18764Civil servants are now the masters !!!
- Dec 8, 2012Public Sector Pay Soars in CA
December 8, 2012 By John Seiler
_A new study_
(http://pacificresearch.org/fileadmin/templates/pri/images/Studies/PDFs/20121105_NewTexasF_01.pdf) by the Pacific Research Institute
shows that compensation for the public sector in California is soaring far
above that of the private sector. PRI is CalWatchDog.com’s parent think tank.
For California state and local governments, “a key driver of the budget
crises is overly generous government compensation packages,” the study found.
“Consequently, California’s budget crises will never be sustainably
resolved without addressing the problem of overly generous state and local
“Policy Reforms to Control Rising Government Compensation Costs” is
written by Wayne Winegarden, Ph.D., a PRI senior fellow and a lecturer in
economics at Marymount University.
Winegarden’s key findings:
1. “California’s government compensation costs are already excessive.” He
cited a 2011 study by Jason Richwine and Andrew Biggs, which found:
“In the case of California public employees, wages are slightly lower in
the public sector. Initially, benefits appear only slightly higher, implying
rough parity in compensation between the public and private sectors.
However, properly accounting for retiree health benefits and defined benefit
pension plans generates a public compensation premium of around 15 percent.
The additional job security granted to public-sector employees is equivalent
to an approximately 15 percent increase in public compensation, meaning
that the total public-sector pay premium in California may be as high as 30
I would add that Richwine and Biggs just came out with _an op-ed in the
Wall Street Journal_
(http://online.wsj.com/article/SB10000872396390443854204578058660248073962.html) which found that government workers (teachers
were not included) put in about a month less time on the job every year than
do private-sector workers. They wrote:
“Based on the most detailed and objective data set available, the private
sector really does work more than the public sector. This fact may hold
different lessons for different people, but our own take is simple: Before we
ask private-sector employees to work more to support government, government
itself should work as much as the private sector.”
In sum, government workers get paid 30 percent more than private
sector-workers, but work 8 percent (one month) less. Nice part-time work for
full-time pay if you can get it.
However, I’m also mindful of the old libertarian maxim, “We’re lucky we don
’t get all the government we pay for.” I would be happy if every
regulator in the state, even while getting paid their hefty salaries and benefits,
stayed home and played video games.
Widening pay gap
Back to the PRI study by Winegarden. He also found, ”California’s
government compensation premium over California’s private sector is widening.”
“The benefit premium of state and local government workers is not a new
phenomenon …. over the past 40-plus years California’s government
compensation premium relative to California’s private sector compensation levels has
been growing and is currently near historic highs.”
Even as the private sector that pays for everything through record-high
taxes shrinks, the government sector that lives off it keeps growing.
Compensation higher than other states
Winegarden also found, “California’s government compensation premium
relative to other states cannot be justified based on California’s relatively
higher incomes and cost of living.”
Certainly, California’s cost of living is higher than in other states — in
part because of the high cost of taxation and the regulations imposed by
all those highly compensated functionaries.
But Winegarden wrote:
“State and local government workers in California receive a compensation
premium over state and local government workers in Texas and the U.S. that
is consistently greater than the compensation premium received by California’
s private sector workers compared to private sector workers in Texas and
That makes sense. If you’re in the private sector, you’re competing
against not only other Americans, but all 7 billion people on the globe. If costs
go up, then worker pay has to go down — or the company moves to another
state or country, or goes broke.
By contrast, when government costs go up, taxes are raised — as we just saw
with the passage of Proposition 30 and Proposition 39, as well as scores
of local taxes and bonds.
There is some check on government because departing businesses and workers
then don’t pay taxes in the place from which they were exiled. But that
check usually takes a few years to dig in. And governments also commonly meet
funding crises by cutting services, such as parks and roads, rather than
reducing generous employee pay, perks, pleasures and pensions.
Excessive and growing
Winegarden concluded, “[T]he evidence regarding California’s state and
local government compensation costs are clear: when all benefits are included,
these costs are excessive and growing.”
“California implements policies that encourage excessive compensation.
These policies include mandating collective bargaining, empowering public
sector unions, and, in some areas, mandating binding arbitrations. These
policies have led to practices such as excessive pension spiking, low retirement
ages, covering health care services during retirement, generous pension
levels, and permitting the practice of receiving both a government pension and
a government salary. When coupled with the declining asset values of
California’s pension system, these trends have created a crisis waiting to
So, that’s how it is as we rush toward 2013. The private sector shrivels
under the immense burden of government, even as the government functionaries
work less and are paid more — and as taxes are jacked up to record levels
to pay for everything.
Until the system falls down and all Jerry Brown’s horses and all the unions’
men couldn’t put it together again.
(John Seiler is the Managing Editor for CalWatchdog. Originally posted on
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