Are Government Employee Salaries Too High?

Recently at one of the local city pools, a woman began loudly complaining about the young staff not caring much about their work. She zoomed in immediately on all 20 million government workers in the US. All government workers, she said are overpaid and don’t work. The government is run by “fat cats,” she ranted.

Well, let’s look at that claim. Do you agree government employee salaries are too high? The President of the United States gets paid $400,000 a year to run the biggest economy in the world. And he pays taxes on that amount! This is the man who decides whether he should push the button if that red phone (that we saw so much of in the ads during the last Presidential election) rings in the middle of the night.

$400,000 for a job guaranteed to turn your hair gray in four years?

And mind you, while the President gets $50,000 tax-free for expenses, he gets no big fat million dollar bonuses. Moreover, the President’s pension is currently estimated at $199,700 per year.

Salaries for the Vice President, legislators, and judges are lower than the President’s salary.

What about government bureaucrats’ salaries?

What about the “fat cats” at the top of the civil service bureaucracy? They average $74,839 – 128,171.  You can look it up for yourself at PayScale.

How do these salary figures compare to the salary paid to CEOs and other top officials of companies?

“A chief executive officer of a Standard & Poor’s (S&P) 500 index company was paid, on average, $9.25 million in total compensation in 2009.” (AFL-CIO Executive PayWatch).

Pay for all of our top federal government officials is adjusted each year by about 2-3%. Look online and you’ll see CEOs who regularly get increases in the 40% range! A far cry from 2%!

What about the average civil service worker?

You’ll see many sites online with headlines screaming about civil servants salaries being too high. For example, one article in USA Today claims: “Federal workers earning double their private counterparts“.

“Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available.”

The government’s Bureau of Labor Statistics, the source used most often by economists, also gives 2009 statistics. These are quite different.

“In March 2009, the average earnings for full-time Federal employees were $74,403.”  (See table 5 in the Earnings section)

The difference between these two federal bureau statistics could be explained by the inclusion of benefits by the Bureau of Economic Analysis. The Bureau of Labor Statistics (BLS), on the other hand, is only citing salaries. If private sector salaries are indeed half of federal employee salaries, full-time private sector employee salaries would average $37,202.

But the BLS believes that the private and public sectors should not be compared.

Comparing private and public sector data

“Compensation cost levels in state and local government should not be directly compared with levels in private industry. Differences between these sectors stem from factors such as variation in work activities and occupational structures. Manufacturing and sales, for example, make up a large part of private industry work activities but are rare in state and local government. Management, professional, and administrative support occupations (including teachers) account for two-thirds of the state and local government workforce, compared with two-fifths of private industry.” (Employer Costs for Employee Compensation – September 2010, page 4)

Thus, the BLS is saying that salaries may be higher in public service than in private industry, but the skills required are different.

The bottom line

The bottom line is that salary comparisons are not the real issue here! One has to think about who is responsible for the lower salaries paid in the private sector. IT IS NOT THE US GOVERNMENT! It is the private-sector employees’ own bosses. How can we have CEO’s and top officers of corporations making tens of millions of dollars while their employees make so little?

As I listened to the lady at the pool, I couldn’t help but think of older relatives I grew up with talking about black people. In fact, some of the same people I grew up with who stereotyped black people are now doing the same to government employees.

One has to ask, who is really benefiting the most from all this public-service-employee bashing? Who thinks the rich who earn millions each year should get more while everyone else gets less? Who dreams that pulling down government employee salaries will help them make more?

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NOTE:  Tune in for my new new series, “The Word” for the day! Look for it beginning on the Ides of March – right here on Brucenomics!


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