Workers in the private sector collect an average of 24.3 cents in various benefits for every dollar they make in wages, but those in Milwaukee's public school district collect 74.2 cents in benefits -- or about three times as much.
How can that be? Well, start with Social Security and Medicare, which all workers collect, and to which their employers contribute 7.65 percent of their wages. But in Milwaukee, the state's largest school district, teachers also belong to the state pension plan, which requires a contribution of 6.8 percent of wages from their employer plus 6.2 percent from the employee. Except that in Milwaukee, the public pays the teachers' share, too.
In that city's school district, teachers get another, supplemental pension funded by the school district, which puts up 4.2 percent of their salaries to pay for it. The teachers pay nothing.
The school district pays the other school employees' share of a separate pension plan, contributing 5.5 percent of their salaries to the plan. The school district also pays the entire cost of their employees' medical and vision benefits, and over half the cost of their dental insurance.
The teachers' union itself sponsors these insurance plans, so benefits are generous. And the premiums collected may be higher than they would be in a more competitive market. The school district winds up paying 38.8 percent of these employees' wages for their health insurance. (Compare to the national average of 10.7 percent of wages paid by employers in the private sector.)
Then there is the health insurance the taxpayers of Milwaukee pay for retired public employees. The public pays the entire premium in effect at retirement. It's a great deal for public employees. Not so great for the public.
"Overall," to quote Professor Costrell, "the school district's contributions to health insurance for employees and retirees total about 50.9 cents on top of every dollar paid in wages. Together with pension and Social Security contributions, plus a few small items, one can see how the total fringe benefits reaches 74.2 percent" of wages.
Gov. Walker would be happy to bargain over just the salaries of state employees. But he realizes that it's the benefits they draw, which add up to that additional 74.2 cents for every dollar paid in wages, that are eating up school budgets like Milwaukee's. And his state's fiscal integrity.
No wonder Wisconsin's newly elected governor wants to restrict collective bargaining for public employees in his state to salaries, not benefits. For when it comes to the pay structure for teachers in school districts like Milwaukee's, the "fringe" has become almost as big as the whole fabric.
Wisconsin's governor and the Republican majority in its legislature are trying to reshape the terms of public employment in Wisconsin to make it more like the federal system, in which workers and their unions may negotiate personnel practices -- like who has to pay for cleaning uniforms -- but little else.
Eliminating the web of special privileges and extravagant benefits that unions have negotiated for themselves in Wisconsin won't solve all that state's fiscal problems. But it would be a start -- a good start. Just because it wouldn't solve all that state's financial problems doesn't mean it wouldn't address a major one.
The federal government has no such problem with unions, not having any with real clout. Its chief executive is named Barack Obama, and while he's made some sympathetic noises about union demands in Wisconsin, he shows no sign of changing the federal system.
Even while talking a good union game, the president doesn't seem at all inclined to give public-employee unions the kind of power over the federal government that they have over state government in Wisconsin. For this president and CEO, preaching is one thing, practice quite another. And who can blame him? He's got enough budget problems of his own without risking the kind that are sinking Wisconsin -- and many another state government.
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