Fillings in his Teeth

Marc Abrams

A few years ago, the Oregonian started giving Dave Lister, a failed City Council candidate, a periodic spot on the Op-Ed page. Lister was presumably to represent the “forgotten” East Side and the “little guy” running a business.

Flash forward. Lister, sadly, has become just another right wing demagogue receiving “talking points” through the fillings in his teeth from the RNC. In this week’s Oregonian, he takes up the drum beat against public employees with the same canards being used by Lars, Victoria, Jayne and the other Beck-lites of the Portland air waves. Public employees are overpaid, he says. And, worse, we load the deck by electing officials who then “owe” us and can’t bargain in the public’s interest.

The implicit answer to these “problems” is, of course, to elect Republicans. The only problem is that both assumptions are demonstrably false.

Public employees are not overpaid. The State’s own, 300+ page study last year found that, while compensation comparisons varied from job to job, overall, public and private compensation were pretty much equal here in Oregon. A national study out of DC a few months back showed that professionals in government received 29% less than their private sector counterparts. Those calculations include health insurance and retirement plans. Now to be fair to Lister, strictly speaking, he does dodge this inconvenient truth, saying only that non-professional employees “now earn as much or more than their private sector counterparts.” However, where’s the unfairness in “as much as?” And the “more,” for many categories, is 2-3%.

But that hasn’t stopped the present administration in Salem from proposing cuts to state employees that AFSCME Executive Director Ken Allen called “draconian.” The cuts are at least 12%, and, for lower paid workers, such as an Office Specialist 1 making $2,586 per month, the cuts will be 23.7% (check out the calculator for what the State’s proposal will do at the pay calculator at the top right hand of the home page).

Now consider the State’s all funds budget in the last biennium was $60.5 billion, and to sustain “current service levels” we would need $3.5 billion more than is currently on hand. Although the Governor has moved away from the “current service” approach, that number remains the core of all budget conversations. So, that means that the cuts must equal 5.78%. Yet the State’s proposal would cut employees – whose earning power this State’s economy needs as much as that of the mill worker in Lebanon, the rancher in Lakeview or the CPA in Beaverton – between 12 and 23 percent!

Two things should be apparent from this. First, that the idea that electing “union-friendly” Democrats puts the unions in charge of their own workers’ pay is a total canard. This is a Democratic Governor’s team putting these proposals on the table. I sit at the AFSCME “Central Table” in bargaining. This is not a puppet show! The State’s requests of labor are not only disproportionate to the need, but regressive. Second, even assuming that a few non-professional categories of jobs currently get more than they would in the private sector, they certainly will be far behind after anything remotely resembling the State’s proposal.

But the truth doesn’t intrude into the statements made by Lister and the others. Lister states that public employees are different from those, apparently like him, who “have gone without pay raises for years.” Dave, as President of AFSCME Local 1085, I can tell you that my members, in the past eight years, have had raises in two, freezes in four, and cuts in two. And five of those past eight years were boom times for the private sector.

Although I am very thankful that our Governor and others elected with union support are not following the path taken by Tea Party driven anger in Ohio and Wisconsin, that is a far cry from saying that they are under the thumbs of those of us with union cards. And the myth of the overpaid public employee is simply that: a myth. Yes, our pensions and medical benefits don’t look like those for most in the private sector. But neither do our salaries, and they (at best) balance out.

I also find it ironic that Lister and his ilk would argue that private sector principles (as they define them) should apply, and yet don’t apply the most basic such principle of all: that labor will flow to the best compensation. Of course, maybe they don’t care whether the government can function, whether it retains skilled workers, whether its institutional memory survives and creates efficiencies. Perhaps that’s really the long-term goal. But most of us recognize the value of good government…and of good government employees.

Labor has said repeatedly that we understand the need to help find the way out of this budget crisis. But there is a large difference between asking for our help and using state workers as the scapegoat for the state’s budget problems. Mr. Lister has forgotten this, if he ever knew. The rest of us should not.

Comments

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    Thank you for your comments. You have made some valuable points. As an OEA Board member I see and hear how the cuts in education continue to impact our members.

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    Repugs have never allowed facts to stand in the way of a good right-wing canard.

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    Marc - From what I have seen, worker salary, medical benefits, and unfunded increases in PERS costs account for slightly less than $1.5 billion of the roughly $3.5 billion shortfall in the 2011-2013 Current Service Level Budget.

