Tag: bureau of labor statistics

Another Government Employee Bailout

President Obama is proposing giving the states another $50 billion. However, this would amount to another bailout for state and local government employees and their unions. The president claims that more deficit spending is necessary to sustain the nascent economic recovery. But the only thing the money would sustain is the excessive wages and benefits government employees enjoy at the expense of the private sector.

According to the Bureau of Labor Statistics, the average state and local government employee receives 45 percent more in total compensation per hour worked than the average private-sector employee. Perhaps we should cut generous government wages and benefits rather than putting the federal government further into debt?

Total compensation for state and local workers is more than $1.1 trillion a years. So loosely speaking we could simply cut compensation by less than five percent for state and local governments to save the $50 billion they are in need of.

Of more fundamental concern is the continued relegation of the states to being administrative outposts of the federal government. The employment of firefighters, teachers, and police officers is an issue for the states to be concerned with. However, so long as the federal government continues to overstep its constitutional bounds, the states will have little incentive to tackle issues like excessive employee compensation. State and local policymakers can avoid the hassle of taking on the government employee unions by cashing Uncle Sam’s checks instead.

As the following chart shows, federal aid to state and local governments has almost doubled in real terms over the past decade:

It’s not a coincidence that the states find themselves in a fiscal bind. The increasing dependency on the federal government has contributed to the states’ dereliction of duty when it comes to keeping their fiscal houses in order. As this essay argues, reviving fiscal federalism is critical to getting governments at all levels in the United States to clean up their fiscal messes.

Health Cost Projections to 2019: The Doc Fix Trick Again

Congressman Paul Ryan (R-WI) takes the President to task for cooking the books on projected health care costs, most egregiously with the “doc fix” – namely, assuming Medicare slashes physician payments by 21.3% this year and subsequently lets them fall continuously in real terms.

What nobody seems to have noticed is that the same phony “doc fix” taints the new “Health Spending Projections Through 2019” from Centers for Medicare and Medicaid Services (CMS).

Drew Altman, president and CEO of the Kaiser Family Foundation, tries to downplay the CMS forecast “that the public sector will start paying more than half of the nation’s health care bill starting in 2012, and that government spending will grow faster than private spending from 2009 to 2019 (an average of 7.0% per year vs. 5.2%).”

Worrying about such spending trends is a foolish “ideological battle over the role of government,” says Altman, because rapid increases in government health spending is “just the byproduct of economic and demographic trends” (recession and an aging population).   “Is government health spending out of control?” he asks; answering “NO” in capital letters.  “The report simply underscores the need to control health care costs in the public and the private sectors alike.”

On the contrary, the reason government health care spending is projected to slow down to 7% a year is, the CMS explains, “due principally to the 21.3% reduction in physician payment rates … mandated in current law.”

Putting aside such “doctored” projections, “health spending by public payers ($1.2 trillion) is projected to have grown much faster in 2009 (8.7 percent) than that of private payers (3.0 percent).”

That was not because of high inflation in costs of medical goods and services (which should not differ much between government and private payers), but because the government has only in recent years been heavily subsidizing health insurance for the unemployed and drug insurance for seniors, and actively expanding the enrollment of Medicaid programs which (being “free”) often lure people out of employer-sponsored plans.

What Congressional Democrats call “reform” is, in fact, much more of the same—more non-poor people getting Medicaid and other subsidies that are yanked away if you work too hard.

No, It’s Not Health Inflation

Describing  runaway entitlement spending as “health inflation” is terribly misleading (even when Rep. Ryan does it), because doing so confuses rising prices with rising utilization of medical goods and services by people who are insulated from actual costs by taxpayer-financed subsidies.

Government subsidies also raise costs to those using private insurance.  The CMS notes that 2009’s 4.6% increase “private health insurance premium spending per employee … resulted in part from an increase in the proportion of high-cost claims—many of whom have temporary COBRA coverage” [emphasis added], which is 65% financed by taxpayers.

By contrast, health inflation per se is projected to be 2.8% this year – comparable to other labor-intensive service industries and also down from 3.2% in 2009 and 3% in 2008.     Morevoer, “out-of-pocket spending is projected to have grown 2.1 percent in 2009, down from 2.8% in 2008.”

