanied by a significant decline in taxes collected, as we saw following the layoffs in the private sector in 2008 and 2009.
Public sector workers are just now starting to feel many of the negative consequences of the dramatic contraction in the private sector felt over the last two years (State education spending, for example, has suffered under the worst cuts in recent history this year. Further cuts to workers in the public sector will likely exact a negative toll on state taxes collected and state budgets in the future (which will continue to decline due to increased unemployment). Economic performance will also suffer in general, as those who suffer under layoffs and pay cuts will become far more careful in their spending habits.
None of the negative consequences of state budget and pay cuts are of serious concern for those national and state officials who oppose stimulus spending and support budget cuts and layoffs. They have long been intent on gutting public sector unions and weakening public services and goods that are provided for through public sector employment and taxation. The ideology stressing ever-increasing tax cuts is accompanied by an understanding that such cuts will inevitably lead to massive budget deficits, which will be met by calls for cuts in social welfare spending, public employment, and state worker benefits. Such policies amount to little more than class warfare, when all’s said and done.