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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

How Many Public Employees Can We Afford?



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In an interview with The New Republic’s Jonathan Cohn, Richard Yeselson, a veteran of the labor movement and well-regarded policy intellectual, offers a mostly sanguine take on the role of public sector unions in American society. Public sector unions outnumber members of private sector unions by a considerable margin, and there is a good reason they’ve become such a lightning rod. Suffice it to say, I don’t agree with Yeselson’s interpretation, but he does offer one observation that I’d like to unpack:

[T]he strongest critique I hear from the right (and some centrist Democrats too) about public sector unions is that their first priority needs to be the excellent provision of services, rather than the job security of public sector workers. And you know what? I agree! Who isn’t in favor of excellent provision of public services? But given how little revenue we raise and how little we spend on public services, relative to other countries, it is easy to imagine public policies that would boost public sector services and end up creating more employees, too.

First, let me stipulate that there are indeed many conservatives for whom the chief problem with public sector unions is that they favor increasing public employment levels. It is not clear to me, however, that this is in fact their main drawback, nor do I think the strongest conservative arguments against public sector unions center on their role in increasing public employment as such. 

In “Government Crowded Out,” Daniel DiSalvo of the Manhattan Institute warns that as state and local governments face rising pension and health benefit costs, they’ve been forced to cut services. And as costs per worker rise, state and local governments are less inclined to maintain high public employment levels. For example, DiSalvo observes that in New York city, a sanitation worker costs $144,000, up from $79,000 a decade ago. Had compensation costs not risen to this extent, the city might be more amenable to expanding the ranks of sanitation workers. Much has been written about the peculiarities of the defined-benefit pensions that are common in the public sector, and which many public employees would happily trade for higher wages, and so I won’t rehearse the matter here. 

Public sector unions have considerable influence over the work rules governing what employees can and can’t do. To be sure, this influence has at times been overstated, as Rick Hess argues in Cage-Busting Leadership, his book on how bureaucratic inertia can be more of an obstacle to reform than work rules as such. But work rules can effectively determine staffing levels in a given job function. In doing so, they limit the ability of state and local governments to embrace new productivity-enhancing technologies and to adapt to changing consumer preferences. In “The Trouble with Public Sector Unions,” DiSalvo discusses how rigid work rules shape the culture of the public sector:

Yet as skilled as the unions may be in drawing on taxpayer dollars, many observers argue that their greater influence is felt in the quality of the government services taxpayers receive in return. In his book The Warping of Government Work, Harvard public-policy scholar John Donahue explains how public-employee unions have reduced government efficiency and responsiveness. With poor prospects in the ultra-competitive private sector, government work is increasingly desirable for those with limited skills; at the opposite end of the spectrum, the wage compression imposed by unions and civil-service rules makes government employment less attractive to those whose abilities are in high demand. Consequently, there is a “brain drain” at the top end of the government work force, as many of the country’s most talented people opt for jobs in the private sector where they can be richly rewarded for their skills (and avoid the intricate work rules, and glacial advancement through big bureaucracies, that are part and parcel of government work). Thus, as New York University professor Paul Light argues, government employment “caters more to the security-craver than the risk-taker.” And because government employs more of the former and fewer of the latter, it is less flexible, less responsive, and less innovative. It is also more expensive: Northeastern University economist Barry Bluestone has shown that, between 2000 and 2008, the price of state and local public services has increased by 41% nationally, compared with 27% for private services.

Yeselson finds it easy to imagine policies that improve the quality of public services while also increasing public employment. I’d suggest that improving the quality of public services might entail increasing public employment in some domains while decreasing it in others. It is this reallocation that public sector unions make extremely difficult, as unions, as democratic organizations, reflect the risk-version of their median members, who believe, correctly for the most part, that unionized public employment helps them secure more favorable terms than they’d be able to secure from private employers. It is not obvious that New York City gains much from the fact that the MTA employs 25 workers for tunnel-boring machine work that Spanish transit agencies need only 9 workers to accomplish. But I don’t doubt that the 16 workers who’d be made redundant by a shift to Spanish-style labor practices would not welcome the change. In aggregate, however, I too can imagine easily a scenario in which rolling back rigid work rules leads to stable or even increased employment levels – New York City could stand to employ more police and more sanitation workers, if they were more affordable. The trouble with public sector unions is not so much that they increase public employment levels as that they make it hard for state and local officials to meet the evolving needs of dynamic communities. 

UPDATE: As if on cue, Kate Zernike of the New York Times reports on encouraging developments in Camden, New Jersey, a depressed, crime-ravaged community where a notoriously ineffective local police force was recently disbanded and replaced by a police force operating under the auspices of the county government:

Dispensing with expensive work rules, the new force hired more officers within the same budget — 411, up from about 250. It hired civilians to use crime-fighting technology it had never had the staff for. And it has tightened alliances with federal agencies to remove one of the largest drug rings from city streets.

The entire article is well worth reading. The old police force was fiercely resistant to change. The new police force is now unionized, yet the sweeping away of the old order has left fresh memories that have prevented backsliding thus far. It remains to be seen if the new police force, and its union, will grow just as hidebound as its predecessor. What we can say is that Camden’s police have grown more efficient by “dispensing with expensive work rules,” which in turn has allowed for the expansion of the workforce. 



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