Michigan’s unemployment rate is currently 10.3 percent, and
since 2000 per-capita personal income has fallen 4.4 percent after adjusting
for inflation. The state’s economy has contracted by 7.1 percent in the last
decade, and the number of people employed in the private sector in this state
has fallen more than 19 percent over the same period.
However, despite these declines, public-sector employment
has fallen only 6.7 percent since 2000, while government employee
compensation levels in the state have increased. In response, legislators
are now working on bills that would restore some balance, including scaling back the
very generous fringe benefits that have been granted over the years to state,
local government and public school employees. In fact, bringing these benefits
into balance with private-sector averages could save Michigan $5.7 billion
Not surprisingly, some of these government employees are
complaining. In the words of an Associated Press item this week, many feel “under
attack” because of the proposed changes to their benefits.
Unfortunately, the story offers no context by which readers
can judge for themselves the validity of the complaints. Using information from
the Mackinac Center’s “Helpful Facts About
Michigan’s Public Sector,” that shortcoming is rectified below.
The AP describes a 59-year-old retired teacher who says
she might “rethink” telling students to go into the field, which she
characterizes as having gone from “noble” to “beleaguered.” AP paints the portrait
Sue Taylor loved being a Spanish
teacher for 32 years, but she's not sure she'd do it again as she watches the
benefits of seniority, untaxed pensions and collective bargaining being
stripped away by Republican legislators in Michigan.
Putting it in Context:
The average salary for Michigan public school teachers has
risen for 13 consecutive years, to $63,445 in 2010.
Including benefits, average total compensation far exceeds $90,000 per
employee. Public school teachers contribute on average just 4 percent toward
their health insurance premium, vs. on average 21
percent in the private sector, and about 25 percent for
federal employees in Michigan. Typical public school health coverage also costs
47 percent more
than private-sector levels. From 2000 to 2010, the average benefits per
full-time classroom teacher rose by 37 percent, even
after adjusting for inflation.
Michigan public school employees get a defined-benefit
pension that they can start collecting at age 55 after 10 years on the job.
This costs taxpayers some $1,500 per student, up 25 percent since 2000 in real
terms. Most teachers are contractually obligated to work 185 days per year,
whereas the average private-sector work year is about 245 days.
It’s not just teachers feeling “under attack”:
Across Michigan, teachers, state
government workers, university employees, police and firefighters are
struggling to hang onto the protections they've had in the past. Bills have
been introduced to end binding arbitration for disputes between first
responders and local governments, require all public workers to pay at least 20
percent of their health care costs, limit the issues on which teachers can
bargain and make at least some portions of the state right-to-work areas where
workers covered by union contracts could choose not to pay union dues.
Putting it in Context:
Individuals employed by this state receive wages and
benefits worth $94,686 on average. Government employee health insurance
benefits exceed private-sector averages by $7,149 more per year.
Retirement benefits per public-sector employee cost $11,725 more per year
than in the private sector.
This chart illustrates how Michigan government and private
sector wage and benefits have diverged since 2000:
Graphic: Growth of Michigan Wages and Benefits Since 2000
Source: Author's calculations based on data from the Bureau of Labor Statistics and the Bureau of Economic Analysis
The article quotes several government employees and union
bosses who express belligerence toward the proposed bills and their sponsors:
overreached, and we're going to hold them accountable for the decisions they're
making," said Ray Holman of United Auto Workers Local 6000 (which
primarily consists of government employees).
Putting it in Context:
The evidence over the past decade suggests that it’s the
government unions that have overreached in their demands, seeking and getting
more than a rapidly shrinking private sector can provide. The legislation that
is advancing in the state Legislature would actually make very modest
adjustments to this imbalance. Government employees in this state would still
be doing far better on average than their neighbors who work in the private
Jarrett Skorup is a research associate for online engagement
at the Mackinac Center for Public Policy, a research and educational institute
headquartered in Midland, Mich. Permission to reprint in whole or in part is
hereby granted, provided that the author and the Center are properly cited.