When I worked at Coast Guard headquarters years ago, I always heard from the civilian employees how they could make so much more in the private sector. They would make these claims as proof that they are “sacrificing” for the good of the nation. I would just pat them on the back and thank them for their service, rather than reminding them that in the private sector they would also lose their juicy benefits (including the pension plan), work much more than the 40 hours they work for the government, face downsizing (as opposed to only losing their job due to murder or embezzlement), and be accountable for their work (in the government failure results in the agency receiving more money, not failure like the private sector).
It turns out that government workers get paid substantially more than private sector workers, especially when benefits are factored into the equation. The USA Today published an article that showed that federal workers are paid 20% more than the private sector in 8 out of 10 specialties. The average government worker made $67,691 compared to $60,046 for the private sector employee according to the article. Government benefits increased this pay discrepancy substantially as the average government worker received $40,785 in benefits whereas the private sector employee only experience $9,778 in benefits.
Yet, the federal employee unions continue to claim that federal employees are underpaid by 26% relative to the private sector. I think this is the usual union reindeer games that they play, but here is a link to some of their data.I don’t doubt that the top level government executives, known as the SES or Senior Executive Services, are paid less than the executives at Fortune 500 companies, but at all other levels I don’t think this exists. Government workers have much better pay and benefits without the risk of losing their jobs like private sector employees. It would be like a CD yielding more than the stock market consistently. This isn’t how it should be. The safer job should pay substantially less since risk is reduced.
Even more pressing is how many of the municipalities have mismanaged their pension funds. States are facing huge shortfalls in their pension funding. If you want to understand how big this issue is, please check out Mike Shedlock’s blog at Mish’s Global Economic Trend Anaylsis. He covers it well. This is going to be a big issue when the governments ask the private sector employees to pay extra in taxes to fund a pension for someone who makes more money with greater job security. Look for a backlash in the ensuing years as this discrepancy grows.