I recently read a great article in the Wall Street Journal titled, We've Become a Nation of Takers, Not Makers. The article points out something I wrote about last January (How The Government Payroll is Replacing Goods Producing Jobs), that today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million).
This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.
The author points out we have gradually moved from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. These trends are partly explained by the large productivity gains in farming, manufacturing… We can produce far more output per worker than in the past. But what about productivity gains in government?
Over the last 30 years public school employment per student has doubled. The same is true in almost all other government areas. One way that private companies spur productivity is by terminating underperforming employees and rewarding excellence.
In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which many feel we have gotten.
As the author points out, most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers.
But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.
So how do we fix this problem? As an auditor I have been trained to follow the flow of money. Someone recently emailed this chart to me:
It shows that over the past 20 years, unions have paid hundreds of millions of dollars to Democrat campaigns while giving very little in comparison to Republicans. While I do not want to make this a political post (because I find a lot of faults with both parties), it is hard to ignore this huge imbalance. Can elected democrat officials (who have historically been far more supportive of union issues such as collective bargaining…) be objective when they receive so much money from unions?
At some point we need to have a system that allows schools, governments… the ability to reward high performing employees and remove nonperforming employees. Research has shown this to be the most effective way to increase performance and employee morale in any organization.