    In your view, how much of that $1.5 billion in increased costs should be shouldered by public employees? If the number is less than $1.5 billion, what services and program areas do you feel should be cut in addition to the $2 billion that the co-chairs have already identified?

    One comment that I would make about your analysis is to remind you that Oregon's unemployment rate is currently 11%; our per capita wages are 91% of the national average; 1 in 5 people in this state will be on unemployment this year; and 1 in 4 children in Oregon are food insecure. I certainly don't agree with Dave Lister's analysis or with those who blame state employees for the Oregon's budget woes, but neither do I agree that things are any better for many workers in the private sector right now. If they were, we would not be having a revenue problem.

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    Sal--

    Implicit in your question is the idea that cuts should essentially be across the board, that if personnel costs are 3/7th of the problem, they should be 3/7th of the solution. First, I don't agree with that calculation, as we are NOT proceeding on a current services approach. Second, I'd start with the $1 billion SEIU identified, add in the $550 million the State now admits it would have overspent on OWIN, and go from there. Third, speaking just for me, and acknowledging this is unlikely in this legislature, I'd raise taxes on those making over $200K or $250K, eliminate loopholes, increase corporate taxes.

    I need no reminder of the state of the State's economy. But government is needed more in bad times, not less. A government that loses its skilled workers, or treats them so poorly they are no longer interested in performing (and this realationship is well documented in the public and the private sector), fails to deal well with its people's needs.

    Finally, I hope it is clear I was not advocating holding State workers harmless. But I am happy to argue the idea that the State's collective bargaining proposal is short-sighted and harmful not only to State workers, but to the State itself in both the short and long term.

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    "The State’s own, 300+ page study last year found that ... public and private compensation were pretty much equal here in Oregon."

    That's a laugher! The "State's own?" So the bureaucrats studied whether they were overpaid and concluded "No." Ok then, that settles it!

    Just how did that study compute the implied value of the pension benefit?

    To receive an annuity payment of $75K for 30 to 35 years requires between $1.5 million and $2 million to be in the bank. That is about a 35% pension benefit, for an average employee.

    In other words, 35% of salary would have to be contributed to the pension account for 30 years (assuming an employee who starts at $30K, ends at $80K, and the annual return is 6% compounded) for there to be enough money saved for that kind of pension.

    Did the state's study gross up the base pay by 35% to value the pension? I doubt it.

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    Marc - I am confused. In your post, you point out that the CSL budget level "remains at the core of all budget conversations", and now you are saying that you do not agree with the LFO analysis of why the CSL budget has grown because "we are NOT proceeding using a CSL approach".

    That seems inconsistent to me.

    Although I certainly trust this governor and the co-chairs of ways and means to act in the best long-term interests of the state, I am not advocating for any proposal. I am merely asking some questions about where the money should come from to address the $1.5 billion shortfall related to maintaining CSL for salary and benefits for state workers.

    Regarding OWIN, the Governor's 2011-2013 budget calls for $146 million to be spent on OWIN, not $550 million.

    Regarding the SEIU proposal, Dennis Richardson appears to agree that management staff should be cut from 1 per 5.5 employees to 1 per 11 employees. I suppose that makes sense in terms of government efficiency, but it does seem to fly in the face of your argument that the state economy needs the earning power of government employees as much as it needs the earning power of private sector employees. I am a little uncomfortable with the idea of kicking hundreds of people to the curb just because they lack representation and have no right to bargain collectively.

    All of that aside, I agree with you that Oregon, like most states and the federal government, needs to do a much better job of collecting taxes from profitable multi-national and multi-state corporations that exploit loopholes in various jurisdictions to avoid paying their fair share of taxes.

    I am shoulder to shoulder with you on that, particularly with regard to private utilities, which are still charging rate payers for taxes that some of the utilities are not paying.

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      Marc - I understand that you are not suggesting that public employees should be held harmless. Thank you for clarifying that. I should clarify that I don't see any attempt to balance this shortfall as particularly fair to anyone. What I see is an array of bad choices.

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    Rob--

    The average PERS recipient gets 24K, not 75K, so you've vastly inflated the math. As to dismissing the state study, that's simply how the Right always does it: don't like the source, disregard it. However, no one has disputed the accuracy of the study, which dovetails with those done nationally. Also, how the benefit compares to the base salary, of course, depends on what rate of return one gets; right now it's down, but in many years it's been high. Your math is incorrect.

