Tuesday, July 06, 2010

The Two Americas: Public vs. Private Workers

"Even using all the standard controls—race and gender, full- or part-time work, firm size, marital status, region, residence in a city or suburb, and more—the federal wage premium stubbornly hovers around 12%, meaning private employees must work 13½ months to earn what comparable federal workers make in 12.

If the overall generosity of federal benefits matches that of federal salaries (which seems quite likely), total compensation for federal workers may easily exceed $14,000 per year more than an otherwise similar private employee.

A federal pay premium is unfair both to private workers, who receive less than their government peers, and to taxpayers who must cover the difference. Given our 2.7 million-strong federal work force, the government effectively overbills Americans by almost $40 billion every year just on labor costs."

~AEI's Andrew Biggs and Jason Richwine (Heritage) in today's WSJ


At 7/06/2010 7:56 AM, Blogger Dr William J McKibbin said...

My observation is that the US fears a default on government paychecks almost as much as defaulting on the national debt. How government paychecks became such a tacit priority for the US and its states (and apparently for monetary and fiscal policies as well) is similar to the story of how the landed gentry brought down Europe in the late 19th and early 20th centuries. Clearly, government workers and retirees (including the military and its retirees) are the new "landed gentry" of our time...

At 7/06/2010 8:33 AM, Blogger Cabodog said...

Not to mention the added tax on the private sector of losing more-qualified employees to the public sector, thus robbing talent from the very engine that is needed to pay the increased salaries/benefits of the public sector.

At 7/06/2010 8:41 AM, Anonymous Lyle said...

It there is more differential in state and local worker pay than federal pay. The federal pension system is no where near as generous as the state and local system. It would be useful if the state and local was broken out. In particular the second paragraph, is untrue if you check the federal pension it is a defined benefit of 1.1% times the number of years plus a 401k like plan. States are far far more generous. Lets focus where the problem is not so much the feds as the state and local folks.

At 7/06/2010 10:25 AM, Blogger juandos said...

Speaking of the Wall Street Journal, Tyler Durden over at ZeroHedge has lengthy piece (replete with copies of correspondence) regarding the WSJ you might find interesting: On The New York Fed's Editorial Influence Over The WSJ

I guess it never hurts to be a bit skeptical of one's sources of information...

At 7/06/2010 11:07 AM, Anonymous Anonymous said...

Not to mention that my work is done when it is done, rather than at 5 p.m.


At 7/06/2010 12:24 PM, Anonymous Anonymous said...

You would be surprised at what people will do for a steady paycheck.

The German government functioned through the thirties and forties on the efforts of Good Germans serving the government for a paycheck. Right to the end of World War Two, the mail was delivered, licenses were issued, bond interest paid, and the trains ran on time - to places like Auschwitz.

The morally blind formula was, "I do my job, I get my paycheck."

Our government is dependent on the loyalty of our Good Germans and so the government takes care of them, knowing they will do what they are told.

At 7/06/2010 12:39 PM, Blogger Benjamin said...

Imagine being able to retire after just 20 years on the job. That is the deal for federal military employees. Boy, talk about benefits.

I suggest that no federal employee be able to retire until age 67. Military em,ployees can transfer into the huge number of civilian desk jobs, after 20 years of service, and then retire at age 67, like everyone else.
Me? I doubt I ever will be able to retire. I work in the private sector, so federal employees will get no waa-waa from me.

At 7/06/2010 12:40 PM, Anonymous Anonymous said...

What may be worse, is the harm govt bureaucrats do in slowing down free-enterprise businesses, the generators of all wealth.

In many cases, it would be better to pay the drones to stay home and do nothing, rather than fill our lives with forms to file, lawyers to hire and time to waste.

At 7/06/2010 1:00 PM, Anonymous Lyle said...

Benjamin, the federal employees possibly excluding the military don't get nearly as good a deal as state and local employees. Many get the option to calculate their pension including overtime payments, on a one year basis, so the last year they work a lot of overtime to run their pension up.
On the military there are two ways to fill it pay a lot, or the draft. Note that a consequence of the current system is all the contractors doing things that used to be done by military, as I understand it KP is no more except perhaps in basic. Also the idea of only being deployed one out of three years to keep people in. In the old days of the draft labor in the military was cheap so it did most stuff itself, today with the 1/3 deployed ratio, military personel are very expensive so you use them only for directly military purposes.
If one went to the system suggested then we would have to bring back the draft to fill the military or raise the pay more.

At 7/06/2010 2:22 PM, Anonymous Lyle said...

To give a further example the navy is working to get cash off of its ships and use payment cards, it saves a number of slots on the ship, and of course makes theft on board much less practical.

At 7/06/2010 2:30 PM, Blogger Milton Recht said...

Don't most economic studies of public vs private services show that government has about a 20-30 percent inefficiency as compared to the private sector, (number of employees needed, number of hours to complete a task, etc.).

So, don't we have government workers paid 14 percent more to produce 80 percent as much as the private sector.

Isn't the true premium of a government worker closer to 42 percent (1.14/.8 = 1.425).

At 7/06/2010 5:13 PM, Blogger Jason said...

Somewhere, somehow, the function of Government morphed from "serve the people" to "hire the people." Service really isn't even the point anymore.

Not to rub salt in the wound, but the top three wealthiest counties in America are near Washington D.C.



At 7/06/2010 7:49 PM, Blogger Paul said...

"I work in the private sector, so federal employees will get no waa-waa from me."

But you'll keep on voting for the Democrats that keep the govt. gravy train a rollin'.

At 7/06/2010 8:56 PM, Anonymous Anonymous said...

I would love a federal job..but i'd have to numb down my brain to 50% capacity to adjust for pace of business first..


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