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The Why of San Jose

Tuesday, June 19th, 2012

You have no doubt heard about Obama’s recent “gaffe” about “the private sector’s doing fine.”

The private sector, of course, is not doing well, not at all — and it’s suffering from a public sector gone mad: Bailouts, increased spending, increased debt, increased regulation.

But our beleaguered and benighted president was trying to make the point that it’s our public sector that’s doing badly.Chance PENSION

And there is something to be said — carefully, with much caution — about public sector jobs. In many states and locales, government jobs are not increasing in number. Well, at least not increasing as fast as bailout mania might lead you to think.

And Josh Barro knows why. Public sector jobs are in decline because public sector compensation has been skyrocketing, depleting resources from state and municipal governments, preventing job increases.

San Jose, for instance, used to have 7.5 employees per 1,000 residents. Now the city’s down to 5.6 employees per thou, “with further cuts expected next year.” Why?

[C]osts for a full-time equivalent employee are astronomical and skyrocketing. San Jose spends $142,000 per FTE on wages and benefits, up 85 percent from 10 years ago. As a result, the city shed 28 percent of its workforce over that period, even as its population was rising.

Blame it on pensions, grossly over-promised.

It’s a problem politicians have: They like to dole out favors. And pensions are something they can promise without funding fully, making “future politicians” (uh, taxpayers) pay (like, uh, now). It’s the scandal of the age.

But I wonder if Obama would ever ’fess up to the real nature of the problem

This is Common Sense. I’m Paul Jacob.

Trick and Treats

Thursday, June 7th, 2012

After more than a year of big labor throwing industrial-size kitchen sinks at Scott Walker, Wisconsin’s Republican governor became the first of the three governors in U.S. history to face recall and retain the office.

Walker more than survived; he prevailed, beating his Democratic rival by seven percentage points, 53 to 46. In a light blue state, it was a thorough thwacking of the public employee unions, the biggest, bluest special interest.

According to exit polls, Walker even won better than a third of union households.

The man had kept his word not to raise taxes. Further, ending collective bargaining for most government employee unions, along with other reforms, saved lots of money for state and local governments and school districts. This, it turns out, prevented public sector layoffs and helped secure future health and pension benefits.

Walker’s success will be repeated elsewhere.

Hey, already happened! On Tuesday, in San Diego and San Jose, California, voters overwhelmingly passed measures to get a handle on out-of-control public employee pension costs. These measures were, of course, fiercely opposed by government unions.

As cities are cutting programs to pay pension benefits for retirees, a post on the Calpensions blog explains, “Public pension amounts in California are based on what unions are able to obtain through collective bargaining, not what is needed for a reasonable retirement.”

Among Tuesday’s many treats, there was one really rotten trick. California’s Prop 28 passed, weakening the state’s legislative term limits. Most voters, misled by the official ballot summary, thought the measure would result in tougher term limits.

Can’t wait until the next election, which falls nearer Halloween. Hope for more treats than tricks.

This is Common Sense. I’m Paul Jacob.