What about all the uninformed media fuss about health insurance companies supposedly “asking for” premium increases of “up to” 39%?

If President Obama really wanted to find out how quickly typical health insurance premiums have been increasing, he could have a staffer call the Bureau of Labor Statistics and ask for Table 3A of the “Consumer Price Index Detailed Report Tables Annual Averages 2009.”  It turns out the consumer price index for health insurance premiums fell by 3.2% in 2009.

No, the ‘Real’ Unemployment Rate Isn’t 17.3%

Nearly every economic commentator from Fox News (on the fair and balanced side) to Paul Krugman (on the unfair and unbalanced side) is eager to tell you that the “real” unemployment rate is not 10% but 17.3%.  The latter figure is the largest of six offered by the Bureau of Labor Statistics.   But that does not make it more meaningful.

Many people believe (incorrectly) that unemployment is a measure of how many jobs were lost.   But people can also be unemployed because they quit their job, or because they never worked before, or haven’t worked in a long time.  Job losers accounted for 63.7% of the unemployed in December, down from 66.1% in September.  If we counted only those who were unemployed because they lost their jobs, that measure of unemployment was 6.3% in December — down from 6.7% in October.

The 17.3% figure, by contrast, starts with those looking for jobs during the past month and adds “all marginally attached workers, plus total employed part time for economic reasons.”   That phrase “marginally attached” means people who looked for work at some point during the past year, but not lately. Contrary to press reports, relatively few of the “marginally attached” are those discouraged about job prospects.  Adding discouraged workers would only push the unemployment rate up by half a percentage point, to 10.5%.   And even that small number of discouraged workers is not simply those who could not find work, but those who simply “think” no work is available, or think they are too young, too old, or that they lack the necessary schooling or training.

The rest of the “marginally attached” don’t even think they can’t find work.  Instead, they are not looking for work “for such reasons as school or family responsibilities, ill health, and transportation problems.”  To describe such people who are not available for work as “underemployed” (much less unemployed) is an abuse of the language.

As for those “working part-time for economic reasons,” only a fourth say they could only find part-time work.   Those who normally work a 9-to-5 schedule (35 hours a week) are counted as working part-time for economic reasons if they miss even one hour “for reasons such as holidays, illness and bad weather.”   That isn’t really underemployment, much less “real” unemployment.

What is unique about last year’s unemployment was its typical duration — doubling the number of weeks people remain on the dole.   Because those who have been unemployed 12–18 months do not leave the ranks of the unemployed until their benefits are about to run out (after an unprecedented 79 weeks or more), it doesn’t take many newly unemployed to push the rate above 10%.  Congress tripled the number of weeks people collect unemployment benefits (describing that and other transfer payments as a  “stimulus”) and now wonders why so many people take so long to accept a suitable job offer.   If you subsidize something, you get more of it — and that applies to unemployment too.   Many of those same clueless  legislators may be equally surprised to find themselves out of a job next November.

Perceptions of Government Pay

A new poll by Rasmussen finds that the general public has an accurate assessment of government worker pay.

Compared to the average government worker, most Americans think they work harder, have less job security and make less money.

In fact, 59% of Americans say the average government worker earns more annually than the average taxpayer, according to the latest Rasmussen Reports national telephone survey. Just 15% don’t believe that to be true, while another 26% are not sure.

Among those who have close friends or relatives who work for the government, the belief is even stronger: 61% say the average government worker earns more than the average taxpayer.

Feeding that belief is the finding that 51% of all adults think government workers are paid too much. Only 10% say they are paid too little, while 27% say their pay is about right.

Bureau of Labor Statistics data indeed shows that government workers work fewer hours in a year and have much higher job security than private sector workers. And I’ve argued that they are generally overpaid, and by increasing amounts.

For more, check out:

Those Who “Serve” Us Celebrate

adamsThose who think that the college-educated, or soon to be so, should have more and more of their education funded by taxpayers – whether those taxpayers themselves attended college or not – are shooting off the fireworks a bit early this year, celebrating increasingly generous federal aid going into effect today.

