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Public Employees
The Coddled Sector
New York’s exorbitant spending and heaviest-in-the-nation taxes prop up one of the largest and costliest public payrolls in the U.S.
New York ranked eighth in state and local government jobs per capita, 14 percent above the national average, according to 2001
Census Bureau data.[130] Labor Department figures show that, for every 1,000 residents, New York has 71 state and local government employees,
compared with California’s 61. With about 6.5 percent of the nation’s population, New York employs about 7.5 percent of the nation’s government
workers—who together are paid 9 percent of the nation’s total spending on government payrolls.[131] All told, 70 percent of New York’s
government workers are unionized—the most in the nation. Thanks to union power fortified by long-established collective bargaining rights,
state government workers in the Empire State are the nation’s third-highest paid, earning about 18 percent more than the national average.[132]
The difference between New York and other states is so dramatic that New York’s state and local taxes could be reduced by $14 billion a year
if its public-sector workforce matched the national average—even if those workers earned slightly more than the national average.[133]
 Not
only do New York’s government workers earn more than their counterparts
in other states; they often earn more than the people who pay their salaries.
The hourly earnings of the New York metro region’s private-sector workers
average 15 percent less than what is earned by New York City employees, the
Citizens’ Budget Commission has reported.[134] This,
the CBC notes, “undermines the long-standing myth that the public sector
must provide unusually generous fringe benefits packages in order to compensate
for higher private-sector salaries.”[135]
Those fringe benefits—notably, health insurance and pensions—remain lavish compared with the typical private-sector worker’s. Consider
New York City’s Transit Workers Union: after only 25 years on the job, TWU members can retire at age 55 at half salary—with cost-of-living
adjustments. When the MTA tried to rein in these unsustainable pension costs in contract negotiations in late 2005—preposterously, the union
wanted the retirement age lowered to 50—the TWU walked off the job in an illegal strike.[136]
Taxpayer-financed public-pension contributions soared by over $3 billion from 2000 through 2004, and the increases continued in 2005. In
New York City, the rise in pension costs from 2002 through 2004 was steep enough to consume every single dollar raised by Mayor Bloomberg’s
record $1.8 billion property-tax increase.[137]
Upstate taxpayers alone pay up to $6 billion a year more than taxpayers pay in a state with an average tax burden, such as Ohio. About
two-thirds of that excess is attributable to excess spending on government payrolls.[138] Of course, the state’s added tax burden soars even higher
when high-tax downstate precincts like New York City, Long Island, and Westchester and Rockland Counties are considered.
To understand how bloated New York’s taxpayer-funded government sector
is, compare two dissimilar areas: Buffalo-Niagara in western New York; and the
Albany region. New York’s capital region has long been immune from the
economic ups and downs afflicting the rest of the state, because it is home
to one of the largest and bestpaid government workforces in the world. In the
14-year period ending in 2004, the Albany-Schenectady-Troy region enjoyed a
payroll–job growth rate of 8.3 percent, far above the upstate average
of 3.8 percent and the anemic statewide average of 2.9 percent. (The nation’s
job-growth rate during the same period was 20.1 percent.)[139]
Buffalo-Niagara, in contrast, actually lost jobs during the same 14-year
period, when it posted a job-growth rate of -0.1 percent.
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“"Each year, unions spend millions on lobbying, political campaigns, and ad
campaigns to sustain their privileges."
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Public-employee unions invest plenty of time, energy, and money to remain plump
and happyduring private-sector hardships. These powerful public-employee unions
spend millions each year on lobbying, political campaigns, and ad campaigns
to sustain their unique privileges.
They are aided by state laws that effectively prevent state and local governments from
reining in labor costs. Perhaps the most notorious of these is the “Triborough Amendment”
to the Taylor Law, which gives negotiating advantages to New York public-employee
unions that unions in other states don’t have. Under the amendment’s provisions, elements
of existing labor contracts—annual pay increments, for instance—remain in force
even after the contracts expire. Teachers and other government workers have little incentive
to grant concessions in contract negotiations with school districts and municipalities,
because their previously negotiated gains automatically remain in force.[140] So, for example, public-sector workers typically have much better
health-insurance benefits than their private-sector counterparts, since these benefits were awarded when health insurance cost less, and it’s now
virtually impossible, thanks to Triborough, to get public-sector unions to make concessions to put these costs in line with the private sector’s.[141]
In the lead-up to their illegal December strike, for example, the TWU was outraged to be asked to contribute 1 percent of their salaries to their
health-care plans, whereas private-sector workers typically pay between 10 and 20 percent of their health-insurance premiums, far more than
1 percent of the average TWU salary. The free ride for municipal employees has gone on long enough.
