NCPA - National Center for Policy Analysis


March 12, 2010

The recession and the ongoing jobless recovery devastated much of the private-sector workforce last year, sending unemployment soaring, but government workers emerged essentially unscathed, according to data released Wednesday by the Labor Department. 

Meanwhile, the compensation for state and local government employees continued to easily outdistance the wages and benefits for workers in private business, a separate Labor Department report showed: 

  • Private-industry employers spent an average of $27.42 per hour worked for total employee compensation in December, while total compensation costs for state and local government workers averaged $39.60 per hour.
  • The average government wage and salary per hour of $26.11 was 35 percent higher than the average wage and salary of $19.41 per hour in the private sector.
  • But the percentage difference in benefits was much higher; benefits for state and local workers averaged $13.49 per hour, nearly 70 percent higher than the $8 per hour in benefits paid by private businesses.  

Paul Booth, executive assistant to the president at the American Federation of State, County and Municipal Employees (AFSCME), attributed the pay difference to a changing government workforce that has increased its proportion of higher-skilled workers during the past 15 to 20 years. 

Small-government advocates see it differently.  Compensation for government workers "is a gigantic problem" that will only get worse in the future, says Chris Edwards, director of tax policy studies at the Cato Institute: 

  • The defined-benefit pension plans for state and local workers and their post-retirement health care costs do not include the extent to which those benefits are underfunded or overpromised.
  • The cost of today's benefits for government employees ($13.49 per hour) assumes that these retirement benefits are fully funded, however, the benefits are underfunded by an estimated $3 trillion.
  • Benefit costs eventually will soar, and taxpayers will be required to pay the difference between available resources and the overpromised benefits as government workers of the baby boom generation, who start to turn 65 next year, begin to retire en masse.
  • Also, government workers also have the rare privilege of being able to retire at age 55.  

Source: David M. Dickson, "'Gov't workers feel no economic pain,"' Washington Times, March 11, 2010. 

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