USA Today on Friday, February 1, served up a few important numbers contrasting state and local government employee compensation to private pay. The key numbers from the analysis based on Bureau of Labor Statistics data were:
• “State and local government workers now earn an average of $39.50 per hour in total compensation, reports the Bureau of Labor Statistics (BLS). Private workers earn an average of $26.09 an hour.”
• “Benefits are a big reason for the gap. Companies have trimmed pension benefits and asked employees to pay a greater share of medical costs. Few governments have imposed similar cuts on teachers, snowplow drivers, lawyers and other civil servants.”
• “From 2000 to 2007, public employees enjoyed a 16% increase in compensation after adjusting for inflation compared with 11% for private workers.”
While private sector workers are more productive, it is not surprising that government workers receive higher compensation. Why? Because elected officials are spending other people’s (i.e., the taxpayers”) money, so they have no incentive to rein in costs, or to tie compensation to efficiency or production. In addition, government workers have higher rates of unionization, which further weakens the link between performance and pay.
In the end, all of this means higher costs for individual and business taxpayers. The economy gets hit twice – from higher taxes and due to increased compensation for less-productive government work.
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