Unions and the problem of public sector salaries

All Democracies are probably moving slowly down the road to the fiscal irresponsibility that now plagues Europe.  In the private sector not controlling costs will ultimately put the people who own the business out of business, to great loss to the owners of the business.  They are motivated to keep costs under control.  That motivation is lacking in the public sector.  The politicians and technocrats that scramble to the top of the public enterprises get paid and get good benefits, what happens down the road is pretty low on their priorities.

For democracies to be fiscally responsible in the modern interconnected world the law needs to build in some structures to control public sector salaries.  Here are some mechanisms that could help:

1.  Every taxpayer supported entity should have a provision in their charter or constitution that links public sector compensation to private sector compensation.  People that understand math far better than I could set up the formula, using mean, median and mode tests.  The goal would be to make public sector salaries match the private sector salary of three years prior.  In any given year that will mean the private sector employees may make a little bit more than the public sector employees, but when the private sector hits a bumpy patch and the local economy takes a dive, Government would not add to the economic slowdown by not reducing salaries until three years later.

To put a top end limit on public salaries the charter/Constitutional provision can either set a maximum salary as some multiple of the average private sector salary, or use the salary of the highest paid elected official as a cap.  For example, why should any State employee make more than the Governor?

In terms of how to get to a system like this, the Charter/Constitutional amendment should acknowledge that it would not be fair to go back in time and change assumptions that people have built their life plan around.  The change to a linked salary structure should be prospective only - from the date of the approval of the amendment.

2.  Another government practice that inadvertently fuels the increase in public sector salaries is the practice of sending money from one taxing authority to another.  For example, when the Federal Government hands out a block grant for local governments to use for some purpose, that pool of money becomes a target for local government officials and employees.  Local taxpayers don't pay much attention since it is not money out of the taxes they pay locally, so the easy road for politicians is usually to give the local public employee's what they want (and thereby get their support at the next election).

We need a Federal, State and local Constitutional/Charter amendments that preclude government from giving taxpayer money to another government entity or accepting money without a vote of people of the accepting jurisdiction.  That doesn't mean the Feds or the State can't come into town and set up a program on their own, it means the Fed's can't just shower money on States and Local governments that undermine the local taxpayers ability to control their governments long term obligations.