Jeff Jacoby
Public-sector pay, private-sector backlash
by Jeff Jacoby
The Boston Globe
January 27, 2010
http://www.jeffjacoby.com/6872/public-sector-pay-private-sector-backlash
LAST MONTH, the US economy shed another 85,000 jobs. It marked a miserable end
to a calamitous year in which an estimated 4.2 million American jobs were
liquidated, and the unemployment rate rose to 10 percent. In addition, more
than 920,000 "discouraged workers" left the labor force entirely, having given
up on finding work and therefore not included in official unemployment data.
Meanwhile, millions of Americans who do have jobs have been compelled to work
part-time or at reduced wages; many others have not seen a raise in years.
But not everyone is having a rotten recession.
Since December 2007, when the current downturn began, the ranks of federal
employees earning $100,000 and up has skyrocketed. According to a recent
analysis by USA Today, federal workers making six-figure salaries – not
including overtime and bonuses -- "jumped from 14 percent to 19 percent of
civil servants during the recession's first 18 months." The surge has been
especially pronounced among the highest-paid employees. At the Defense
Department, for example, the number of civilian workers making $150,000 or more
quintupled from 1,868 to 10,100. At the recession's start, the Transportation
Department was paying only one person a salary of $170,000. Eighteen months
later, 1,690 employees were drawing paychecks of that size.
All the while, the federal government has been adding jobs at a 10,000-a-month
clip. Between December 2007 and June 2009, federal payrolls exploded by nearly
10 percent. "Federal workers are enjoying an extraordinary boom time in pay and
hiring," USA Today observes, "during a recession that has cost 7.3 million jobs
in the private sector." And to add public-sector insult to the private-sector
injury, data from the Office of Personnel Management show the average federal
salary is now roughly $71,000 -- about 76 percent higher than the average
private employee earns. (If benefits are included, the disparity is even
greater.)
Needless to say, it isn't only at the federal level that government pay and
perks increasingly outstrip those in the private sector. In states and
municipalities across the country, public-employee pension costs are going
through the roof.
In Ohio, a joint reporting effort by the state's eight largest newspapers found
that even in a time of severe budget cuts, "one expense government leaders have
not cut is pensions for their workers." The annual public pension tab in Ohio,
currently $4.1 billion, is growing by around $700 million per year. "Retirement
incomes for the most experienced government employees top out at 88 percent of
their active-duty pay," writes James Nash of the Columbus Dispatch. "Unlike
most private-sector workers, whose retirement is driven by the strength of the
stock market and 401(k) plans, government employees' pensions are guaranteed."
Moreover, government retirees in Ohio enjoy taxpayer-provided health care, and
in many cases can retire at age 48. Especially egregious are the
"double-dippers" -- public employees who "retire" on a full pension while
returning to work and collecting a paycheck. In 2009, double-dippers were paid
nearly a billion dollars by Buckeye State public-pension systems.
Ohio is hardly unique. A public-pension tsunami is beginning to inundate
government budgets at every level. As more and more of taxpayers' earnings are
confiscated to fund outsize public-sector benefits, the backlash from the
private sector will only grow angrier and more intense.
"We are about to get run over by a locomotive," warned California Governor
Arnold Schwarzenegger in his State of the State address this month. Over the
past decade, he told lawmakers, pension costs for state employees swelled 2000
percent -- but revenues only increased 24 percent. The state has had to come up
with funds to close that gap -- funds diverted from "our universities, our
parks, and other government functions."
Public-employee unions fiercely defend their members' pay and pensions, of
course, but even labor-friendly Democrats are starting to acknowledge the
inevitable. "The deal used to be that civil servants were paid less than
private sector workers in exchange for an understanding that they had job
security for life," former San Francisco mayor and California Assembly speaker
Willie Brown recently wrote in the San Francisco Chronicle. "But we
politicians, pushed by our friends in labor, gradually expanded pay and
benefits . . . while keeping the job protections and layering on incredibly
generous retirement packages. . . . Talking about this is politically unpopular
and potentially even career suicide for most officeholders. But at some point,
someone is going to have to get honest about the fact."
A showdown is coming, and more likely sooner than later. Taxpayers will put up
with a lot, but their patience has its limits.
(Jeff Jacoby is a columnist for The Boston Globe).
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