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

Monday, February 27, 2017

Blaming Public Employees For NJ's Fiscal Mess: Today's Dopey Episode

Whenever I want to read something really ill-informed and contemptuous of public employees, I turn to the always reliable Star-Ledger:
Property taxes in New Jersey are the highest in the nation. Since 2000, they have doubled and have risen at over twice the rate of inflation. No wonder people are forced to move; no wonder we have the highest foreclosure rate in the nation.
That's from guest columnist Tom Byrne, who apparently is so busy with his gig on the State Investment Council that he doesn't have the time to find out that out-migration due to taxes is a totally fabricated myth.

Or the time to read the Star-Ledger itself (the news part, which is still pretty good), which pointed out that New Jersey's high foreclosure rate is due, at least in part, to the state's relatively long foreclosure process.

By the way -- New Jersey is not some sort of wildly high-spending state:

OK, we're top ten (barely), but we're not some sort of outlier -- and that's without accounting for the fact that this is an expensive state in which to live. Funny how stuff like this never made it into Byrne's piece:
The obvious way to control property taxes is to hold the line on expenses, but this is fraught with political consequences, especially for Democrats. Public-sector unions like the NJEA and the two police unions, whose members' salaries and benefits are largely paid by property taxes, wield enormous influence in both general elections and, particularly, Democratic primaries.
Yes, it's those greedy, greedy NJ public employees...
The data analysis in this paper, however, indicates that New Jersey public employees, both state and local government employees, are not overpaid. Comparisons controlling for education, experience, hours of work, organizational size, gender, race, ethnicity, and disability reveal no significant difference between the private and public sectors in the level of employee compensation costs on a per hour basis. However, public employees, particularly higher level professional employees, have fewer opportunities to work overtime than those who work in the private sector. Therefore, on an annual basis, full-time state and local employees are under-compensated by 5.88% in New Jersey, in comparison to otherwise similar private-sector workers. [emphasis mine]
Real research? Tl;dr. Besides, Byrne lives in the world of "alternative facts," where he can use unsourced data points to make unfounded claims:
Positive change can be made. For starters, we could cut property taxes by about 8 percent simply by insisting that local employees get the same healthcare benefits that exist at the high end of private sector plans. That alone would save about $2.5 billion on $28 billion in annual property taxes. But what politician wants to risk the wrath of the unions?
I'm not quite sure who Byrne means by "local employees," as some, like teachers, are subject to state laws regarding premium payments, and some are on state plans. But when it comes to state workers:
In fact, the average New Jersey government employee is paying more for individual health insurance coverage than government workers in any other state and the 10th-highest average premium for family coverage in the country. 
Further, state and local government workers are paying a much higher percentage of the cost of their individual health insurance policies than private-sector employees in New Jersey have been paying, and not much less than the percentage paid by the state’s private-sector workers for family coverage. [emphasis mine]
Whether the insurance is "better" than private insurance is, of course, a more complicated question. But the notion that public employees are enjoying inordinately cheap health care is just not borne out by the evidence, no matter what Chris Christie's commission says. Byrne continues:
The most recent available data, from 2012-13, shows New Jersey with the highest starting teacher salaries of any state. But three states have higher average salaries than our $68,797. On top of this, data from the Bureau of Labor Statistics suggests that the value of total benefits added 29.4 percent or $28,520 to base pay for a total value of over $89,000. And then adjust as you will for a shorter work year.
First of all; even when you adjust for teachers' annual unpaid furlough every summer, teachers make less than similar workers:
New Jersey public school teachers are in fact undercompensated, not overcompensated. Using regression analysis to control for level of education and other factors that affect pay, we find that public school teachers earn 16.8 percent less in weekly wages and 12.5 percent less in weekly total compensation (wages and benefits) than other full-time workers in New Jersey. The percent by which teacher pay is less than pay of comparable workers is called the teacher pay penalty. An analysis of hourly compensation shows the teacher pay penalty at 13.7 percent for wages and 9.4 percent for total compensation. [emphasis mine]
In addition: the percentage of total compensation that is attributed to benefits is 30 percent for private employees.* So, no, benefits aren't completely out of whack for NJ public employees. In addition, Byrne makes the freshman mistake of not adjusting wages for geographical differences. His comparisons here are, in a word, worthless.

This is turning into a real mudder, but let's keep going:
It seems that the bigger issue is proliferation of non-teaching staff. There are far more vice principals and administrators than a generation ago, which has not improved education. One national study shows that the number of K-12 administrators has increased 2.3 times faster than the number of students in school. If we don't deal head-on with these issues, we will shortly be forced to increase class sizes.
No, it does not: the study, from the Friedman Foundation, shows that the combined group of administrators and "other staff" increased.

In the period between 1992 and 2009, federal special education law underwent significant changes; it was also the time when No Child Left Behind passed. Both set new high standards, so it was inevitable that schools would increase personnel (including instructional aides) to reduce class size, expand offerings, provide remediation, and improve special education programs. Money matters in schools, and the largest expense in schools is staffing. 

It's also worth noting the United States does not overspend on education compared to the rest of the world when making appropriate adjustments for student characteristics and other factors.

Keep going...
I heard one deputy commissioner of education say some years ago that if we had the same class sizes as the national average, we would save over $1 billion per year.
Casual conversations with bureaucrats are not serious sources of data. Instead:

Yes, New Jersey's class sizes are smaller than the national average, especially in primary schools -- but, again, we're hardly an extreme outlier. And maybe our outstanding performance in academic outcomes owes something to putting more resources into schools and reducing class sizes.

Yes, Massachusetts spends somewhat less and does very well, but we're not Massachusetts. Our kids are different and our labor costs are different. We aren't really far behind them, and we're not wildly spending more than they are.

Regular readers know that pieces like Byrne's frustrate the hell out of me. We should be having serious conversations about fixing New Jersey's fiscal crisis. I'm all for looking at finding efficiencies in our school system: one clear way would be to stop having small, inefficient charter schools with large administrative expenses continue to proliferate.

But facile, poorly sourced fluff like Byrne's op-ed keep us from having those conversations. And one more thing:
One more administrative example. Gloria Bonilla-Santiago, who runs a well-regarded charter school in Camden, says her custodial costs are $400 per student, versus $1,200 per student for the unionized custodians in the Camden public schools. The NJEA pointedly asks gubernatorial candidates if they would do anything to change this. Not if they want to win a primary election.
Unless this is an extraordinary coincidence, Byrne gets this story wrong too. This anecdote and its specific dollar amounts are from Dale Russakoff's book, The Prize. This story is about a school in Newark; I debunk it here.

I don't know what Bonilla-Santiago told Byrne; she's quite a character herself. But maybe Tom Byrne should spend a little less time talking with her and a little more time looking at real, credible research before writing his next op-ed.

Keep those alternative facts coming, Tom!

* One of the things that makes me nuts about pieces like this is that they are unclear about how they use the term "percentage." Given the figures here, benefits didn't add 29.4 percent to base pay; benefits are 29.4 percent of total compensation. That's completely different. Didn't anyone at the S-L proofread this?


StateAidGuy said...

Jersey Jazzman,

A few points.

1. Bryne was talking about outmigration in general, not the outmigration of only rich people. I'm aware that some groups claim that NJ's outmigration of rich people is at the national average or this is an irrelevant issue anway since the number of rich people in NJ constantly increases, but no one disputes that NJ has one of the country's highest rates of outmigration among people of any income level and many would attribute this to our taxes.

2. New Jersey is one of the highest spending states that rely on taxation of their own residents. The states who spend more than us have revenue streams that derive from non-residents. AK and ND have huge energy industries; Delaware gets huge amounts of money from incorporation fees and tolls. Washington DC gets very high very aid and its average income is extremely high too.

And small states get disproportionate amounts of money from the federal government in block grants, so that benefits AK, VT, DE, and ND too.

3. The Jeffrey Keefe study you cite that claims that NJ's teachers are underpaid is not to be taken seriously. The EPI (Economic Policy Institute) is a union-funded group with high union officials (including Lily Eskelson Garcia) on its board, so taking anything it produces as objective truth on anything relating to teachers is like taking a Cato Institute study seriously on the minimum wage or an Koch-funded study on climate change.

Even beyond the funding, Keefe's study makes questionable methodological assumptions.

Specifically, Keefe lumps in everyone with a BA together and then shows that since teachers have BAs and make less money than other people with BAs that they are underpaid.

But this lacks any rigor because the majors teachers have are different from the majors of college-grad non-teachers, as is the distribution of post-grad degrees.

Certain degrees are worth more than others. You'd expect someone with a degree in an engineering field to make more than someone with a liberal arts degree or education. And a masters in teaching is not equivalent to other post-grad degrees that non-teachers would be more likely to have, such as an MBA, JD, or MD. Additionally, you have to consider that a teacher would be reimbursed for the costs of getting that MAT.

Are there teachers who are underpaid? Absolutely yes. Anyone with a comp sci degree who is teaching AP Computer science is underpaid, in my book, but not every teacher is someone who could move so easily into the private sector.

Keefe's report is also not to be taken seriously because it claims teachers work 47 weeks a year. Are you serious? Sure, give teachers some credit for summer prep work, but teachers get a lot more time off than just five weeks.

4. The spending difference between Massachusetts and NJ is a chasm. You can't honestly say "Massachusetts spends _somewhat_ less."

As of 2013-14, the Census had NJ school speinding at $17,900 per student. Massachusetts was at $15,100. That's an 18% difference and it doesn't even count NJ's PreK spending.

I don't know what your definition of "somewhat" is, but I would not call an 18% difference "somewhat less."

Giuseppe said...

This zombie myth that people are fleeing NJ in droves drives me crazy. I looked at the US Census data and for every census going back decades, NJ is always gaining in population. It is true that the rate of increase has gone down over the years but an increase is an increase is an increase. NJ is still the most densely populated state in the union. The latest US Census population estimates for NJ shows NJ gaining in population; not big gigantic gains but gains in population nevertheless.
For what it's worth: U.S. News & World Report Releases Best States Rankings.
Guess what, NJ ranks SECOND IN EDUCATION behind first place Massachusetts.

Duke said...


1) There is no empirical evidence I am aware of that shows taxation is a major factor in state-to-state migration. http://www.cbpp.org/research/state-budget-and-tax/state-taxes-have-a-negligible-impact-on-americans-interstate-moves?fa=view&id=4141

2) Byrne's argument is based on portraying NJ as a very high-spending state. It is not, relatively speaking. And it's not NJ's fault if it gets screwed on its returns from contributing to federal expenditures. Are you saying NJ should be forced to spend less just because it only gets 68 cents back for every dollar it sends to the feds in taxes?


Also, this is dated but still relevant, IMO:


3) It's really easy to dismiss a study based on who funds it. I think funding sources should be disclosed, and I have on occasion pointed that out. But I take on arguments based on their merits.

Your argument, for example, is circular: "Teachers should make less because their teaching degrees are worth less!"

Regarding the weeks: you must have missed the part where Keefe explains the shortcomings in the data and how he adjusts his estimates. I find it quite credible. "It should be noted the interval measure and the weeks worked estimate make little difference to the ultimate wage and compensation estimates."

4) Again: you can't make that comparison without geographic wage controls. And student characteristic controls, which must be better than poverty/not poverty.

NJ spends more than MA, no doubt. But I note we rarely mention we spend less than NY. I do think NJ could save some money on schooling. But Byrne's contention that we are some wild over-spender, and that's why we're in a fiscal hole, is not supported by his "facts."

Duke said...

Giuseppe, well said.


G. B. Miller said...

I think most states that are bleeding red ink are due to bad fiscal policies put forth. Granted, some public sector unions are the recipient of said policies. But, here in CT, where we are gushing red ink, the unions will still support Diaper Dan Malloy, in spite of the fact that he has basically bitch-slapped the unions (layoffs last year, promised layoffs this year, charter schools, etc. etc. etc.) into Oliver Twist-land (please sir, may I have another?) so bad that even when a viable Republican candidate is available, they can't bring themselves to support he/she.

StateAidGuy said...


