Topic: Government and Politics

State and Local Workers Retain Advantage

The Bureau of Economic Analysis has released its annual data on employee compensation by industry. (See tables 6.2, 6.3, 6.5, and 6.6).

The new data for 2006 show that the nation’s 16 million state and local government workers earned an average $61,727 in total compensation (wages plus benefits). That is 11 percent more than the $55,470 average earned by U.S. private sector workers.

Looking just at wages, state and local workers earned an average $46,937, which is similar to the $45,995 average earned by private sector workers. Thus the primary state and local advantage is the generous fringe benefits.

The figure below shows that the state and local worker advantage has remained fairly constant since at least 1990. Private pay boomed in the late-1990s, but state and local pay has grown faster this decade.

Source: Chris Edwards, Cato Institute, based on Bureau of Economic Analysis data

For those interested in the welfare of teachers, the BEA data shows that teacher compensation has closely tracked the overall state and local average since 1990. The average compensation in state and local education in 2006 was $62,371

State and local workers are not paid as well as federal workers, on average, but they usually receive similar generous fringe benefits including high job security, and lucrative pension and health care plans.

Another Government Shutdown?

In Wednesday’s OpinionJournal.com Political Diary, John Fund writes that House minority whip Roy Blunt told reporters that he believes President Bush will deliver on his threat to veto the budget bills currently working their way through Congress. And with enough Republicans on record agreeing to uphold the veto, Blunt suggests we might end up witnessing a government shutdown later this year.

As you might recall from the mid-1990s, a federal government shutdown does not mean that every federal agency stops whatever it is they are doing. It’s only the non-essential ones that grind to a temporary halt – and, yes, there is an official definition of what constitutes essential government functions: mainly law enforcement and defense. That Congress continues to fund everything else is what keeps policy wonks like me busy.

Maybe Blunt’s statements are the opening gambit in a political game of chicken. There might be little interest in a government shutdown among the Democratic leaders in Congress. So the follow-up to an upheld Bush veto would likely be a compromise stop-gap measure (like a “continuing resolution” that puts the government on auto-pilot for the rest of the fiscal year) that results in much less spending than would otherwise occur in the course of an unimpeded appropriations cycle.

In either case, those of us who prefer divided government might have another example to add to our growing “Great Moments in Gridlock” list.

Is Federal Pay Too High?

Chris Edwards writes below that the gap between federal pay and private-sector pay continues to widen, with federal employees now making more than twice as much as private employees. Meanwhile, a congressional committee is holding hearings on whether federal employees are underpaid or overpaid. Do you think they’ll hear testimony about why federal employees make twice as much as private-sector workers? Or about the fact that federal quit rates are far lower than private-sector quit rates, suggesting that most federal employees are pretty satisfied?

New Federal Pay Data

The Bureau of Economic Analysis just released its annual data on employee compensation by industry. (See tables 6.2, 6.3, 6.5, and 6.6).

The new data for 2006 show that 1.8 million federal civilian workers earned an average $111,180 in total compensation (wages plus benefits). That is more than double the $55,470 average earned by U.S. workers in the private sector.

Looking just at wages, federal workers earned an average $73,406, which is 60 percent greater than the $45,995 average earned by private sector workers.

Average federal pay has soared in recent years, growing much faster than private sector pay between 2001 and 2005. However, federal pay growth slowed in 2006, while private sector pay accelerated. As a result, average compensation for federal civilians grew 4.0 percent in 2006, compared to the average in the private sector of 4.2 percent.

Hopefully, federal pay increases will continue slowing to help relieve the soaring taxpayer costs of federal workers. I’ve proposed freezing federal pay to help reduce the deficit and privatizing expensive activities such as air traffic control.

The BEA data show that compensation for federal civilian workers cost taxpayers $203 billion in 2006, up from $145 billion in 2001 when President Bush took office. (The costs of military compensation have grown even more rapidly, from $98 billion in 2001 to $156 billion in 2006).

