Everyone should breathe a sigh of relief. Or should they?
Santa Clara County’s nurses, librarians, janitors, dispatchers, and assorted other workers belonging to SEIU Local 521 will not be going on strike after all. At least not yet. Late night negotiations have produced a deal that’s being sent back to the members.
The exact terms of this latest deal are not clear. But according to sources at the San Jose Mercury, the level of pay and benefits was only one of the issues being negotiated. Another key issue was work conditions – in particular, excessive overtime and excessive workloads.
The issue of pay and benefits is directly connected to the issue of overtime and workload, of course, because when employees are paid more than the budget can accommodate, it is impossible to hire more employees. Here is a look at how much key members of this union are making:
Unfortunately, this data, which comes from the California Office of the State Controller’s “Government Compensation in California” database, has not been updated yet for 2014, so it is possible that the situation has changed. But using these numbers, a few things are immediately apparent:
(1) These workers are very well paid. The average nurse collects a compensation package worth $183,822 per year. The average janitor collects a compensation package worth $76,309 per year. By comparison, according to the U.S. Census Bureau, the median annual earnings for a full-time, year-round civilian employed worker in Santa Clara County in 2013 was $68,586, one of the highest in the nation.
(2) These workers are not working extreme amounts of overtime. The 2nd to last row on the above table is calculated based on overtime pay, divided by 1.5x (some overtime is paid at 2.0x so this is, if anything, understated), divided by base pay (some overtime rates are calculated on base pay plus other pay, so this is also understated). The group that works the most overtime are the dispatchers, who, in a 40 hour week, on average are turning in an extra 6.0 hours of work. That equates to 72 extra minutes a day, i.e., zilch from the perspective of any start-up entrepreneur.
(3) The cost of pay and benefits are making it difficult to hire more workers. These workers are typically receiving a 2.5% at 55 pension, meaning, for example, if the average nurse retired after 30 years making $128,117 (it would be more than that since that figure represents the average, not the final – again, we’re understating), at age 55 they would get a starting pension of 2.5% times 30 times $128,117 = $96,088, with annual cost-of-living increases, for the rest of their lives. The employer’s health insurance payments, over $15,000 per year, are roughly the same across job categories regardless of average income. This means the benefits overhead for the relatively low paid employees, the janitors, is a staggering 58%. In the case of the nurses, who are the highest paid among these four groups, it is still 28%. For dispatchers, who have to work a measurable amount of overtime, benefits overhead is 42%.
Without having more detailed knowledge of the situation in Santa Clara County, it isn’t fair to indulge in excessive editorializing on this specific case. But the unions who represent Santa Clara county workers, and all government workers, have become accustomed to comparing their rates of pay to each other. In Santa Clara County, the unions representing miscellaneous workers see how much money is going to unionized public safety employees and they become resentful. The public safety unions continuously identify cases where, somewhere, a local government agency is paying their police and firefighters more than they’re making, and they foment resentment that leads to politicians granting pay increases to achieve parity. And the circle goes round and round. And pay goes up and up.
Meanwhile, in the real world of private sector work, the idea of an employer paying $15,000 per year or more to cover an employee’s health insurance plan is almost unheard of. In the world of salaried employment, the idea of working a mere 40 hour week (and accruing 4+ weeks a year of paid vacation) is almost unheard of. And the idea of retiring at age 55 with a pension (with cost-of-living adjustments) that starts at 75% of one’s final year’s earnings is preposterous.
California’s government workers, especially those in the Silicon Valley, point to the wealth being created by start-up companies who make it big, minting dozens if not hundreds of multi-millionaires, and somehow they think that’s the norm. But it isn’t the norm. The norm is a median private sector worker income of $68,586 per year; a median household income of $91,702 per year. The norm is an employer paid benefits overhead of around 15% (9.0% Social Security and Medicare, at most another 6% for health insurance and a contributory 401K). Not 28%. Not 41%. Not 42%. Not 58%.
California’s government workers deplore the excessive cost of living, especially in the Silicon Valley. But instead of fighting for more wages and benefits for themselves, they might find the vision, the courage, and the selflessness to identify and fight for policies that would lower the cost of living for everyone. Nobody can afford a home, because environmentalists have successfully declared all open space to be sacred. Ordinary workers struggle to pay for gasoline, electricity and water, because development of these resources has been excessively restricted for decades. Across almost every critical household expense, add education and healthcare to the list, ordinary workers pay far more than they would have to in a more competitive economy.
The aspirations of unionized government workers are understandable; the rhetoric of their union leadership is compelling. But these government union leaders don’t live in the real world, and worse, they don’t appear to even care about the real world. Because unlike private sector unions, government unions negotiate with bosses they elect, for a share of taxes that are taken from citizens, not precariously earned by a private company. And they use their unique power to exempt themselves from the economic challenges facing the rest of the citizens they are supposed to serve.
When that is fixed, we may truly breathe a sigh of relief.
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