Wisconsin State Capitol
THE HOUSING BUBBLE, not public sector workers and their unions, is the source of deficits at the state level, according to a new report by the University of California (Berkeley) Institute for Research on Labor Employment. Titled “The Wrong Target: Public Sector Unions and State Budget Deficits,” the report concludes:
Budget deficits were primarily caused by the housing crisis and subsequent economic downturn which resulted in a decline in revenues as the economy contracted. There is no statistically significant correlation between union density, union strength, and the size of state budget deficits (when controlling for the decline in housing prices).
Relative to the population, the public sector workforce has not been growing (whether or not the workforce is unionized).
As a percentage of overall state expenditures over the last 20 years, public sector compensation has actually fallen (again, whether or not the workforce is unionized).
When taking into account education levels, experience, and other factors, public sector workers are not paid more highly than their counterparts in the private sector.
The solution to state budget deficits is growing the national economy and fixing the housing market. Cutting state and local budgets will cause further harm to the economy.