The acceleration of federal compensation is clear in the figure below covering 1990-2006.

Source: Chris Edwards, Cato Institute, based on Bureau of Economic Analysis data

For further information, see

http://www.cato.org/pub_display.php?pub_id=6611

http://www.cato.org/pubs/tbb/tbb-0605-35.pdf

(Data note: The BEA data for number of employees is measured in full-time equivalents.)

The Airborne Version of the Post Office/Department of Motor Vehicles

Don Boudreaux’s Cafe Hayek Blog is always worth reading, but his recent complaint about the snail-like pace of passport control struck a raw nerve since I also travel frequently. Don makes the point that it is foolish for people to want government to take over health care when it is so incompetent at everything it does. That is a very valid point, but it understates the case. Passport control (and also security screening) should be incredibly simple. Data on flight schedules and passenger density is easily available. Yet somehow the bureaucrats are incapable of having staff on duty during peak times. So if this relatively easy task is beyond the ability of the bureaucracy, then something more complex like health care surely will turn into a disaster when placed in the hands of government:

The reason we missed our flight is that nearly 50 minutes of our time after landing was consumed by waiting in a long and slow-moving line to clear passport control.  At that terminal on Friday evening, the TSA had only three agents to service the line of U.S. citizens returning from abroad.  Three.  That’s it.  Most of the passport-control-agent booths stood empty.

Still No Consensus

A headline in the Washington Post (the actual newspaper, not the online version) reads:

Montgomery Still Lacking Consensus on Growth Policy

The article explains that officials in Montgomery County, Maryland, are having trouble agreeing on rules for limiting economic growth while leaving room for development. “I don’t think there is consensus on much of anything at this point,” said County Council member Nancy Floreen.

One reason that there’s no consensus, of course, is that there’s no consensus. The county’s 900,000 residents don’t all agree on who should be allowed to build new homes and businesses, who should have their property rights limited, who should pay the bills, and so on. This is why Hayek said that planning was not compatible with liberal values. The only values we can agree on in a big diverse society, he wrote, are “common abstract rules of conduct that secured the constant maintenance of an equally abstract order which merely assured to the individual better prospects of achieving his individual ends but gave him no claims to particular things.” That is, you set up property rights and the rule of law, and you let people run their own lives without being allowed to run other people’s lives. Try to go beyond that, and you’re going to infringe on freedom.

As I wrote a few months ago, another newspaper story reported

“As a consensus builds that the Washington region needs to concentrate job growth, there are signs that the exact opposite is happening.

Over the past five years, the number of new jobs in the region’s outer suburbs exceeded those created in the District and inner suburbs such as Fairfax and Montgomery counties … contradicting planners’ ‘smart growth’ visions of communities where people live, work and play without having to drive long distances.”

Maybe if tens - hundreds - of thousands of people aren’t abiding by the “consensus,” there is no consensus: there is just a bunch of government-funded planners attending conferences and deciding where people ought to live. It’s like, “Our community doesn’t want Wal-Mart.” Hey, if the community really doesn’t Wal-Mart, then a Wal-Mart store will fail. What that sentence means is: “Some organised interests in our community don’t want Wal-Mart here because we know our neighbours will shop there (and so will we).”

In her book It Takes a Village, Hillary Clinton calls for “a consensus of values and a common vision of what we can do today, individually and collectively, to build strong families and communities.” But there can be no such collective consensus. In any free society, millions of people will have different ideas about how to form families, how to rear children, and how to associate voluntarily with others. Those differences are not just a result of a lack of understanding each other; no matter how many Harvard seminars and National Conversations funded by the National Endowment for the Humanities we have, we will never come to a national consensus on such intimate moral matters. Clinton implicitly recognizes that when she insists that there will be times when “the village itself [read: the federal government] must act in place of parents” and accept “those responsibilities in all our names through the authority we vest in government.”

Governments would do better to set a few rules of the game and let market enterprises respond to what people really rather than try to push people into conforming to planners’ visions and phony consensuses.