Wisconsin public-sector workers face an annual compensation penalty of 11%. Adjusting for the slightly fewer hours worked per week on average, these public workers still face a compensation penalty of 5% for choosing to work in the public sector.
The deal that unions, state government and -- by extension -- state residents have made to defer the compensation of public employees was a bad deal -- but it was a bad deal for the public employees, not for the state government. State and local governments were able to hire better workers now by promising higher pay later. They essentially hired on an installment plan. And now they might not follow through on it. The ones who got played here are the public employees, not the residents of the various states. The residents of the various states, when all is said and done, will probably have gotten the work at a steep discount. They'll force a renegotiation of the contracts and blame overprivileged public employees for resisting shared sacrifice.
Which gets to the heart of what this is: A form of default. There's been a lot of concern lately that states or municipalities will default on their debt. This is considered the height of fiscal irresponsibility -- an outcome so dire that some are considering various forms of federal support. But the talk that states or cities will default on their obligations to teachers or DMV employees? That's considered evidence of fiscal responsibility. And perhaps it's a better outcome, as defaulting to the banks makes future borrowing costs higher, and can hurt the state economy in the long-run. But it's not a more just outcome.
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