I had a the great pleasure of attending the Manhattan Institute’s conference on the terms of public employment at the state and local level, “A New Social Contract.” The panelists, including Josh Barro, Daniel DiSalvo, Joshua Rauh, and E.J. McMahon, among others, did an excellent job of describing the barriers to comprehensive reform, including the sheer scale of the unfunded pension liabilities facing state and local governments, a point forcefully made by Rauh. The conference was built around a new survey conducted by Douglas Schoen, a centrist Democratic pollster who served under President Clinton.

Because Schoen does not share all of the political presuppositions of the mostly right-of-center panelists and attendees, he offered a great deal of insight into the limitations of the political strategy pursued by conservative reformers looking to scale back or reverse outright collective bargaining rights. In an op-ed for the Wall Street Journal, he summarized his basic view. First, he observes that the basic message of conservative reformers, that public sector compensation is poorly structured and in need of a shake-up, is widely embraced:

The top priorities for resolving current fiscal issues are to cut government spending (47%) and to ask for greater sacrifice from current public employees, by having them contribute more towards their benefits (31%). By almost two-to-one, they think that current public employees should have to contribute more toward their pension benefits because of budget problems.
A majority (51%) say they would not be willing to cut “social service programs provided by your state” to maintain the compensation of public employees; and 60% say that “education and health care” should not be cut so that “the salaries and benefits of public employees could be paid at current levels.”
Further, by 48% to 40%, voters say that public employees’ salaries should be “frozen,” and they should be required to contribute more towards their benefits when states face the type of crises they are now facing. Close to two-thirds (64%) say they would not be willing to have their taxes raised as a means of keeping salaries and benefits of current employees at current levels.

There are serious problems, however, e.g.,

A majority (56%) supports reducing certain state services to address state budget crises if programs need to be cut. Voters are most inclined to cut libraries and parks services and least inclined to cut education, health care, police and fire protection. However, a whopping 60% of voters oppose “increasing state sales, income or other taxes” to reduce budget deficits.

Education and health care are the biggest drivers of spending at the state and local level, while libraries and parks services are trivial by comparison. It is thus essential for opponents of the conservative reform agenda to conflate compensation for public workers in the education and health sectors with funding for education and health, despite the fact that high compensation budgets often crowd out service delivery.

Moreover, while voters aren’t particularly passionate about collective bargaining rights, they don’t really see how they are related to the problematic compensation structures they seem to oppose:
While there is a clear sense that cutting spending and reducing salaries and benefits will result in fiscal stability for state governments, there is no similar linkage between reforming the collective bargaining process and achieving fiscal well-being for individual state governments.
Put simply, the voters don’t see a connection between the two.
Collective bargaining is not overwhelmingly popular in the abstract. A majority (50%) agrees that “public employees should not bargain collectively and use union power to limit or delay the delivery of important government services.” Moreover, 60% of voters feel that collective bargaining is a benefit “and can be changed and negotiated based on economic circumstances,” while 30% see it as “essential” and “a basic right of labor.” In the recent “disputes between state governments and public unions over collective bargaining,” voters side with state officials by 46% to 39%. …
Yet the reason for this apparent movement against collective bargaining reform is that unlike reducing state spending and benefits, voters nationally and in those two states are not convinced that clear savings will result from reforming the labor relations process. By 56% to 33%, voters nationally say “it is unclear how much money will actually be saved by limiting” collective bargaining rights.
Voters also reject the notion that reforming collective bargaining will make government more efficient in each of these two states. [Emphasis added]

If anything, I would argue that collective bargaining reform is actually more important than compensation reform as such, because rigid work rules are a key barrier to improving the efficiency of public sector institutions. Yet conservative reformers have failed to persuade the public on this point, which suggests that, as Schoen put it, they might win every battle and still lose the war.

We need to talk more about “crowding out.” In Schoen’s view, the essential step for reformers is to begin with an attractive vision of public sector reform, e.g., by making government more efficient, we can offer more and better high-quality public services consistent with a modest tax burden.

A side note: E.J. McMahon, one of the most lucid and intelligent people I’ve come across in this line of work, noted that from the last year of the Giuliani administration to the most recent fiscal year under Mayor Bloomberg, New York city has increased pension contributions from $1.4 billion to $8.4 billion, an increase that could have purchased a doubling of the size of the NYPD, the parks department, and the sanitation department. This, McMahon suggested, is crowding out in action, yet this massive increase in the burden of paying public pensions has gone almost entirely unnoticed.

There is much more to discuss, particularly in re: the recommendations of Barro and Rauh.