Morning Must Reads: Wages Under Pressure and Doing Nothing Is Not an Option

It IS hard out there for a cellist. (Photo: fatseth, flickr)
It IS hard out there for a cellist. (Photo: fatseth, flickr)

A blog post by Mark Price, originally published at Third and State.

It’s hard out here for a cellist!

On the cusp of the opening of the orchestra’s 2011-12 season, members of the ensemble approved a contract calling for a 15 percent pay cut, reducing the size of the ensemble, and replacing the defined-benefit pension with a defined-contribution plan. The deal, also ratified by the association’s board of directors, was mediated under the supervision of Stephen Raslavich, chief judge of U.S. Bankruptcy Court for the Eastern District of Pennsylvania, and is subject to bankruptcy court approval. The American Federation of Musicians and Employers’ Pension Fund, the $1.7 billion national plan that would be jilted by the new deal, has pledged to fight for up to $35 million it says it will be owed if the orchestra association withdraws from the fund.

The Patriot-News this morning sort of has an endorsement for the American Jobs Act, but as the saying goes, with friends like these, who needs enemies?

But for every worthy infrastructure project such as the Conodoguinet bridge, millions were spent rather than invested. The stimulus kept state workers, teachers, police and firefighters on the payroll — which was great while the money lasted. But after the grants ran out, those same governments laid off workers with a vengeance. You can’t say the money was wasted; it paid for dedicated teachers and first responders to stay on the job a bit longer. But with the nation racking up record deficits, it simply postponed the day of reckoning when states and cities had to tighten their belts anyway. We spent money we didn’t have and received too little of lasting value. It was like taking out a bank loan to buy groceries.

Huh? Maintaining teacher and first-responder jobs has long-term benefits too, such as better educational outcomes, lower crime, and less property damage from fires.

Most importantly, the Recovery Act — all of it — helped stop a downward spiral in the economy that John McCain’s economic advisor Mark Zandi projected would have increased the national unemployment rate to 16%. Such a calamity would also have resulted in a massive loss of output, some of it private investment, and the high and long-term social costs of very high unemployment.

Bottom line, when the economy enters a recession and private-sector payrolls are falling at a rate of more than 20,000 jobs a month in Pennsylvania, you do not turn around and begin firing teachers, police officers and state workers.

In the last several months, unfortunately, austerity economics has come to dominate state as well as national politics. As a result of state and federal funding cuts, public-sector layoffs have picked up. This has led private-sector payroll growth to stall and the unemployment rate in Pennsylvania to rise from 7.4% in May to 8.2% in August.

The Patriot-News editorial board deserves credit for calling for more action to boost the economy; it is just too bad that they feel the need to propagate the views of Herbert Hoover in the 21st century.

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