I didn’t think you would dispute that high taxes induce outmigration. Even the New Jersey Policy Perspective, while vigorously contesting the claim that high (income) taxes cause rich people to relocate, acknowledges that New Jersey’s high property taxes induce outmigration among low-income and middle-income people.

And no one seriously disputes that NJ’s outmigration is among the highest in the country, although there is disagreement over what causes that outmigration and if it is a major problem or not.

And when most of the other high-outmigration states, including Connecticut, New York, and Illinois, also have high taxes and over 40% of New Jerseyans saying that taxes are NJ’s #1 problem, it seems pretty compelling that taxes have something to do with it.

I read the study you linked to.

No one really claims that taxes are the only reason people (even retirees) make interstate moves, but many people (including me) believe it is a major reason.

Certainly job opportunities inspire many interstate moves, but job opportunities are themselves linked to tax rates since many (not all) businesses want to be or need to be in low-tax environments.

A major claim Mazerov makes is that interstate migration should be considered low, only 1.5% per year.

Ok, that might be true, but that 1.5% figure is only in _one year_. That means that over one decade, 15% of the population would make an interstate move, and for certain states the percentage leaving would be higher than that.
For New Jersey, whose adult population is at least 7 million, that means we would lose over 1 million residents per decade.

To say that because only 1.5% of Americans make an interstate move per year, outmigration should be seen as a minor issue, is silly. During the Great Migration, in any given year, only a tiny percentage of Southern Blacks moved north, but that doesn’t mean that over several decades the Great Migration wasn’t a major episode in American history that’s worthy of study.

Mazerov also says that since so many Floridians move to Georgia, which has higher (income) taxes, it’s evidence of the unimportance of taxes, but this is a false comparison that overemphasizes income taxes. All in, according to the Tax Foundation, GA and FL taxes are very similar. Florida taxes 8.9% of income; Georgia taxes at 9.1%. That’s not a big difference. (NJ taxes at 12.2% of income)


StateAidGuy said...

BUT your blog’s major point wasn’t about outmigration. It’s about public employee salaries.

This is an even more contentious point than outmigration, but I don’t think Tom Byrne believes that public employee salaries are the entire story of NJ’s high taxes.

Tom Byrne has argued that it’s not only the salaries themselves, but the NUMBER of public employees that cause NJ to have high taxes. Indeed, Byrne has talked about how NJ’s police force is extremely high in per capita terms.
And I wouldn’t be surprised if Byrne would agree that there is something questionable about how New Jersey has the country’s highest percentage of special-needs kids in Out-Of-District private school placements.

And I’m sorry, but I don’t think that comparing teacher salaries to the salaries of other people with college degrees is the right basis of comparison.

I will not get into this point about college majors too much, but if you think a person with a BA in elementary ed should be paid as much as someone with a BS in a hard science or accounting we disagree.

However, teachers have job security that non-teachers rarely have. Although teachers can be RIFed, teachers (unlike people in the private sector) don’t have to worry about losing their jobs because the business they work for fails, merges with another business, or needs to shed workers in a recession. Teachers are not in a constant cutthoat competition to win over clients either.

(When teachers do face competition that could cause them to lose jobs, like from charter schools, they are adamantly against that competition, but that’s a separate argument)

As you’ve said on this blog more than once, teachers value tenure and if tenure is eliminated, teachers would have to be paid more. So, therefore, shouldn’t a monetary value be attached to tenure and other aspects of teacher job security?

If so, then even the straight benefits to benefits comparison between teachers and non-teachers is invalid.

CrunchyMama said...

StateAidGuy: You actually said "I will not get into this point about college majors too much, but if you think a person with a BA in elementary ed should be paid as much as someone with a BS in a hard science or accounting we disagree."

I know a number of elementary teachers who have gone that route from a number of industries, including STEM fields, and ALL of hem have found teaching elementary school to be harder, to be more time-consuming, to require more work and energy and time not just in the classroom but outside, and in the summers when so many folks assume they're lounging at the beach for 10 weeks and not keeping up their certification.

If ANYONE should be raking in the bucks, it's the people we entrust with the education of the next generation of accountants and scientists - and teachers, and musicians, and doctors....