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Governor Patrick's pension-reform plan and popular perception of public employees

Posted by Jesse Singal  January 20, 2011 12:32 PM

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If Michael Levenson's piece is any indication, Governor Patrick's pension reform proposal seems to be getting mostly positive reviews. It's not surprising that groups like the Mass. Taxpayer Association would support it, but it's somewhat notable that the public unions themselves haven't reacted all that negatively, at least in their public comments.

Part of that is because the plan will affect future workers, not them. And part of it is that it does kees a robust pension system in place — it's not as though the state will be hanging public employees out to dry once they retire, though the proposed increase of the retirement age will certainly complicate things for some.

But a good part of the muted response can be ascribed to just how unpopular public unions have gotten recently — while they're still a powerful force in the state, they also understand that they are facing a backlash over their benefits. As I wrote earlier this week, a lot of that has to do with the fact that, as unions have declined, defined-benefit pensions and similar benefits simply aren't the norm anymore. In the past, if a politician or pundit pointed at a public employee's pension and shouted "Wasteful!," it would have been hard to attract much of the public's ire, since so many people in the private sectors had pensions of their own. Now? Not so much.

I do wish I had read James Surowiecki's New Yorker column on the subject before I wrote my blog post. He does a very good job summing all of this up:

[T]he advantages that union workers enjoy when it comes to pay and benefits are nothing new, while the resentment about these things is. There are a couple of reasons for this. In the past, a sizable percentage of American workers belonged to unions, or had family members who did. Then, too, even people who didn’t belong to unions often reaped some benefit from them, because of what economists call the “threat effect”: in heavily unionized industries, non-union employers had to pay their workers better in order to fend off unionization. Finally, benefits that union members won for themselves—like the eight-hour day, or weekends off—often ended up percolating down to other workers. These days, none of those things are true. Organized labor has been on the wane for decades, to the point where just seven per cent of private-sector workers belong to a union. The benefits that union members still get—like defined-contribution pensions or Cadillac health plans—are out of reach of most workers. And the disappearance of unions from the private sector has radically diminished the threat effect, meaning that unions don’t raise the wages of non-union workers.

The result is that it’s easier to dismiss unions as just another interest group, enjoying perks that most workers cannot get. Even though unions remain the loudest political voice for workers’ interests, resentment has replaced solidarity, which helps explain why the bailout of General Motors was almost as unpopular as the bailouts of Wall Street banks. And, at a time when labor is already struggling to organize new workers, this is grim news. In a landmark 1984 study, the economists Richard Freeman and James Medoff showed that there was a strong connection between the public image of unions and how workers voted in union elections: the less popular unions were generally, the harder it was for them to organize. Labor, in other words, may be caught in a vicious cycle, becoming progressively less influential and more unpopular. The Great Depression invigorated the modern American labor movement. The Great Recession has crippled it.

If you're someone who is opposed to generous employment benefits, this is a very promising trajectory. If you're a worker, it's very bad news.

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ABOUT THE ANGLE Online commentary and news analysis from the Boston Globe. The Angle is produced by Rob Anderson and Alan Wirzbicki. You can follow Rob on Twitter at @rcand.

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