“Big labor” isn’t the problem
BY ROBERT BRUNO July 20, 2013 9:36AM
Updated: July 30, 2013 11:07AM
Mr. Eden Martin’s July 18 op-ed (“Why I am a Democrat”) makes a number of unjustified assertions.
Mr. Martin first posits that big business was once the main threat to competitive markets, but now the menace is “big labor.” The author assumes that most private markets in America are in fact competitive, with scrupulous CEOs who are able to perfectly align corporate profits with the public good. This is simply not the case in Illinois or America today.
In the real world, big box retailers drive out mom-and-pop businesses, imposing oligopolistic markets by skirting labor and employment laws while their competitors abide by the rules of the road.
Big businesses receive municipal incentives to avoid taxes and evade the government through corporate loopholes — small businesses hardly view these as features of a “competitive” environment. And the recent transgressions of the too-big-to-fail banks, characterized by intimidation of the bodies meant to regulate the market, profiting off financial instruments which were known to be junk, and causing the worst economic downturn since the Great Depression are not evidence of “competitive markets.”
Asserting that “big labor” is the biggest threat to the Illinois worker is misguided when a more likely culprit of Illinois’ 9 percent unemployment rate, $2,200 drop in average annual worker earnings since 2007 (in real terms), 13 percent poverty rate, and increasing income inequality levels are policies and practices that have shifted greater wealth shares away from workers and to business.
Rather than rely on empirical data, Mr. Martin opines about the allegedly “inflated” costs imposed by public sector unions. My University of Illinois colleague, Frank Manzo IV, and I recently published a policy brief, Working in Illinois’ Public Interest, in which we compared and contrasted the earnings, benefits, and impacts of state and local government workers in Illinois.
Contrary to Mr. Martin’s claim that public sector compensation packages “rarely have any relation to competitive standards,” we found that state and local government employees are not overcompensated for equal work. When controlling for education and demographics, state and local government workers actually earn 13.5 percent less in wages and salaries than their private sector counterparts. While Illinois public servants do indeed earn more generous benefits than workers in the private sector, this is a trade-off: they are accepting lower earnings today for higher compensation in the form of retirement income. By comparison, public sector workers in nearby Iowa and Minnesota have higher total compensation packages than their counterparts in Illinois.
Finally, 1.1 million jobs (18.5 percent of all jobs) in Illinois are attributed to state and local government employment and pension expenditures, as current and former public employees spend their earnings in the rest of the economy. That figure includes over 300,000 private and nonprofit jobs, or 6 percent of all jobs in the private sector. Public sector unionization has not exploited “the 85 percent” to the benefit of “the 15 percent,” as suggested by Mr. Martin. On the contrary, Illinois public servants earn an average compensation package expected for a high-wage, highly-educated state.
Robert Bruno is the director of the labor education programs and a professor of labor and employment relations at the University of Illinois