Two Americas - Government workers increase their lead

Government workers used to be "civil servants." They earned less, but they kept at it because they were serving the public. Then their benefits started outpacing the private sector. Now their pay is growing much faster. Michael Mandel at his Mandel on Innovation and Growth blog compares public data on wages and benefits for state and local governments and finds that the public and private sectors were even in the first quarter of 2005. But the public sector pay and benefits grew so fast that it left the private sector in the dust. He is using inflation-adjusted data for wages and benefits. After five years the private sector had gained less than 1 per cent, the public at least 5 per cent. He says 5 per cent; when I eyeball the data I get a gain from 106.5 to 113, which is 6 per cent and from 106.5 to 107.5 for the privates. The gap is about 5 per cent after five years.

So what? State budget deficits: By Mandel's calculation if the publics were being paid the same as the privates the huge state deficits would be a small fraction their size. On $1 trillion in pay the delta (difference) of 5 per cent is $50 billion. The budget gap combining all 50 states in February was $55 billion for 2011. Subtract 50 bill from 55 bill and the problem is only 1/10th. The states hold their own destiny: They can reduce the increase in pay and benefits to the rate in private industry and improve their situations greatly. Government workers are no longer civil servants; they are being paid more and their pay and benefits combination is growing faster than for the taxpayers who are supporting them. Via WashACE. Click graphic to enlarge.