In a recent Michigan Capitol
Confidential article, James Hohman points out that governmental largess has
created a bit of a bind for state and city governments that are looking to pare
down spending. With revenues falling, legislatures nationwide will have to make
tough choices regarding public services, benefits, and employment. This is
especially difficult when the primary employers in a given area are employed by
the state. As an example, look to the below graphic, indicating the number of
people employed in Detroit.
Hohman notes, “In Detroit's case, six of the top 10
employers are not private businesses at all, but government entities: public
schools, the city government, the U.S. government, Wayne State University, the
State of Michigan and the U.S. Post Office. Two others are health care
providers intrinsically tied to government policy, the Detroit Medical Center
and the Henry Ford Health System.”
In a similar vein, Christopher Westley
of Mises.org notes a similar situation occurring in Wisconsin. See the below list. Westley says, “This
leaves Wisconsin's legislature in a bind. The federal stimulus granted it an
artificial lifeline, but that runs out this year. Meanwhile, its massive
public-sector payroll cannot be met by income taxes on that same sector.”
Largest Wisconsin Employers
- Walmart
2.
University of Wisconsin–Madison
3.
Milwaukee Public Schools
4.
US Postal Service
5.
Wisconsin Department of Corrections
6.
Menards
7.
Marshfield Clinic
8.
Aurora Health Care
9.
City of Milwaukee
10. Wisconsin
Department of Veterans Affairs
When governments find themselves in the business of
employment, government tends to hire more and provide more cushy benefits
packages that are “affordable” when property rates and incomes are artificially
high (thanks to a boom generated by the manipulation of interest rates). When the bust inevitably comes, public
sector employment is no longer affordable, and the state must do what other enterprises
must do: shed the malinvestment. The state gambles with the lives of its
employees. Rather than taking a position of fiscal responsibility, they dole
out benefits they couldn’t otherwise. (To see the breadth of this problem,
check out how out of whack public
sector employment in Michigan is.) The turmoil caused by this is disheartening.
Folks lose their jobs and benefits they’ve been accustomed to.
Nobody wins when government plays with the money, with
employment, and the lives of its citizens.
