LANSING — Michigan's new governor, Republican Rick Snyder, faces a $1.8 billion budget gap that must be eliminated by September, or the state will shut down. How does he do that?
Many observers think he is likely to start by going after public employees' pensions and benefits, if not their salaries.
For years, conservatives have insisted on the need to get state workers' pay and benefits “in line with” those in the private sector.
New state Senate Majority Leader Randy Richardville (R., Monroe) and House Speaker Jase Bolger (R., Marshall) said Thursday that state employees must make new concessions. If not, they indicated, the Legislature will impose them.
James Hohman, a fiscal policy analyst with the conservative Mackinac Center for Public Policy, says Michigan can save taxpayers $5.7 billion without cutting a single program.
His solution is to scale back public-sector benefits, which he argues, “far outpace” those that most private-sector workers get. His dollar figure is considerably higher than other studies offer.
But the idea that government workers are compensated too lavishly is widely accepted, in Michigan and elsewhere. Many politicians talk as if there are far too many government workers, and call for massive layoffs.
Is all this true? Maybe not.
A number of studies indicate that what people think they know about public workers' compensation may be just wrong. Two years ago, Charles Ballard, an economics professor at Michigan State University, and Nicole Funari, now with the Federal Aviation Administration, made a detailed study of the Michigan work force.
They concluded that the number of state employees in Michigan had fallen sharply since 2001. Those workers' salaries and benefits didn't keep pace either — especially for the most highly skilled employees.
“State employees with a high-school education receive salaries that are roughly comparable with their counterparts in the private sector,“ they conclude.
But that changes dramatically for workers with at least a bachelor's degree: “In terms of salaries, on average, these highly educated state employees fall substantially short of their private-sector counterparts.”
State workers' benefits generally are better than those in the private sector. But even these are contracting, the researchers say; state workers have had significant “increases in their health insurance premiums, co-pays, and deductibles.”
In a shift that will save the state billions of dollars in the long run, Michigan started in 1997 to cover new state employees by a “defined contribution” pension plan rather than its previous, highly expensive “defined benefit” plan.
Most dramatic, however, has been the considerable drop in the sheer number of state workers. The study found that Michigan's state employee work force peaked in 1980. In the seven years starting in 2001, it declined — mainly through attrition — by 18 percent, or 11,000 workers. And the wages of those who remained on the state payroll barely kept pace with inflation.
Michigan was not an isolated case. Other studies by the nonpartisan National Institute on Retirement Security and the Economic Policy Institute reached many of the same conclusions about government workers nationally: While they had a bit more job security, they tended to be at least slightly undercompensated.
None of this is likely to sway many Republicans, who now control every branch of Michigan government. They have a massive projected deficit to eliminate, and many, perhaps most, GOP lawmakers vowed not to raise taxes when they ran for election.
Roger Martin, a former award-winning reporter who now runs a lobbying firm in Lansing, is scarcely a neutral party. He represents Citizens for Accountability in Reform, a coalition of state and local public employees who, understandably, want to hang on to as many benefits as possible.
Mr. Martin acknowledges that sacrifices are likely. But he maintains: “Our goal here is to make sure the debate is honest.
“If they are going to cut public employees even more, the politicians can't be allowed to get away with positioning it as bringing compensation more in line with the private sector. It already is.”
He adds: “The problem is that too many politicians argue perception when they lose on facts.”
It's hard to argue with that.
Jack Lessenberry, a member of the journalism faculty at Wayne State University in Detroit and The Blade's ombudsman, writes on issues and people in Michigan.
Contact him at: email@example.com