24 August 2009

Pay Gap

Cato @ Liberty | Chris Edwards | Federal Pay Continues Rapid Ascent:

In 2008, the average wage for 1.9 million federal civilian workers was $79,197, which compared to an average $49,935 for the nation’s 108 million private sector workers (measured in full-time equivalents). The figure shows that the federal pay advantage (the gap between the lines) is steadily increasing.


What is going on here? Members of Congress who have large numbers of federal workers in their districts relentlessly push for expanding federal worker compensation. Also, the Bush administration had little interest in fiscal restraint, and it usually got rolled by the federal unions. The result has been an increasingly overpaid elite of government workers, who are insulated from the economic reality of recessions and from the tough competitive climate of the private sector.

It’s time to put a stop to this. Federal wages should be frozen for a period of years, at least until the private-sector economy has recovered and average workers start seeing some wage gains of their own. At the same time, gold-plated federal benefit packages should be scaled back as unaffordable given today’s massive budget deficits. There are many qualitative benefits of government work—such as extremely high job security—so taxpayers should not have to pay for such lavish government pay packages.

Regular readers know I have no particular sympathy for government workers, nor am I anything but cynical about the Federal fiscal process, but I need to say that this is not an apples-to-apples comparison being made here.

For one thing the high job security that Edwards points out leads most government employees to have longer tenure than private sector employees, so the the average age of government employees is higher than civilian employees, and age is positively correlated with income (with the age range of ~25-65). A combination of the Baby Boomers reaching the top levels of the bureaucracy imminent to their retirement, along with the "Echo Boom" graduating college and seeking entry-level jobs both occurring in the last decade may account for some of the increase in the civilian/federal gap.

Secondly, a lot of the lowest income jobs in America go to immigrants, often non-citizen immigrants, and a lot of government jobs are limited to US citizens. I have no idea how much this skews the results, but I've seen a lot of other income studies where it had a big effect, so I'd like it to be accounted for.

The bigger issue is that the federal government outsources most of it's menial jobs to contractors, moving them off the federal books and into the civilian column. By and large there are no federal employees cleaning sinks or pushing brooms, those are all contractors now. Partially this is a result of the Clinton's administration's attempt to "shrink government." They did so by reducing the number of federal employees and contracting out everything they did. The same number of man-hours of work were being done on behalf of the government, and at a higher cost, but he could brag that the size of government, measured by the cherry-picked metric of number of employees, shrank. I'd like to see some numbers which account for the nature of the work being done, rather than lumping all jobs together.

I'm more concerned with the growth of the gap between federal and civilian sectors over the last decade than the existence of the gap, at least until I can get some apples-to-apples numbers. I wouldn't be surprised if there was still a very large gap, especially because I think the Public Choice critique Edwards makes is basically right, but these numbers alone don't tell me much.

(Via Coyote)

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