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End Collective Bargaining for State Employees |
Tax Savings Here are the estimated taxpayer savings expected from adoption of the 3 ballot measures:
This is how we came up with our estimates: Prohibit collective bargaining for state employees: $373,000,000 This proposed amendment to the Constitution prohibits the Civil Service Commission from collectively bargaining with state employees and requires the Commission to set pay rates at the market rate, that is, the lowest rate necessary to attract an adequate pool of qualified candidates for each job. This report from the Mackinac Center for Public Policy says that from 2001 to 2009, state workers have seen their average weekly pay increase 33%, from $796 to $1,058, while private sector workers had a 14% increase, from $722 to $824. We calculate that if state employees wages had increased at 14% instead of 33%, their average weekly pay would be $907 instead of $1058, a difference of $151 a week, or $7,852 a year. Multiply that by 47,538 state employees (we are being conservative here and counting just full time employees as of June 2010) and we get $373,268,376. That is 7.8% of aggregate payroll for fiscal year 2009 for state classified employees (aggregate payroll was $4,781,203,263). What we have done above is calculate the collective bargaining premium for state employees at 19%, the difference between the 33% by which state employee wages increased from 2001 to 2009 and the 14% by which private sector employee wages increased in the same period. The "collective bargaining premium" is a term we made up for the amount by which collectively bargained wages exceed the market wage - the lowest wage needed to attract qualified employees. It is a figure we can only guess at, and it varies with each job. There are so many variables that the only way to really determine the market wage is try it: see how little it takes to maintain a qualified workforce. Repeal PERA: $2,493,020,000 Repealing PERA makes collective bargaining optional for local governments and schools, and we expect that it is going to take years for a significant percentage of them to give it up. But as some reject collective bargaining and start paying employees at the market rate, others will see the cost reductions and choose not to continue paying the collective bargaining premium. We expect the move from collective bargaining to paying the market rate will start slow, then accelerate. The report cited above from the Mackinac Center says that from 2001 to 2009, local government workers had a 29% increase in weekly pay, from $647 to $837. If the increase had only been 14%, like private sector employees, average weekly pay would be $737 instead of $837, a difference of $100, or $5200 a year. Multiply that by 400,100 local government employees - that includes school employees - and we get $2,080,020,000. (That 400,100 figure for total local government employees comes from this Mackinac Center report, which says they got the figure from the Bureau of Labor Statistics. Page 26 of this fiscal year 2009 report for the Michigan Public School Employees Retirement System (MPSERS) says 268,208 of its members are current public school employees.) Looking at teachers alone, we find that $802,752,000 could be saved if average teacher pay for Michigan teachers ($62,272 in 2009) was the same as the national average. And $1,255,104,000 could be saved if Michigan's average was the same as Indiana's. (These figures were calculated from figures provided in this Mackinac Center report.) The salary figures mentioned above apparently do not include fringe benefits, and to get the full picture, we need total employee compensation, which would consist of salary plus the value of fringes. It would be interesting to compare Michigan's average total employee compensation with Indiana's. The following excerpt from another Mackinac Center report illustrates the financial impact of fringe benefits:
Right to work: $0 Making Michigan a right-to-work state is not going to reduce our taxes, but it will save money for workers who don't want to be in the union. Monthly UAW dues are the equivalent of 2 hours pay - $56 dollars for someone making $28 an hour. MEA dues are 1.5% of salary, with a maximum of $630 a year. It is money that could go into the worker's pocket rather than to the union. |