A Conservative Highlights How Badly Private Sector Employees Are Paid.

by Pitt Griffin on July 30, 2013 · 0 comments

in Economics, Politics

“Facts are stubborn things, but statistics are pliable.” – Mark Twain.

If you hate the federal government, you can make allies by getting others to hate federal workers. And what could be easier than implying that those workers are lazy fat cats with out-of-control pay, benefits and pensions?

Typical of this, is a resentment provoking article in Townhall.com, “Total Compensation: U.S. Government Employees vs the Private Sector”. Townhall.com is a consistently rabid anti-government, anti-Democratic, anti-Obama site – so you know where this article is headed. Especially when this is the lead picture:

Detroit sign

It’s a powerful image, guaranteed to incense every government hater, with its pro-union message of entitlement. And what could be a better symbol of something going terribly wrong than Detroit’s impending bankruptcy?

No doubt there was government mismanagement in Detroit – but it has nothing to do with the compensation of federal workers. The picture’s only purpose is to push buttons.

Moving on to the meat of the article, the next picture is this chart:

Federal compensation

 

It’s self-explanatory and, for the sake of argument, let’s accept that it is accurate. But it’s a meaningless comparison, because it doesn’t take into account of the types of jobs, and the educational achievements of employees in the private vs. the public sectors.

Federal workers have more education than private sector employees - why shouldn't they be paid more?

Federal workers have more education than private sector employees – why shouldn’t they be paid more?

Ironically the article even admits this. The author writes that average private sector earnings are overstated because it includes the incomes of highly paid people such as, “CEOs, very specialized medical professionals, sports stars and entertainment moguls.”

The author is right. The better comparison would be between people doing the same job in the private vs public sector – like “very specialized medical professionals”. That description fits many of the doctors at the National Institutes of Health, and they earn far less than they would in the private sector.

And there are many more examples – look at all those lawyers in Congress, many of them could (and will) earn more in the private sector.

If you are going to mention the rich skewing the public sector average up, consistency demands that you mention the low paid jobs that drag the average down. The statistics used in the article don’t show public employees living high off the hog, but instead show how successful businesses have been in slashing wages and benefits for private sector employees. It’s all there in the graph.

The author even highlights it – writing, “benefits for federal workers cost 48 percent more per hour worked”. The implication is that federal employees have it easy – but in reality this statistic reflects the damage done to private employee compensation. If you rewrite the analysis as, “corporations have slashed the benefits of private sector employees to a mere 70% of those of public employees” you get a more accurate picture of the trends in private compensation.

In their facile argument against public compensation, fiscal conservatives fail to consider that the campaign to reduce wages and benefits is costing the taxpayer. Employers have driven down wages and benefits to such a degree that even some full-time employees are eligible for Medicaid and welfare. Workers without pension plans are increasingly reliant on Social Security, giving us less flexibility to make changes to the program.

Employees in well-paying private sector jobs shouldn’t be blasé about federal pay. Private or public, all employees are in the same wage pool, and if public wages and benefits decline, it reduces the incentive for private employees to give raises or even maintain the current wage structure.

Ultimately the pressure to reduce federal compensation is being driven by corporate interests. Federal payrolls amount to 12% of the federal budget  – and that includes service members. If the military, veterans affairs and homeland security were left untouched, and the compensation of every other federal employee were cut by by 10%, federal expenditures would be cut by 0.53%. Which hardly seems worth depressing the earnings of millions of workers for.

 

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