Currently home to the worst state unemployment rate in the nation at 14.3% and with some counties facing almost 19% unemployment at the start of 2010 (higher than the state record unemployment rate of 16.8% following the 1982 stock market crash), Michigan residents are in dire need of jobs. However, a job sure isn’t what it used to be…unless, of course, you work for the government!
According to an article by the Michigan Taxpayer Alliance, compensation for Michigan’s private sector citizens decreased by 10.3% between 2007 and the third quarter of 2009. This makes sense in light of the national economic situation. What doesn’t make sense is that during this period, state and local government employee compensation increased by 5.5% while federal government employee compensation rose 7.5%.
What accounts for this disparity and Michigan’s vast unemployment? The national economic downtown combined with Governor Jennifer Granholm’s vast tax increases, especially on private businesses. In past years Granholm pushed to increase income taxes, expand service taxes, raise sin taxes, hike business taxes and decrease Michigan’s ability to compete with other states for business. This has led to billions of dollars in higher taxes and tax proposals since 2007.
The Michigan Taxpayer Alliance article also noted in its article that state employees were scheduled to receive a 3% pay increase this year. According to The Detroit News, Senate Appropriations Chairman Ron Jelinek, an opponent of the pay raise, said, "This is the real world, the real economy of 2010. We are not proposing pay cuts; we are proposing to not raise pay three percent." This is a necessary distinction for those who would protest worker pay cuts. The pay increase recently passed in the state Senate with a 22-15 vote.
With a dragging economy and unemployment rates approaching record highs, taxes should be cut to put money in the pockets of the taxpayers and promote private enterprise. If the government does not raise taxes (as it shouldn’t) then it possesses a limited source of revenue. The distribution of this revenue should not be further aimed at public employees whose compensation has risen as private sector compensation has declined, but towards basic and necessary services. If the government wishes to pay for both these services and pay increases, the only way to do both is through eventual tax hikes or bonding. Both tax hikes and deficit spending or bonding would be counterproductive to Michigan interests.