A proposal to rescue Michigan
By Leon Drolet
Michigan’s government class – school, state and local government employees – is proving far more immune to our state’s economic decline than private sector citizens. In fact, recent statistics demonstrate that most government employees are prospering compared to Michigan’s long-suffering private sector workers.
According the U.S. Bureau of Labor Statistics, the average government worker now makes $25.97 in wages and also receives lavish health care, retirement and time-off benefits worth an additional $13.53 per hour.
Private-sector workers in the Midwest earn an average wage of $18.83 with benefits worth $8.09 per hour. The discrepancies remain even when private sector workers are compared to government employees performing similar jobs (government managers vs. private sector managers, private service worker vs. government service worker, etc.).
But there’s even more good news for government employees.
In addition to higher pay and much more generous benefits, job security for the government class is ever so much greater than for the average citizen. Civil service rules and union contracts make layoffs rare for government employees. In fact, while Michigan lost 147,000 goods-producing jobs and 153,000 service industry jobs last year, our state’s government sector actually grew by 3,000 new workers.
Michigan’s increasingly impoverished taxpayers aren’t the only losers as government class benefits and wages grow. Services that government provides to citizens are slipping. Money spent on the platinum-clad health and retirement benefits of bureaucrats is not available for Medicaid provider reimbursements or food for senior meals-on-wheels programs.
Sadly for its members, the government class gravy train can’t go on forever. As property values and the economy continue to fall, our state and local governments face significant declines in tax revenues.
Because the generous pay and benefits of government employees are contractually locked in, elected officials eventually must choose between raising taxes on citizens or finally laying off government workers.
Raising taxes contributes to what could be called the “Detroitification” of Michigan - a vicious cycle of hollowing out the private sector to prop up an unsustainable government establishment. The alternative is to finally lay off some public sector employees, which means fewer teachers, firefighters, police and other service providers.
But what if Michigan governments could balance their budgets and significantly cut taxes without laying off any government workers or reducing any services? Impossible? In fact, there may be a way.
If the state constitution were amended to cap the cost of government employee benefits at the same level as the average benefits earned by full-time private sector citizens, taxpayers would save billions of dollars.
Michigan has 411,000 school, state and local government employees, according to the U.S. Census Bureau. These employees (which include elected officials) are among the highest-paid in the nation, and also average $4.05 more per hour in benefit costs than comparable full-time private sector employees.
Capping their benefit costs at the private sector level would save over $8,000 for each government employee and full-time politician, for a total annual savings of over $3.4 billion. This huge savings could be achieved without diminishing government services or laying off a single government employee.
Enacting a state constitutional amendment to cap government employee and elected official benefit costs could turn Michigan around by making significant tax cuts possible without painful service reductions. Government workers would still enjoy higher pay and job security, but they would have benefits comparable to those in the private sector.
It’s long-past time to cap a lucrative government class benefit system that is as unsupportable as it is unfair to Michigan taxpayers. There’s only one question remaining about this proposal: What are we waiting for?
Leon Drolet is the director of the Michigan Taxpayers Alliance. Contact him at leon@mitaxpayer.org. Reprinted from The Detroit Free Press edition on June 19, 2009.
Accolades for Rep. Amash
Rep. Justin Amash, endorsed by the RLC-MI before his highly competitive primary last summer, recently received some attention for his principled voting pattern. From Gongwer News, a couple of weeks ago (subscription required–which is why we didn’t notice this until now):
Rep. Justin Amash (R-Kentwood) isn’t into labels, but five months into his freshman term, he’s getting a reputation.
That’s what can happen when a lawmaker is often the only ‘no’ vote on a bill. Over and over again.
Rep. Justin Amash
We’re happy to report that Rep. Amash’s notoriety is being compared to one of the RLC-MI’s favorite former representatives:
Some observers might say that sounds familiar, a la former Rep. Leon Drolet, who was not afraid to stand out in his caucus and with his voting record.
But Mr. Amash is charting a new course in much different territory as Republicans nationally and in Michigan search to regain their political strength….
Time will tell whether that statement overstates the case, but we’re happy to see Rep. Amash is having an impact so far.
(Check out our legislator rankings in the coming weeks to see how former Rep. Drolet, as well as the other 2005-2006 legislators, voted relative to each other–and relative to a pro-liberty voting record.)
More Proof That Blue Cross of Michigan Should be For-Profit
Blue Cross Blue Shield is a non-profit health care insurance company organized under the laws of the state of Michigan. Quite frankly, it’s hemorrhaging money. This has a lot to do with the fact that its policy is not to turn anyone away, regardless of their health and the risk in insuring them. So unsurprisingly, they’ve had trouble competing with other insurance companies who are more discriminatory in who they cover. Lately, they’ve attempted to raise fees in various areas to stop the bleeding. But Michigan Attorney General Mike Cox, who is vested with jurisdiction over every non-profit organized under the laws of Michigan, will have none of it. Cox suspects Blue is trying to make a profit in violation of its bylaws, and he has used the opportunity to grandstand for publicity arguing he’s protecting “vulnerable seniors” in the name of “consumer protection.” Note the fact that Cox boasts of having the support of both the UAW and AARP in fighting proposed rate increases by Blue.
