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Monday, November 1, 2010

The Dilemma of our Public Employee Malaise.

I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments. — Friedrich August von Hayek

How many times have you heard a political ad promoting some initiative or proposition asking us to vote more money for police and firemen? These ad always claim that these men and women have the most dangerous jobs in the world and deserve the unquestioned and patriotic support of the public. No doubt those men and women have dangerous and demanding jobs, but just how dangerous are they?

After some research on the most dangerous jobs in America I discovered that the jobs of policeman and fireman ranked way down on the danger scale. So just what is the most dangerous job in America? Believe it or not it’s being a commercial fisherman — and they don’t even have a union, they are all independent contractors.

According to the United States Department of Labor’s Bureau of Labor Statistics and Business Insider here is the list of the 15 most dangerous jobs in the United States based on fatalities per 100,000 along with their average pay scales.
  1. Commercial Fisherman; 111.8 fatalities per 100k — $13/hr.
  2. Logging Workers; 86 fatalities per 100k — $13/hr.
  3. Aircraft Pilots and Flight Engineers; 70.7 fatalities per 100k — N/A
  4. Structural Iron and Steel Workers; 45.5 fatalities per 100k — $19/hr.
  5. Farmers and Ranchers; 39.5 fatalities per year — N/A
  6. Electrical Power-Line Installers; 29.1 fatalities per 100k — $22/hr.
  7. Truck Drivers; 28.2 fatalities per 100k — $12/hr.
  8. Refuse and Recyclable Material Collectors; 22.8 fatalities per 100k — $17/hr.
  9. Police Officers; 21.8 fatalities per 100k — N/A
  10. Roofers; 29.4 fatalities per 100k — $16/hr.
  11. Taxi Drivers and Chauffeurs; 21.3 fatalities per 100k — $12/hr.
  12. Construction Workers; 19.5 fatalities per 100k — $16/hr.
  13. Firefighters; 17.4 fatalities per 100k  — N/A
  14. Helpers in the Construction Trades; 13.7 fatalities per 100k —$15/hr
  15. Maintenance Workers: 12.0 fatalities per 100k — $14/hr.
Other sources such as the New York Times and the Daily Beast rank these categories slightly different, but police and firefighters are still down on the list.

I can personally attest to the dangers of logging. Several years ago I worked with a fellow who married the widow of a logger whose husband was killed in a logging accident when his chain saw ignited a fire and burned him to death while topping a tree in Oregon. She also had a bother-in-law who died in fall from a tree while logging in Oregon.

We have been told for years that we needed to vote in favor of these initiatives and propositions to increase the compensation of police, firefighters, transit workers, healthcare workers, EMT medics, prison guards and teachers. What we really have done is pad their pensions and health and welfare benefit packages, along with creating more power for their various unions, creating massive amounts of unfunded liabilities for states and municipal governments. (The 2009-2011 budget for the Los Angeles Unified School District was $7.3 billion dollars with $1.4 billion (20%) allocated to health and welfare benefits to certificated and classified employees and retirees).

The liability in the pension program is created by he guaranteed life-time payouts even if there is not enough money in the fund to cover it. The liability for the health and welfare is a guarantee that the taxpayer will cover all costs until the death of the recipients. Today these unfunded liabilities are putting a burden of trillions of dollars on the back of the American taxpayer. This same condition is causing meltdowns in the economies of France, Spain, Greece, Portugal, Denmark, Great Britain, Iceland and other European countries.

For years we have been hoodwinked into giving these public sector employees more and more compensation and benefits and the their unions more political power — power which they use to coerce legislators into voting then eve more power. Today, according to the Bureau of Labor Statistics, public sector employees earn almost 50% more than their private sector counterparts when their total compensation packages are taken into account.

We warned of this in 1919 when the Mayor of Boston Andrew J. Peters in support of his police commissioner, Edwin U. Curtis, summoned local militia units to restore order after he suspended the entire police force for demanding collective bargaining rights. At this juncture, Governor Calvin Coolidge, elected the previous November, decided to enter the picture after having passed up an earlier opportunity to resolve the matter. Coolidge summoned the entire Massachusetts Guard — a show of force that rapidly caused the strike to collapse and earned for the governor the reputation of a strict enforcer of law and order.

The striking policemen were not allowed to recover their jobs, which went overwhelmingly to returning servicemen. The new officers were granted higher pay and additional holidays, and gained the additional benefit of free uniforms.

Coolidge defended the decision not to rehire the strikers in a remark to Samuel Gompers, the head of the American Federation of Labor, proclaiming, “There is no right to strike against the public safety by anybody, anywhere, any time.”