Perhaps the most galling part of all the increasingly free-flowing aid is how much is being targeted at people who work in “public service.” Ignoring for the moment that the people who make our computers, run our grocery stores, play professional baseball, and on and on are all providing the public with things it wants and needs, to make policy on the assumption that people in predominantly government jobs are somehow selflessly sacrificing for the common good is to blatantly disregard reality.

Consider teachers, as I have done in-depth. According to 2007 Bureau of Labor Statistics data, adjusted to reflect actual time worked, teachers earn more on an hourly basis than accountants, registered nurses, and insurance underwriters. Elementary school teachers – the lowest paid among elementary, middle, and high school educators – made an average of $35.49 an hour, versus $32.91 for accountants and auditors, $32.54 for RNs, and $31.31 for insurance underwriters.

So much for the notion that teachers get paid in nothing but children’s smiles and whatever pittance a cruel public begrudgingly permits them.

How about government employees?

Chris Edwards has done yeoman’s work pointing out how well compensated federal bureaucrats are, noting that in 2007 the average annual wage of a federal civilian employee was $77,143, versus $48,035 for the average private sector worker. And when benefits were factored in, federal employee compensation was twice as large as private sector. But don’t just take Chris’s word and data to see that federal employment is far from self-sacrificial – take the Washington Post’s “Jobs” section!

And it’s not just federal employees or teachers who are making some pretty pennies serving John Q. Public. As a recent Forbes article revealed, it’s people at all levels of government, from firefighters to municipal clerks:

In public-sector America things just get better and better. The common presumption is that public servants forgo high wages in exchange for safe jobs and benefits. The reality is they get all three. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector’s $19, according to Bureau of Labor Statistics data. Throw in pensions and other benefits and the gap widens to 42%.

Recently, my wife and I have been watching the HBO miniseries John Adams, and I couldn’t help but make the observation: In Adams’ time, many of those who served the public truly did so at great expense to themselves, often risking their very lives and asking little, if anything, from the public in return. Today, in contrast, many if not most of those who supposedly serve the public do so at no risk to themselves – indeed, unparalleled security is one of the great benefits of their employment – but are treated as if their jobs are extraordinary sacrifices. And so, as we head into Independence Day, it seems the World has once again been turned upside down: In modern America, the public works mightily to serve its servants, not the other way around.

Teachers in the Money

A few months ago, I wrote a report that busted two pervasive education myths: that student loan burdens are crushing recent graduates, and that teachers get paid peanuts. In the paper, I itemized first-year public school teacher salaries in districts around the country, and pointed to Bureau of Labor Statistics research showing that teachers work significantly less time for their salaries than do most other professionals. Even accounting for time teachers work beyond their contracted hours – grading papers at home, meeting with students after school, etc. – teachers work on average 18 fewer minutes a day than other professionals. And that figure does not include summer and other vacations – it is only for the contracted school year.  Perhaps most important, at least when it comes to earnings, I noted that that free time can be used to pursue additional employment.

After making my point about how much time teachers work for their salaries relative to other professionals, and noting that teachers can make more bucks with the extra time they have available, I pursued the point no further. But a New York Post article today shows just how much overtime pay intrepid public school teachers, at least in New York City, can make.

At the top end, a teacher at the High School of Telecommunication Arts and Technology made $60,000 developing a data analysis system for numerous schools. That brought his total compensation to $141,159 for 2007-08. A teacher at Chelsea Career & Technical Education HS took in $52,001 of OT teaching night classes at another high school, bringing his total earnings to $152,050 (his base salary was $100,049).  And the Post offers several other examples.

Now, some people will read this blog entry as an attack on the big earners in NYC and teachers generally. They will be wrong: What these teachers did to earn their extra dollars might have been worth every penny, I don’t know, and they very likely put in much more time than other professionals to earn all their dough.  This does, though, just strengthen the almost irrefutable point I made in my report: On an hourly basis, teachers get salaries comparable to other professionals, and the fact that teachers work many fewer hours to get those salaries gives them significant time to earn extra dough. Sometimes, a LOT of extra dough.