Senate Bill 5...bad for education...bad for Ohio

I need some help here.

An Ohio state Senator, Shannon Brown, has introduced a bill, Senate Bill 5, that will drastically change the landscape of education and public service in Ohio. Feel free to take a while and read the full text of the proposed bill here. Then call OEA' action line to be connected directly to your Ohio senator's office.

One of the major pushes of the proponents of Senate Bill 5 is to help get Ohio out of its budget deficit because it will allow employers to slash the salaries of the overpaid members of that new entitled class: public employees.

The premise of this requires two things to be true:

• First, public employees must be overpaid.
• Eliminating collective bargaining must lead to shrunken budget deficits.

Today I offer two pieces of evidence to show that neither of those are true.

First up is the testimony of Amy Hanauer, Executive Director, Policy Matters Ohio. This testimony can be found in its entirety on the Policy Matters Ohio website, but I'm going to quote:

Upon taking office in 2005, Mitch Daniels in Indiana and Matt Blunt in Missouri eliminated collective bargaining agreements for state employees. Kentucky Governor Ernie Fletcher did the same in 2003. Yet according to data provided by the Center for Budget and Policy Priorities, the budget shortfalls of these states in 2010 ranged from 10.6 percent of general revenue fund (Indiana) to 14.5 percent (Kentucky) to 22.7 percent (Missouri), mirroring the fiscal crisis of states across the nation.

The point is not to highlight the struggles of individual states; it is to illustrate that the right of public workers to bargain collectively is not the cause of the budget shortfalls and eliminating that right to collective bargaining has not fixed the problem in states that have tried it. Deeper issues –investment, capital markets, trade and currency – are what shape regional economies.

Some states that forbid collective bargaining for state workers – Arizona, North Carolina, Nevada – face some of the highest state budget deficits going into 2011, all exceeding 30 percent. And some states that
allow and encourage collective bargaining – Montana, Massachusetts, New Mexico, South Dakota – are in better budgetary positions with deficits under ten percent.

In truth, states with and without collective bargaining rights faced similar budget deficits in 2010. States with no collective bargaining rights for any public employees saw an average budget shortfall of 24.8 percent in 2010 while states (including the District of Columbia) with collective bargaining for all public employees had an average budget shortfall of 24.1 percent. For the 42 states (and the District of Columbia) with some (or all) collective bargaining rights for some (or all) public workers, the 2010 budget deficit averaged 23 percent. These numbers are all very close. The right of public workers to unionize is not driving the state revenue or fiscal crisis.

To summarize, eliminating collective bargaining does not lead to a decreased budget shortfall. If anything, collective bargaining slightly decreases the magnitude of the budgetary shortfall.

Second, I offer a position paper from the Economic Policy Institute, and it addresses something that is also covered in Hanauer's testimony: the overcompensation of the public employees:

Comparisons controlling for education, experience, hours of work, organizational size, gender, race, ethnicity and disability, reveal no significant overpayment but a slight undercompensation of public employees when compared to private employee compensation costs on a per hour basis. On average, full-time state and local employees are undercompensated by 3.7%, in comparison to otherwise similar private-sector workers. The public employee compensation penalty is smaller for local government employees (1.8%) than state government workers (7.6%).
...
Public-sector workers’ compensation is neither the cause, nor can it be the solution to a state’s financial
problems. Only an economic recovery can begin to plug the hole in the states’ budgets. Unfortunately, the states' own current budget balancing efforts may prolong the economic downturn by increasing unemployment and reducing demand for products and services. Thousands of state and local public employees will lose their jobs, and their families will experience considerable pain and disruption. Others will have their wages frozen and benefits cut. Not because they did not do their jobs, or their services are no longer needed, nor because they are overpaid. They too will join the list of millions of hard working innocent victims of a financial system run amuck. They do not deserve bullying or our ridicule and condemnation by elected officials and the media looking for scapegoats.

According to the EPI, public employees are actually slightly underpaid when compared to like-educated, experienced private-sector employees.

So, if neither of these postulates are true, why then are legislatures choosing to attack the collective bargaining rights of public workers?

I'll ponder that tomorrow.