With public sector salaries and benefits continuing to expand at the expense of Rhode Island’s beleaguered taxpayers and business owners, some policy analysts see a historical parallel with the waning days of the Roman Empire.
The fact that state and local government employees enjoy generous benefits and compensation in comparison to their private sector counterparts, according to a new study, is not surprising. But the fact that Rhode Island is the only New England state where the average wage earnings of government workers exceeds that for all private sector workers does come as a jolt to some concerned citizens. The recently released study from William Even of Miami University and David MacPherson of Trinity University was compiled on behalf of the Rhode Island Center for Freedom and Prosperity, the parent organization of the Ocean State Current.
In addition to government workers’ higher base salary, Rhode Island is also the only New England state with paid time off ($7,208) that outpaces the private sector ($6,857). Moreover, Ocean State public employees put in the fewest hours of any public employees in New England, the study shows.
“The public employee unions in Rhode Island have proven over the last three election cycles that they control this state and will not stop with their agenda or demands for more benefits,” said Chris Caramela, who is active with the Rhode Island Tea Party. “They participate in dishonest election tactics to buy seats they feel will further their ideology and because they are so well organized, they know exactly how to manipulate the very system designed to be for the people. The real issue here is that far too many people are asleep and don’t care enough to dial into what is going on.”
Across the country, government workers receive a “premium” above what is earned in the private sector, but the difference is greatly amplified in Rhode Island, according to the study.
Here is how Rhode Island’s public sector compensation packages compare regionally and nationally with workers in private industry:
- Rhode Island: 26.5% higher total compensation
- New England: 18.8% higher total compensation
- United States: 14.9% higher total compensation
“The most conspicuous reason for Rhode Island’s poor showing, here, is the huge gap between its economy and that of the two neighboring states that envelope it,” the study explains. “While the Ocean State’s public sector is competitive with Connecticut and Massachusetts (with earnings only $4,294, or 6.6%, below the region-leading Bay State), its private sector has a $15,398 (23.3%) deficit.”
The incestuous relationship that exists between union officials and the elected officials they help put into office deserves greater attention and scrutiny, Matt Patterson, a labor policy analyst with the Competitive Enterprise Institute (CEI) in Washington, D.C., told the Current.
“The pay disparity between public and private sector workers is one of the great unreported injustices in America,” Patterson said. “Government-worker unions help hire, make that hire, their own bosses: politicians, who are then unsurprisingly inclined to grant their benefactors generous wage and benefit packages with taxpayer dollars. It’s a little like the later stages of the Roman Empire, when the army would install as Emperor whichever general the soldiers thought would reward them the best. Then as now, such a bargain is a recipe for corruption and incompetence.”
At a time when rising liabilities threaten to consume the retirement packages for public sector workers, rank-and-file union members ought to rethink policy measures that place additional burdens on private industry, Caramela, the Tea Party activist, suggested. Instead of advancing “tax the rich” schemes, union members should instead look for ways to invite business back into Rhode Island, he argues.
“Have they not realized that our own economy has been in the tank and continues to decline as they push for more benefits?” Caramela asked. “At some point, our unionized labor in Rhode Island will outnumber private sector contributors.”
The Current invited several Democratic representatives to comment, including Senate Finance Chairman Daniel DaPonte (East Providence, Pawtucket) and Rep. Scott Guthrie (Coventry), himself a retired North Kingstown firefighter. As of Tuesday, they had not responded.
Since the private sector continues to contract in Rhode Island, the Current asked elected officials if their union constituencies had a stake in working to improve the business climate. Since public employee unions are largely dependent upon taxpayers who work in private industry, should they be concerned that their benefit packages appear to be unsustainable?
Mike Stenhouse, president and CEO of the Center for Freedom & Prosperity, said the report makes it clear that state and local government policies have favored government workers at the expense of private employees, including union members in the private sector.
“It is only via growth in the private sector that we can solve our state’s many fiscal problems, and we must properly align financial incentives to encourage growth in business, not government.”
“Rhode Islanders want a government that works for all citizens. For how long can taxpayers in a low-pay private sector sustain a high-pay public sector? For how long will taxpayers and businesses tolerate a system that favors special interest groups, while costing jobs for other citizens — citizens who have to pay for these excesses? It’s not at all a fair system right now.”
In February, the RI Center for Freedom and Prosperity put together a national task force to assess the funding status of local pension plans. That task force included Eileen Norcross of the Mercatus Center, Rich Danker of American Principles Project, Bob Williams of State Budget Solutions, and Mike Stenhouse, the Center’s president. The end result was a study published through the Mercatus Center at George Mason University that examined the 36 Rhode Island cities with their own pension plans.
Norcross and her Mercatus Center colleague Benjamin VanMetre used private-sector valuations, as opposed to assumed investment returns, to calculate liabilities. They found that the total amount of liabilities for municipal pensions is $6 billion, as opposed to the $2.4 billion figure that was previously reported. The same private sector valuations also found that every local pension plan is funded below 60 percent of what is needed to cover retirement expenses, according to the study.
This means the state as a whole could be heading toward a Central Falls–type situation in which compensation has to be cut dramatically, Stenhouse warns.
“It is should now be evident to everyone that what’s really needed here is a set of new polices that promote economic growth and increase our tax base.”
Mark Zaccaria, the state Republican chairman, encourages residents to compare Rhode Island’s fiscal climate and its government services to those of New Hampshire, which is similar in terms of size and population. The Granite State offers up proof that the right policies can boost economic performance, he said.
“The greater problem that’s also begging for diagnosis is why so many Rhode Islanders fail to vote in their own best interests,” he observed. These are problems that could be corrected by a simple change of political leadership. Every election cycle the Republican Party presents capable candidates who really do reflect the attitudes of the hard working, tax paying men and women of the Ocean State.”
“To any who say that it can never change I suggest they take a drive to New Hampshire. How do you know when you’ve crossed the NH State Line? The roads suddenly get better. The Granite State has about the same population as RI. It has approximately half the state workers. It has between ten and one hundred times the real estate to manage. And it does so on around 60% of the RI budget — which allows New Hampshire to maintain its absence of both a state tax on earned income and any sales tax on retail items.”
In other words, New Hampshire doesn’t quite resemble the final stretch of the Roman Empire