Why is there a "social" contract at all between taxpayers and public employees? Don't they have real, legal contracts? The "social contract" is supposed to be a concept whereby we all agree to give up some of our freedoms in exchange for mutual safety. (And yes, taxes are a form of this. Taxes represent a loss of freedom to keep all of your earnings.) The social contract certainly comes into play when considering questions of taxation and public service, but it is not between taxpayers and public employees. Rather, it is between all members of society and covers far more than merely that one relationship.
As an aside, the whole idea of the "social contract" is an attempt to legitimize the use of government force on its citizens. Taxes are sometimes described (by liberals) as voluntary or at least as a very soft form of coercion. Of course this is completely false: fail to pay your taxes and you will find yourself in jail. That's not very soft. To justify this, liberals will sometimes bring up the idea that a tax-dodger has broken the "social contract" and, as good conservatives, we are expected to defend contract arrangements. The real goal, I suspect, is to mask the naturally adversarial relationship between taxpayers and government. (Other examples of the same tendency are found in the way our taxes are deducted painlessly from our paychecks, and the fact that tax day - April 15 - is almost exactly six months from election day in early November, i.e. as far away as possible.)
Getting back to the NPR segment, Lehrer opens by suggesting that public employees get much better deals than employees of private firms and asks whether this has to change. Master concedes that they get better deals (with only token resistance), but prefers that private employees get better compensation. He views reduction in compensation for public unions as a "race to the bottom."
Lehrer then poses the following question:
If I in the private sector don't have a defined benefit pension any more; if my job in the private sector doesn't come with unions any more, so I have to work cheaper than my father did [er, what? steal bases much, Lehrer? - J]; then why should the teacher, or the cop, or the toll collector have these things that cost me as a taxpayer more in benefits than my boss is paying me at my private company?
For my home state of New Jersey, and for our neighbor New York and our spiritual and financial partner California, this is a critical question, since public sector spending has gotten so out of balance it now threatens the solvency of these states. Master lists a few concessions which the unions he represents have made to these concerns:
We have made very significant sacrifices and changes in our pension plan to try to address those questions. We've increased the pension contribution of our members in New Jersey from 5% to 5.5%, as have teachers and local government workers all across the state. We raised the retirement age from 55 to 62. In terms of direct compensation, we postponed a raise, we took ten unpaid furlough days, and we have given up a total of $450 million in compensation over the past three years.
This really shows how disconnected the unions are from reality. The pension increase is nice to see, but doesn't bring the pension plan into the black - and doesn't match what private employees have to contribute to their 401(k)'s in order to ensure a comfortable retirement (and even so it isn't ensured in the way a government-backed defined benefit pension is). An increase in the retirement age to 62? This only highlights the fact that it was 55 - fully ten years younger than a private sector employee. Now the gap is merely five years, since private sector employees of my generation will be retiring no earlier than 67, and quite likely later. Incidentally, the combination of low pension contributions and early retirement is financially devastating.
McMahon points out a few other shortcomings with Master's claimed "concessions":
In New York State, public sector workers in state government last year received a 3% across the board salary increase plus longevity steps and are due to receive another 4% next year, in the teeth of the worst recession in 70 or 80 years, when in the private sector those people who have managed to hang on to their jobs are receiving no pay increase.... Even when, in those storied days of the New Deal and its aftermath, when the old line industrial union members - pick the UAW, for instance - had defined benefit pensions - and UAW members still do. You realize the UAW pension at its peak, at its richest, is not as generous as a typical public sector pension. That's a fact. There's never been anything in the private sector by and large as generous as what most state and local government workers get in pension and benefits.