    Sal--

    Perhaps I was unclear, in part because the discussion in Salem is unclear. The Governor has stated he will not operate under a CSL approach, and submitted a budget that did not do so. Notwithstanding that, everyone in the Capitol keeps talking about the $3.5 billion hole. I agree this is a confused discussion in this regard.

    As to OWIN, that's still $100 million more than needed for an effective system, according to published reports.

    As to the managers, it's not a question of whether or not they are represented, it's whether we have the appropriate staffing at the appropriate pay levels. The last Governor waited until he had union concessions, then gave managers large raises. They are, relative to the unionized workforce, overpaid. More importantly, when we examine the labor:management ratio in other state governments, we are not a "flat" org chart. 11:1 is typical around the nation. So, given that layoffs are going to be part of this budget -- and in DOJ our management has made clear they will be even if they obtain EVERY concession they ask for -- it seems reassonable that we look to that ratio, and also to retaining those who perform the functions that serve the citizens.

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      Marc -- As I have said, the SEIU proposal on reducing the ratio of supervisory managerial positions by 1 per year during the next biennium seems reasonable from an efficiency standpoint. But let's not forget that doing so will put 1700 Oregonians out of work. It will cause people to lose homes and put families at risk in other ways. It may be an important step, but it is not something to be taken lightly.

      Regarding the CSL approach... your answer is a little unsatisfying in the sense that you are using the CSL figure of $3.5 billion when discussing the shortfall, and the baseline for the AFSCME calculator relies on CSL for calculating benefits, but you appear to have rejected the costs that the LFO has said will enable the state to maintain CSL for employee wages and benefits.

      Anyhow, thanks for the thoughtful responses.

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        But why would they be out of work long? According to the SEIU talking points, we are doing them a favor by letting them pursue those way-better-paying jobs in the private sector!

        Unless the union talking points are.................Wrong?

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    On March 22, 2011, Oregon State workers released a report which would save the State one billion dollars. The report includes cost savings recommendations and one suggestion that I found particularly interesting.

    That suggestion was to increase employees at the Department of Revenue. When Ronald Reagan began destroying the Federal Government by underfunding Treasury and reducing the number of IRS auditors Oregon picked up the slack. Fast forward to last May when Gov. Ted issued his dire budget projections. It did not escape my attention that he said that the State of Oregon was owed two billion dollars. I was not able to interest Blue Oregon in this aspect of the problems facing schools, law enforcement, courts, roads, etc. but learned from the Department of Revenue that income not property taxes was the source of the uncollected revenue.

    So, I congratulate the employees of the State of Oregon for doing what would be good for the State. Why isn't Kitz interested?

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      I haven't seen anyone, not the governor or any of the ways and means co-chairs, nor even the Oregonian, that are not taking the SEIU report seriously.

      Regarding the revenue shortfall due to uncollected personal income taxes... my understanding is that we have had tax amnesty legislation in multiple recent sessions that has recouped a significant portion of that shortfall. I do not think it is fair or true to say that "Kitz is not interested."

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    Marc, you ignored the point. Which is: Salary studies that show public sector paid less than private sector do no accurately account for the pension benefit. They systematically under value it.

    For instance, the usual way to do it is to just add the employer contribution amount to the salary and other benefits. But guess what? Oregon has a huge unfunded pension liability, which means that the employer contribution doesn't accurately reflect the actual cost of the pensions.

    Also - let me get this straight. Did you actually say you want to raise income taxes AGAIN on people earning more than $250K? You mean raise it above the current 11%?

    Really?

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    Rob, that may or may not be how some studies do it, but this one used actuarial work from Milliman, a respected nation leader, and DID price it out correctly. See the (Summary) [http://oregonpers.info/Library/Download.aspx?docid=1254]. You're also ignoring that the issue is what the compensation is, which not whether there is a gap created by sytematic underfunding (hardly the employee's fault). Public employees pensions do not put them ahead of their private-sector counterparts in total compensation. And, yeah, I'm OK raising taxes on those who have benefitted from federal giveaways. How about you retract your inaccurate math about "75K pensions?"

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    Come on, Marc, stop repeating the same old FACTS. No one wants to know the truth about public employee compensation. They work for the government,for god's sake. They all must be ripping-off the tax-paying public, by definition. The uproar will not cease until every public service is provided by a private contractor owned and controlled by a major Republican contributor. Only then will we rest in peace.

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