Immovable unions about to hit irresistible budget crunch
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It looks like push is about to come to shove at the city of Las Vegas.
Two unions this week are balking at the city's calls for budget cuts, including an ultimatum: wage cuts of 8 percent in each of the next two years or mass layoffs of unionized public employees.
The firefighters warned that such cuts would be a Pyrrhic victory that would result in higher insurance costs and all sorts of carnage due to longer emergency response times. City officials called the warning scare tactics.
Then the R-J reported the Las Vegas City Employees Association sent a belligerent letter saying it will not come of the table until every other union has submitted to cuts.
So far the unions have agreed to a reduction in cost-of-living wage hikes of 1 percentage point.
Along comes an article in Reason magazine titled "Class War: How public servants became our masters" by Steven Greenhut, a former Orange County Register columnist and and now director of the Pacific Research Institute's Journalism Center. Greenhut says public servants once were paid less than those in the private sector but in return had greater benefits and job security. That has changed until now the public sector wages far outstrip those in the private sector, but the real time bombs are in those benefits, especially pensions that have grown until it is beyond the ability of the taxpayers to support in any acturarially practical way.
Greenhut notes, "Most of these benefits are vested, meaning that they have the standing of a legal contract. They cannot be reduced." And the employees have allies in government. For example, when the city of Vallejo, Calif., went bankrupt under the burden of 75 percent of its budget going to unionized police and firefighters, the state Assembly introduced a law that would not allow cities to file for bankruptcy unless they got approval from a union-friendly commission.
Greenhut's article is not yet online, but some of his sources are.
Take a gander at Michael Hodges' Grandfather Economic Report.
Hodges says that in 1930 government accounted for 12 percent of the economy. Today its consumes 45 percent.
"People who are supposed to serve the public have become a privileged elite that exploits political power for financial gain and special perks," writes Greenhut. "Because of its political power, this interest group has rigged the game so there are few meaningful checks on its demands. Government employees now receive far higher pay, benefits, and pensions than the vast majority of Americans working in the private sector. ...
"It's a two-tier system in which the rulers are making steady gains at the expense of the ruled."
Challenge in the legislative halls? Most legislators, commissioners and council members owe their elections to public employee union support. And they have the same pension plan. Challenge in the courts? Judges are public employees.
If the unions take pay cuts their union leaders will lose power. If the unions refuse and massive layoffs are required, the number of union members will decline along with ballot power.
Push is coming to shove.
