I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Sunday, October 17, 2010

Ledger Logic - Wage Cap Edition

Regular followers of this blog know that one of my great frustrations is a press that seems incapable of analyzing what they are reporting. Take today's editorial in the Star-Ledger on wage caps for public workers (from the 10/17/10 print edition - it's not online (???)):
If the foot-dragging Democrats in the state Legislature need a starting point for passing the remainder of the governor's toolkit, we have it: A cap on labor costs. 
Under Christie's proposals, the cost of salaries and benefits for public workers would be capped at 2.5% annually. The Legislature and the governor can haggle over the details - maybe place health benefits outside the cap - but a cap is crucial.

Let me repeat one of my favorite statistics regarding NJ wage costs: wages grew 162% for the average worker in NJ over the period from 1985 to 2008 (the last year data is available). For teachers, wages grew 150%.

Using this handy return rate calculator, that 162% translates into just about 4% annually; teachers are around 3.9% annually during the same period.

Given this, how can anyone support a 2.5% cap on wages and still expect high-quality workers to stay in public service professions?

"Wait!" says the S-L:
Union representatives call binding arbitration a bogeyman and predict a separate cap for teachers would make them paupers again. But it would take years for the pendulum to swing back that far - and the cap could be adjusted in better economic times.

Well, why not do that right now? Tie all teacher raises to the current wage inflation of the average NJ worker - seems fair, right? Except we would wind up paying teachers MORE than we pay them now; doesn't really solve the problem, does it?

Now, I know what the teabagging crowd says to that: "Gold-Plated Benefits!" Which is EXACTLY the point: the cost-drivers for the state are pensions and health care. And not just health care for public workers, but all public spending on health care.

A wage cap does nothing to address exploding health care costs or the pension holiday the state took for years and now must pay for. It also does nothing to fix the regressive tax system we have that has turned the state into a banana republic.

But, as looney and ineffectual as a wage cap is, "serious" people know it's something we must have.

1 comment:

thinker said...

Remind me, exactly how long ago was it that a NJ governor had to actually codify a MINIMUM teacher salary because teachers were being paid so poorly? Was it 100 years ago? No? 50 then? Oh wait, less than 50? Hunh. But teachers have nothing to worry about, we value our teachers now and want to pay them a fair wage. Yes, we sure do! Just ask the governor.