Salary Explosion in the Public Sector

Joel Bowman at The Daily Reckoning caught our attention just before Xmas with a piece about private and public sector salaries. We can’t really add much to what Joel told us-"Data from Cato Institute of Federal Pay Vs Private (i.e. taxpayers) shows federal pay and benefits in 2008 of $119,982 vs. $59,909 private industry. Twice as high! And, the gap is growing fast. A decade ago, the average federal civilian employee earned 66% more in wages and benefits than the average private taxpayer. Today, it is double. In 2009 Federal Government budget for wages is up 3%, while private employees are losing their jobs and pay is being reduced. And, state and local town employees are paid about 35% more than private taxpayers. The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA Today analysis of federal salary data. Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession's first 18 months - and that's before overtime pay and bonuses are counted. Federal workers are enjoying an extraordinary boom time - in pay and hiring - during a recession that has cost 7.3 million jobs in the private sector. "The highest-paid federal employees are doing best of all on salary increases. Defense [sic] Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available. "When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000." Like Joel we fail to see how this can be reconciled with any kind of ‘sound money’ approach. 

As Moonraker’s Jeremy Charlesworth recently added to MBMG clients, “economies do best with good regulation and small government. Sadly, we seem to get bad regulation and big government lately”