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Union-Friendly Laws
Across the nation, union membership and influence have
been dwindling steadily for years,[142] but New York’s
unions still benefit from state laws that directly or indirectly inflate
taxpayer spending on government employees and construction projects. In
addition to the Triborough Amendment to the state’s Taylor Law, New
York inflates its taxes and costs with various shortsighted requirements:
- The state’s antiquated Wicks Law requires at least four separate
contractors on most construction and building-renovation projects.[143]
This makes it impossible for taxpayers to enjoy the cost savings and efficiencies
that most private-sector projects realize from use of a general contractor.[144]
- State laws and regulatory practices generally require schools and
municipalities to pay “prevailing wages”—that is, union-level
wages[145] that, for construction jobs, are almost
universally higher than those of nonunion workers.[146]
Many states have prevailing-wage practices; one national study ranked
New York’s prevailing-wage requirements the second most burdensome
among 31 states studied.[147]
- Highway contractors say that they are forced by outdated contract
rules to pay for union jobs made obsolete by modern equipment.[148]
This featherbedding is likely to continue, since 29 percent of New York’s
construction jobs are unionized, compared with only 9 percent nationwide.
All told, the Wicks Law and other mandates drive up construction
and related costs for local governments and schools by over $1 billion
a year. But state legislators reject strong annual appeals to repeal or
reform the law because subcontractors and unions that benefit from it
make substantial campaign contributions and provide get-out-the-vote workers
for political campaigns.[149]
So Albany, Inc. has done nothing to lighten the burden that these union-friendly
laws impose on taxpayers. To the contrary, state officials have consistently
acted to strengthen labor’s hand in organizing and contract negotiating,
tightening their chokehold on taxpayers.
For example, with strong bipartisan support in the state legislature and
enthusiastic support from Governor George Pataki, Albany passed a notorious
union-friendly “labor neutrality” law in 2003. This union-driven
legislation prevented employers who got state funds of any kind from saying
anything about unions during organizing campaigns.[150]
A federal appeals court struck the law down in May 2005,[151]
but union leaders vowed to continue their quest for a law to gag employers.[152]
Small wonder this is such a high priority for them: after all, while public
employees are forcibly compelled to pay union dues whether they like it
or not, private-sector workers tend to turn thumbs down when they are
informed of potential disadvantages of union membership.
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130. See U.S. Census Bureau’s state and local government employment
and payroll data, at http://www.census.gov/govs/www/estimate.html.
131. Ibid.
132. Ibid.
133. Budget Watch ’03, no. 5, Public Policy Institute of New York
State, updated January 3, 2003. Estimate based on Census Bureau data.
134. “Average hourly wages of public-sector employees exceedthose of private-sector employees in the Greater New York
City Region,” Citizens Budget Commission analysis of U.S.
Bureau of Labor Statistics data, April 21, 2005. Analysis is
available at http://www.cbcny.org/04-21-05_Release-Public-PrivateCompensation.pdf.
135. Citizens Budget Commission analysis.
136. Steven Malanga, “What Would Reagan Do?,” Wall Street Journal,
December 21, 2005.
137. E. J. McMahon and Peter Ferrara, Defusing the Pension Bomb: How to Curb
Public Retirement Costs in New York State (Manhattan Institute, November
2003).
138. “How High Is the Upstate Tax Burden—and Why?,” a report
by the Public Policy Institute of New York State. The report
is at http://www.ppinys.org/reports/2004/upstate_taxes04.pdf.
139. U.S. Department of Labor, Bureau of Labor Statistics data
posted at www.bls.gov.
140. Robert B. Ward, The $163 Lightbulb: How Albany’s Mandates Drive
Up Your Local Taxes (Public Policy Institute of New York State, 1999), p.
28.
141. “The Albany Impact,” Buffalo News editorial, May 2,
2005.
142. See, for example, Danielle Kost, “Unions Vie for Survival in Changing
Economy,” Rochester Democrat and Chronicle, September 3, 2001.
143. Ward, New York State Government, p. 257.
144. Idem, The $163 Lightbulb.
145. Idem, New York State Government, p. 257.
146. Idem, The $163 Lightbulb, p. 52.
147. Ibid., pp. 52–53.
148. “Featherbedding Is Strike’s Unsettled Issue,” Buffalo
News, May 15, 2005.
149. Jay Gallagher, “Wicks Law Drives Up Costs of School Construction,”
Gannett News Service, published June 13, 2004, in the Rochester Democrat
and Chronicle. Available at http://democratandchronicle.com/gannettonline/gns/newyork/p4_wicksl.html.
150. Tamara Loomis, “Statute Limiting Anti-Union Activity Takes Effect
Dec. 29,” New York Law Journal, December 12, 2002.
151. See http://www.bcnys.org/whatsnew/2005/0517neutrality.htm.
152. “State Labor Leader Vows Fight on Union-Organizing Bill,” Elmira
Star-Gazette, May 19, 2005.
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