SB 5: It’s all about the money

Millions of dollars will be spent by proponents and opponents of Ohio’s new collective bargaining reform law that’s up for a vote of the people in the Nov. 8 general election.

But that isn’t the money at the center of the debate over the law, commonly referred to as Senate Bill 5. There are two important studies that reflect the positions of the two sides.

For the proponents, the Buckeye Institute For Public Policy Solutions’ “The Grand Bargain is Dead” has become the rallying cry. The secondary title of the study is, “The Compensation of State Government Workers Far Exceeds Their Private-Sector Neighbors.”

For the opponents of S.B. 5, the Economic Policy Institute’s “Are Ohio Public Employees Over-Compensated?” is serving as the antidote to the commonly held perception that public employees are overpaid and underworked.

(It is true that the perception has been fed in this space for many years — based on this writer’s first-hand knowledge of local governments.)

Heart of the debate

Wages and benefits are at the heart of just about every debate involving public vs. private employment. That’s because private sector workers have had to ride out the national economic storm by accepting wage freezes, higher health insurance premium payments, frozen pensions and even givebacks.

By contract, public employees are surviving the recession relatively unscathed — even though the money they are paid mostly comes from taxpayers in the private sector.

Hence, the growing resentment — which the Buckeye Institute and the Republicans in Columbus, including Gov. John Kasich and the leadership in the General Assembly, are feeding.

Here’s how the Buckeye Institute characterizes the public/private compensation divide:

“Currently, a median state government worker makes 24.6 percent more than her private sector peer ($36,858 v. $29,586). Using this comparison and the 2009 state pay data, a 19.73 percent cut in pay (the percentage needed to reduce the state government worker’s pay to her private-sector peer’s pay) would save Ohioans roughly $639,889,878 in the next year.”

But the Economic Policy Institute counters with research that, it says, shows state and local government employees in Ohio are not overpaid.

“Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of state and local governments earn lower wages than comparable private sector employees. Average annual wages and salaries of full-time state and local public employees in Ohio are 5.9 percent lower than those of comparable private sector employees.”

When wage and nonwage benefits are taken into consideration, Ohio public employees annually earn 6 percent less than comparable private sector employees, the institute says.

But the key to the arguments being used by the opponents to S.B. 5 to counter the proponents’ claims is contained in the following paragraph: “These comparisons account for important factors that affect earnings, the most important of which is level of education. Because occupations in the public sector require much higher levels of education, Ohio public sector workers, on average, are more highly educated than private sector workers.”

Higher education

Consider the following statistics: 49 percent of full-time public sector workers in the state hold at least a bachelor’s degree, compared with 26 percent of full-time private sector workers. Ohio state and local governments pay college educated employees 25 percent less in annual total compensation, on average, than private employees, the institute contends.

The labor strife at Youngstown State University has focused public attention on the fact that the $70,000-plus average salary for faculty is way higher than the $24,000 median income of a family of four in Mahoning County.

Thus, the question: At what point does the public sector become unsustainable?

Gov. Kasich and the Republican controlled General Assembly say that point is now, which is why the new collective bargaining law, which strips public employees of many of their rights, is necessary.

Opponents of S.B. 5 counter that the Republicans are simply out to destroy the public employee unions in Ohio.

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