Thursday, August 12, 2010


I make no bones about the fact that I'm old, but I'm not so old that I can't remember when one of the reasons given for the inefficiencies of the Federal Government was that the private sector could pay more and thus took all of the better applicants. This was brought to mind by an article in Tuesday's USA Today.

The front page piece, entitled: Federal pay tops private workers, lays out data showing that, since 2000,
Federal compensation has grown 36.9% since 2000 after adjusting for inflation, compared with 8.8% for private workers.
That is not a small difference, and, as would be expected, caused a political response. In the same article Rep. Eric Cantor, R-Va., expresses the GOP's position this way:
Americans are fed up with public employee pay scales far exceeding that in the private sector.
So I guess that's it then. We can't be paying out good taxpayer money to pay government employees when we could get a much better deal by using the private sector for more and more government services. Spending cut! Deficit defeated! Let's all go home and have a cookout.

Now, there are two points one can make of all this. One, which I will only mention in passing, is that this huge increase in Federal pay happened under a Republican President and Congress. Just sayin'.

The point that bothers me, though, is the assumption that it's Federal pay that is too high. Could it be that private sector pay is too low?

We know that over the past two decades more and more private sector jobs in the U.S.A. have been off-shored and out-sourced  to workers in other countries. This depressed payrolls throughout the private sector. Lets look at a graph.

What this shows, very clearly, is that as household incomes for the top 1% went up dramatically in that time period, the same could not be said for the rest of us. Household income for the middle 60% and bottom 20% have been almost flat. Other more recent data indicate that in some of the middle class household incomes are in decline, down 2 to 3 percent in the last two years.

As usual, let's review. The Federal Government, which for years was considered the employer last on anyone's list of top jobs, now offers better pay and benefit packages than the private sector that has been shedding jobs to other countries, cutting back on staffs and doing more and more with fewer and fewer people each year. A private sector that thinks nothing of a corporation going bankrupt in order to shed so called legacy costs, those pesky union contracts with health benefits and pension plans. A private sector that hires undocumented workers to avoid high wages and payroll taxes. And let's not forget, a private sector that invented the "Golden Parachute" that sends executives with horrible track records off into the sunset with plenty of cash and stock to ease their suffering.

And the GOP and conservatives think that Federal workers are paid too much? You've got to be kidding!

No comments: