Public Sector Pay vs. Private Sector Pay

While the private sector is the driving force of U.S. economic growth and productivity, government serves as a clear drag on the economy. Yet, due to government decisions being driven by politics and special interest pressures, we see stories like the one that appeared on the front page of the April 10 issue of USA Today.

The article was titled “Benefits widen public, private workers’ pay gap.” It noted the following:

• “The pay gap between government workers and lower-compensated private employees is growing as public employees enjoy sizable benefit growth even in a distressed economy, federal figures show. Public employees earned benefits worth an average of $13.38 an hour in December 2008, the latest available data, the Bureau of Labor Statistics (BLS) says. Private-sector workers got $7.98 an hour.”

• “Overall, total compensation for state and local workers was $39.25 an hour — $11.90 more than in private business. In 2007, the gap in wages and benefits was $11.31.”

• “A full-time government worker receives benefits worth an average of $27,830 per year. A private worker's benefits are worth $16,598.”

It also was reported: “Illinois state Sen. Chris Lauzen, a Republican, says government benefits are unsustainable and unfair to taxpayers who earn less than civil servants. ‘People will become angrier and angrier when they learn the difference between their pay and benefits and what we give to public employees,’ he says.”

And people should be angry. Politicians should not be coming to the taxpayers – either individuals or businesses – for more revenues. Instead, it’s time for givebacks from grossly overpaid government workers.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council