You’ve Got to Pick a Pocket or Two

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2015-03-08 – Headline in this morning’s Chicago Suntimes: “State’s $100,000 Club Includes 682 Who Made More than Governor Last Year.” It’s outrageous. And according to our new governor Bruce Rauner, unions are to blame for much of this.  Or not—if you actually read the article.

It seems that the vast majority of top payrollers aren’t even in a union.

A lot of these folks are judges. They are making between $100,000 and a little over $200,000, depending on their level. That’s a lot. That puts a lot of them in the top two or three percent. The very senior judges may even squeak into the top one percent. But did you know that many judges are making less than kids just out of law school at the top corporate firms?

Yeah, I know. That’s crazy. But no one is complaining about the pay rate of lawyers at these firms—even though that rate of pay means that most people cannot afford a lawyer. And, what’s more, these high priced lawyers flood the courts with so much paper that, even if you can afford a lawyer, you have little hope of getting a day in court, if you need one.

The headline seems to imply that there is something wrong with making over $100,000. But the article was really peeved at people who made more than the governor. The last governor who drew a paycheck collected $177,412 (that was Quinn, Rauner doesn’t need the money so he isn’t taking the salary). Assuming no other income, this amount puts you in the top two percent. The folks that made more than this are clearly out of line.

But the six-figure employees who made less than the governor . . . ? Most of these folks are at the top of their professions, but like judges, they may be taking a pay cut to work in government. But let’s say that they’re not. They’re doing pretty well. Still, if they have a couple of kids, don’t have a spouse’s income, and want to send them to the same schools that they went to, some of these people (particularly those just over the $100,000 mark) are going to need financial aid to do that (according to FAFSA, the Free Application for Federal Student Aid that most colleges use to determine eligibility for grants and loans).

It’s not that they are needy, of course. That’s just a reflection of how screwed up college tuitions are. I just mention it to point out that, despite high incomes, these folks are not paid enough to send their kids to college. We’re talking high salaries here, not outrageous ones.

Oh, sure. Sift through the list and you will find some outliers that you can write headlines about. I’m talking about the vast majority of them.

What does all this have to do with unions? The answer is nothing. According to the article, most of these people were not even members of any union.

Does this let unions off the hook for the poor financial condition of the state? No—but in a surprising way. It’s not that they bled the state dry with their demands. It’s that they were too weak.

Yes, they were too weak.

A large part of the state’s financial problems is due to pension obligations. Unions accepted state IOUs rather than cash deposits into their member’s pension. Members worked believing that they were earning pensions. But now the state is saying they might not have the money to pay up.

If you ask me, the unions should have demanded cash.

Okay, that might mean they would have gotten something less. But when you are negotiating for someone’s pension, you need to make sure that the money is secure. That’s worth something. The unions didn’t do that. They were derelict, not overreaching.

And who profited from this? Politicians. They got their labor contracts without having to pay real money. Their budgets were fake balanced. And now they want to blame the union of this.

Look. There is undoubtedly waste in government spending. This is Illinois! But except for a few outliers, this isn’t it. These are people who worked and provided services for the citizens of the state. You can flaunt the outliers to try to get people stirred up. But outliers don’t prove your case.

The state basically has four types of expenses: interest on its bonds, pension obligations, salaries, and contracts. Interest on the bonds is untouchable. The pension obligation has fortunately been protected as well by a recent court case, but it is instructive to note that there was even any doubt about it. People are still trying to chip away at the protection.

That leaves salaries and contracts.

When government contracts hit the news, folks get all outraged, but they never suggest abolishing corporations. For some reason, we seem to think it’s fine to squeeze people who work for a living, but never go after the folks who steal.

As Fagin sang in the musical Oliver!

In this life, one thing counts
In the bank, large amounts
I’m afraid these don’t grow on trees,
You’ve got to pick-a-pocket or two

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