America has a problem with its public employees. They are not downwardly mobile enough.
Policemen, firefighters, teachers, hospital nurses -- they still belong to the one part of the U.S. economy where the New Deal hasn't been repealed. Fully 90 percent of them have defined-benefit pensions as of old. In the private sector, just 60 percent of employees have retirement plans, and a scant 24 percent still cling to defined-benefit plans. Fully 86 percent of public employees are covered by on-the-job health insurance; in the private sector, the rate has fallen to 66 percent.
According to the Employee Benefit Research Institute, public employees make on average $49,275 a year. A sub-princely sum, that, but better than the $34,461 that is the average annual income of private-sector workers.
There are a number of reasons public employees have been able to preserve the kinds of benefits and, in some instances, living standards that were once more common to American workers generally, but chief among these is unions. While 37 percent of public-sector workers are unionized, just 8 percent of private-sector workers are. Through their power at the ballot box, public employees have maintained the ability to bargain with their employers, who are either elected officials or their appointees. For all intents and purposes, their private-sector counterparts have lost the power to bargain collectively.
But are decent living standards in one sector sustainable when they're dependent on the taxes of an increasingly beleaguered private sector? More and more, conservative political strategists see an opportunity to weaken the Democrats -- traditionally the beneficiaries of public-employee union support -- by pitting private-sector voters against public-sector ones. That certainly was Gov. Arnold Schwarzenegger's goal earlier this year when he backed an initiative that would have terminated the defined-benefit pensions for California's state and municipal employees and shifted them to 401(k)s instead.
Schwarzenegger's plan had a few glitches -- most notably, ending survivor benefits for widows and orphans of police officers and firefighters killed on the job. Facing an onslaught of criticism, Schwarzenegger backed off the initiative. But the war between Arnold and California's public employees has spread across many fronts. He's been embroiled with nurses on the question of nurse-patient ratios, and with teachers over his reneging on a funding commitment to public schools. He's been losing every one of these fights, with his support in the polls dropping from 60 percent to an anemic 40.
Now, a number of Schwarzenegger's business backers have funded yet another initiative, this one to curtail the ability of public-sector unions to fund political campaigns (including those for and against initiatives). The governor -- unless he trades off his support for this measure in return for concessions from the Democratic legislature -- is likely to back it.
Though the attacks from the gazillionaire governor on the state's public servants have only backfired, Arnold's handlers do not sound daunted. On Sunday the Los Angeles Times, reporting on a series of bi-weekly phone calls that Schwarzenegger and his strategists hold with his leading business backers, quoted veteran Republican operative Don Sipple, in one recent call, telling the assembled Arnoldistas how they'd go after the public employees.
"When you get to the point of . . . 'These people are on your payroll, and they are out to roll you every day,' that creates a kind of phenomenon of anger," Sipple said. "But it takes a long time to get there."
If Arnold truly believes he can convince his fellow Californians that the police, firefighters and teachers are out to roll them every day, then the tale of the Incredible Shrinking Governator will continue apace.
But the problems faced by public-sector workers as the private sector grows steadily meaner aren't going away, whatever the outcome of the immediate battles in California. When public-sector workers were first joining unions in the '60s, they were largely playing catch-up with private-sector employees. But as Wal-Mart has supplanted General Motors as America's largest private employer (and GM announced a cutback of 25,000 more workers Tuesday), it's the teachers and their public-sector cohorts who have emerged as the relatively more advantaged -- and politically exposed.
From the period of the three decades after World War II, when the long boom in the American economy was felt in every class and quadrant, we have devolved into a nation of separate economies -- increasingly insecure private-sector workers, a public sector where the guarantees of the New Deal order still pertain and a stratum of mega-rich whose investment income is taxed at lower rates than the incomes of those who work for a living. If we can't create more security in the private sector (and universal health insurance would be a good start), the modest security of a work life in the public sector will surely be eroded, too.