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Sanders blind to key source of income inequality

Bernie Sanders has made a presidential campaign out of income inequality, claiming that wealth is created at the expense of the middle class and poor. The exact opposite is true, of course. Income generated in the marketplace — based on voluntary purchases and mutually agreeable salary negotiations — is a positive-sum game, where both sides gain.

There is one group, however, that actually does enrich itself by taking from others: the government.

Median government wages have long exceeded those in the private sector — mostly due to occupational differences between the two groups. That gap, however, has widened dramatically in recent years.

New U.S. Census Bureau data reveals a 42 percent increase in the pay gap between local government workers and their private, for-profit counterparts. That’s comparing median earnings of full-time, year-round workers for the 2010-2014 period with the same earnings for the previous five years.

While median private workers saw their earnings fall an inflation-adjusted 3.32 percent, down to $42,437, local government earnings increased 0.87 percent, to $49,444.

In other words, even though many private workers took a hit during the recession, government wages continued to rise. Almost certainly, that’s the result of multiyear contracts with guaranteed rates of pay, regardless of what hardships befall those responsible for bearing the cost.

The disparity was cruelest in those states hit hardest by the recession — such as Nevada.

In the Silver State, private workers saw their earnings fall 8 percent, from $41,284 to $37,875 in inflation-adjusted dollars — the largest percentage decrease nationwide. Meanwhile, simply by keeping up with inflation, local government workers’ $56,915 median earnings stand 50 percent above median private pay — a national high.

In California, the poorest residents paid for the state’s highest-compensated city worker. Former El Monte police Chief Steven Schuster received more than $634,000 in pay and benefits in 2014, while the median full-time, working resident earned only $24,419 — the lowest of any California city with a population of at least 65,000, according to data from TransparentCalifornia.com and the U.S. Census Bureau.

Certainly, higher wages for all is a worthy goal, but clearly that’s not what’s happening. For government workers in these areas, it’s coming, quite literally, at the expense of those already struggling.

California teacher Harlan Elrich would “never support” pushing for higher government wages while his community struggles, yet that is exactly what his union is doing. And so, unable to legally opt out of paying dues to an organization with conflicting values from his own, Mr. Elrich is one of 10 teachers currently petitioning the U.S. Supreme Court for that right.

Undoubtedly, many other government workers feel the same way. So what is driving such an inequitable outcome?

The culprit lies in mandatory collective bargaining laws — like those found in California, Nevada and elsewhere — that force public agencies to contract with government unions. Such coercive statutes give government unions excessive leverage in negotiations with their ultimate employers — the taxpayers and the general public.

Notably, within the 28 states that mandate collective bargaining, the average state’s median local government earnings were 18.6 percent higher than private sector earnings. That’s more than triple the 5.5 percent overage in the states without such laws.

Making matters worse, the cost of a growing government pay gap is amplified by retirement plans that cost, on average, nine times more than what private employers pay. While the median private employer contributes 3 percent of pay toward employees’ retirement accounts, the average government retirement plan costs 27 cents per dollar of pay, according to the Public Plans Database at Boston College.

Sanders is correct to worry about those who would use their power to prey upon the less fortunate and less powerful. He’s clearly got a blind spot, however.

— Robert Fellner is research director for TransparentCalifornia.com and TransparentNevada.com, public pay databases provided by the Nevada Policy Research Institute.

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