After 9/11 the federal government has gone crazy dolling out grants for local police and fire departments, so called first responders. All of these grants have been given in the name of national security. These grants have come from the Departments of Homeland Security, Defense, Agriculture, Energy, Housing and Urban Development, Transportation, Energy, Justice and Education. This has been a tremendous windfall for state and local governments.

The grants are for technology, vehicles, communications, facilities, weapons and staff. With all of their grants the police’s ability to stop a crime in progress has not increased one iota. As one Riverside County Deputy Sheriff I know told me, “He has never heard of a case where the police have prevented a crime in progress — this has to be left to the citizen” When I asked him if it wise to own a gun he told me he had a personal defense weapon at home and he believed it was prudent for every citizen to do the same to defend themselves.

This influx of money from Washington has done two things. One, increase the dependency of state and municipal governments on the federal government and two; allow states and municipal governments to cover their costs for public employee compensation costs without the knowledge of the taxpayer. In other words the taxpayer has not been aware of the increases in compensation and unfunded liabilities for pensions and health & welfare as the federal government is covering many of the operating costs. Why should a taxpayer in Montana or Wyoming, where crime is low, support a AWAT team in Los Angeles?  This should be left to the citizens of Los Angeles to decide. If they do not have the money the for these programs and tools The City Council will have to tell the people and the taxpayers in Los Angeles can decide if they want to increase their taxes to pay for these things or the City will have to cut expenses in other areas. These are hard choices being deferred due to federal intervention.

The federal financing of local responsibilities has also been a part of the American Reinvestment and Recovery Act (Stimulus). A great deal of this federal money did not go for “shovel-ready” projects, but was shoveled into states and municipal governments to cover their shortfalls in their ability to make public employee payrolls. Small businesses should be so fortunate. This is also true for teachers, members of one of the most powerful lobbying groups in the United States along with the SEIU. As example the Los Angeles Unified School District received $795 million dollars (2009-2010) to supposedly save 8,400 union jobs.  All this has done is masking the problem and push any real solutions down the road with the hope the taxpayer will eventually bail them out.

As we were warned in 1919 this has become vicious circle. Higher compensation for public employees means more union dues collected for public sector unions that support progressive politicians who support more compensation and benefits for the public employees and so on and so on. This is nothing less than a soft tyranny supported with taxpayer money.

This can only end when the taxpayers and voters have the sense to vote for legislators, mayors, governors and presidents who would begin to take this power away from these unions by reducing the public employee payrolls and outsourcing every possible service that is truly needed or desired by city, state and federal governments to the private sector. Some of the services I can see outsourced with no degradation in quality of service — and in many cases improvements with lower overall costs are:  Transit workers, fire and police administrative functions, engineering bureaus, DMV services, maintenance functions such as tree trimming and street maintenance, facilities maintenance and legal services.

Many of these public employees would have to opportunity to do the same job in the private sector, or better yet start their own business providing these services. This may cause some discomfort, but in the long run the nation would be better served. The total cost would go down and there would be greater accountability of the private contractors. It would be much easier to get rid of unqualified or bad employees and there would be no responsibility on the part of the taxpayer to provide pensions or health and welfare benefits. These responsibilities would fall on the private contractors in a free market environment.

In 1991, after the unification of the two Germanys I was working with Digital Equipment Corporation I preparing a proposal for the German National Railway (Deutsche Bundesbahn) for a comprehensive Geographic Information System (GIS). During this time the DB was mandated to absorb the railway employees of the East German Railway (Deutsche Reichsbahn). At this time West Germany, with a population of 67 million, the DB had 267,000 employees. East Germany with a population of 17 million had 175,000 employees working for the DR. The main reason for this imbalance was that the nothing in the DR was automated. As example there were no automated gate crossings in East Germany. These crossing were manned 24/7, 365 days a year by two person shifts working eight hours per day as crossing guards  This is one of the reasons there was no unemployment in the DDR. There was no way the DB could absorb all of these 175 thousand railway workers, so they came up with a very German solution.

As the DB outsourced as much as they could from construction and engineering, to catering services and facilities management they simply mandated every contractor they used to hire some of the 175,000 DE workers. The private contractors would be responsible for their training and benefits. This worked out well and was a pragmatic German solution. We could do the same.

We just cannot afford to continue down this road of increasing our public payroll. We are approaching the tipping point of 50.1% and when we reach this point it will be too late. You will have a class of workers that can elect their bosses and vote themselves, through their unions, more and more money and power.

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