Originally posted on August 19, 2010 on FreedomWorks’ website.
The average government employee is needlessly paid significantly more than the average worker in the private sector. In a recent New York Times column, Paul Krugman claims that state and local government bureaucrats deserve to make more than private sector workers,
State and local employees are paid more, on average, than private-sector workers about 13 percent more, according to this analysis by John Schmitt. But as Schmitt shows, that’s an apples and oranges comparison: state and local workers are much better educated and somewhat older than private-sector workers, and once you correct for that the comparison actually seems to go the other way.
In reality, government employees unnecessarily enjoy bloated paychecks. According to the Bureau of Economic Analysis, the average state and local government employee salary is $53,056 compared to private sector workers who average $50,462 annually. At first, this may not seem like a huge difference between their salaries. However, Paul Krugman fails to factor in various other benefits of government employment.
Dr. William Anderson, an economics professor at Frostburg State University, explains Krugman’s logical fallacies in an excellent blog brilliantly titled “Krugman in Wonderland“:
However, as I read Krugman, I have come to realize that he sees absolutely no difference in government spending and private capital expenditures…What I find from Krugman, however, is that he views government spending and taxation as a net plus, but private investment and spending is only a cost.
In Krugman’s recent column, he cites a study from the leftist Center for Economic and Policy Research that claims that educated government bureaucrats are actually “penalized” because of their “low salaries”. Yet, this study also fails to mention additional government benefits and pension plans. The USA Today chart below shows that the average state and local government worker receives 59 percent more in benefits than private sector workers:
According to the U.S Bureau of Labor Statistics, state and local governments are far more likely to offer their workers generous health insurance, retirement benefits, life insurance and paid sick leave compared to private sector employers:
In actuality, state and local government bureaucrats earn 14.5 percent higher annual compensation and earn 45 percent more per hour than private sector workers:
If you add up the numbers, the average public sector employee receives $39.66 an hour and works only 33.9 hours a week to earn $69,913 annually. On the contrary, the average private sector employee receives only $27.42 an hour and works 42.8 hours a week to earn $61,051 annually. Krugman conveniently fails to mention that state and local government employees typically work 8.9 fewer hours a week.
Additionally, private sector workers are three times more likely to get laid off or fired than government employees. Public sector workers are also likely to have significantly better working conditions. In fact, private sector workers quit their jobs at a rate that is eight times higher than government bureaucrats.
On average, public sector workers may have attained slightly more education than private sector workers. After all, taxpayers are often forced to subsidize government bureaucrats’ education costs. However, it is hard to justify that education is solely responsible for the growing gap between government and private sector worker compensation. Since 2000, federal employee wages increased by 36.9 percent while private sector wages rose only 8.8 percent.
One of the main reasons that local and state government are in fiscal trouble is because they pay their employees way too much. Since public sector unions have a large influence on government policy, they are successfully able to lobby for excessively higher pay at the expense of taxpayers. Taking away massive amounts of money from the productive private sector to pay for government bureaucrats’ bloated paychecks has deterred economic growth. It is unsustainable that a growing number of government employees are receiving far greater benefits compared to their private sector counterparts.