This past week was exciting in that the Iowa House and Senate began the new legislative session and Terry Branstad took the oath of office of Governor for the fifth time. The Republicans in the House got right to work by proposing around $500 million in spending cuts over the next three years. The Governor, in his inaugural address, promised a new covenant with the people of Iowa, which included reducing the size and reach of state government.
Of course, Democrats began to whine before the ink was dry on the spending proposal or the start Governor’s celebration activities. Loudest among the barking voices was that of Danny Homan, president of Local 61 of AFSMCE, the largest public union in Iowa. The crux of the complaint from union representatives was that a tax relief fund, intended to support business growth, and a concerted effort to reduce the size of government would take funds away from any number of programs in the state that are staffed—you guessed it—by union labor. My take is that the union folks perhaps protest too much.
After reviewing some of the reporting from the Des Moines Register on the spending bill and the inaugural address, I thought I might do a bit of checking on some of the numbers used. The statistics forming the foundation of the analysis for this article can all be readily found on the US Census site, the Bureau for Labor Statistics site and the Iowa Workforce Development site. A few clicks of the mouse and anyone can verify exactly what I am presenting here.
There are some 180K public employees in Iowa, 41 percent of whom are union members. Though the governor and the legislature would like to influence all public sector employment, their influence, of course, will be on the 53,000 full time equivalent employees at the state level. Based on the latest data, those employees average $62,000 a year in salary. The average wage of non-government jobs, according to Iowa Workforce Development, is just a nudge above $36,000 a year.
The differential is some 68 percent. That’s right–the average state employee earns 68 percent more than the average Iowan working in the private sector. Since 2000, the salaries of public employees in Iowa have increased some 41 percent. For the private sector, salaries have increased some 25 percent. Though the increase in number of state employees has remained fairly stable for the past decade or so, the cost of state government has increased dramatically. As surprising as these numbers might be, one should take a look at how Iowa compares to her surrounding states.
I compared my Iowa data with similar metrics for Minnesota, Wisconsin, Illinois, Missouri, Nebraska and South Dakota. Iowa has one state employee for every 57 residents. This compares favorably with our neighbors Nebraska and South Dakota, which have one employee for every 56 residents. Illinois, on the other end of the spectrum, has one employee for every 95 residents. When the seven states are examined in the aggregate, the average is 75 residents for every state employee. If Iowa were to reduce the number of state employees to meet this standard—and it may not be the right standard—some 13,000 full time equivalents would have to be let go.
The savings to the state would be around $806 million a year. Even if Iowa were to shed 6000 state employees, increasing the ratio to one to 65, the savings would be around $372 million annually. Again, perhaps not the right metric, but it sure gives one something about which one might think. Finally, as reported above, Iowa had the highest average salary for state employees—even higher than Illinois. Similarly, Iowa enjoyed the greatest percentage increase in salaries since 2000 except for Nebraska (47% to $44k annually) and Illinois (43% to $59K).
One does not have to be an Iowa grad to be put on edge by these numbers, particularly when unions are the entities complaining the most about reductions in spending. And contrary to whatever economics system union bosses might advance, no one in the middle class was ever lifted by keeping programs on the books that might be of marginal effectiveness, especially when the state is in dire need of sanity in its budgeting processes.
One has to wonder where these individuals get the nerve to grouse when so many of their fellow citizens would like more in their paychecks each month. Imagine state employees contributing $50 a month for their health insurance. The savings to fellow citizens would be around $30 million a year. What if they had to pay at least $200 a month like the rest of us? The savings to fellow Iowans would be over $100 million annually.
There are a lot of ways to address the size and cost of state government, and I am sure the legislature and the Governor have some ideas. If the Governor were to ask me, I would recommend establishing a set number of state employee full time equivalents—say around 45,000—and then have all the agency heads come in and justify the number of employees needed in each agency.
The US military has a fixed force structure, and it works really well. Maybe the State of Iowa ought to look at examining this highly effective model. Maybe state employees ought to pay a little more of their own freight when it comes to health insurance and other programs their civilian counterparts have to support. Regardless of what might be done, one cannot escape the huge disparities between the perceived well-being of state employees compared to the rest of the folks in Iowa.
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