The reason California’s financial woes are so much worse than Texas’: Collective bargaining

Posted on May 2, 2011

So says Bloomberg Businessweek:

California’s prison guards make more than twice their counterparts in Texas—$71,000 a year, compared with $31,000. That difference is true for state workers in general: While in 2009 the average private-sector worker in California made 12.5 percent more than in Texas, the disparity among state workers was 25.2 percent, according to Commerce Dept. figures. The difference underlines the benefits—and taxpayer costs—of working in a union-friendly state and may help explain why California has more intractable fiscal difficulties than Texas.

 According to the story, the unions in California represent almost 85% of state workers, while in Texas the unions represent less than 10%. The difference in union representation between these states has not only resulted in higher pay for California state employees but also larger pension benefits as well.  This results in a larger long-term taxpayer obligation in the state of California:

Higher pay means higher pensions. Texas’ retired teachers get an average of $18,372 a year, compared with $25,440 for teachers in California. The average stipend for retired state employees in Texas rose 3.9 percent in the five years through fiscal 2010; in California it jumped 32 percent from 2004 to 2009, according to the largest pension plans in both states.

As states like Wisconsin try to curtail the collective bargaining power of their unions, this lesson should be held up as a cautionary tale of where that power unchecked will lead.

Posted in: California, Texas