Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Ending Syria’s Nightmare will Take Pressure From Below - 29th Mar 17
Charts That Reveal US Real Employment Status and It’s Not Good - 29th Mar 17
SNP Controlled Scottish Parliament Demands Right for Scotland to Commit Suicide - Indyref2 - 29th Mar 17
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Pay Differential Between Private Sector and Government Workers

Politics / Government Spending Dec 12, 2012 - 04:01 AM GMT

By: BATR

Politics

A dreadful warning arises, when public sector employment pay and benefits outstrips the remuneration earned by the private employment workers. Even the most hardened government proponent, must succumb to the reality that private business generates real wealth that finances government through taxes. The expenditures of government on all levels are linked to the profitability of enterprises and sufficient margin that affords the ability to pay revenue levies. Thus, the proportion of wages between private enterprises and public employees has significant consequences.


Consider the coverage of that bastion of mainstream reporting CBS News when making a comparison in Does the Government Pay More than the Private Sector?

"Bureau of Labor Statistics data shows that federal employees in occupations that exist in both the public and private sectors made an average salary of $67,691 in 2008, USA Today reports. Meanwhile, private sector workers in those occupations made $60,046. Government data also shows federal workers received benefits valued at $40,785, compared with benefits valued at $9,882 for private sector workers."

Now on the surface this assessment is very plausible. Common sense, after the financial collapse in 2008, with the dramatic rise in private sector unemployment and reduced wages, federal employees are sitting pretty. Before the alarm bell sounds, deliberate over the assessments from friendly government sources.

The Congressional Research Center study on Comparing Compensation for Federal and Private-Sector Workers, has some interesting conclusions.

 

"Federal workers with less than a bachelor’s degree have on average a wage premium compared to private sector counterparts, while federal workers with post-graduate educational attainment experience a wage penalty relative to private sector counterparts.

As with wage differentials, the CBO study finds a declining benefit premium as educational attainment rises. That is, the benefit premium declines from 72% for federal workers with a high school degree or less to 2% for federal workers with a professional degree or doctorate. The CBO study finds an average benefit differential of 48% for federal workers compared to private sector workers."

The list of Pay Scales at TSA provides a departure from Federal employees because the TSA does not use the standard GS grading system. The TSA uses an "SV" grading system, which is a system of discrete grades with pay ranges that differ from GS pay ranges. Civil Service work rules and pay scales have long rejected any direct relationship with productive results. However, in the conflicted thinking of Washington speak the President extends federal pay freeze. Note that a reduction in wages and benefits is an unknown thought, even in a collapsing economy.

"The freeze will stay in effect until a spending plan is passed, but the presidential election makes it unlikely that will happen before the start of fiscal 2013 on Oct. 1. As a result, the president is required by the end of August to come up with an "alternative pay plan" to avoid a legal trigger that would automatically raise federal pay in line with private-sector salaries.

In a letter to House and Senate leaders, the president reiterated his support for ending the pay freeze with a 0.5 percent raise, to take effect Jan. 1, 2013, that he proposed early this year.

"Civilian federal employees have already made significant sacrifices as a result of a two-year pay freeze," Obama wrote. "As our country continues to recover from serious economic conditions affecting the general welfare, however, we must maintain efforts to keep our nation on a sustainable fiscal course. This is an effort that continues to require tough choices and each of us to do our fair share."

OK, we have all heard enough of that "fair share" mantra. Now the banner carriers of Big Government raise their ugly heads and reveal their real motives in The truth about federal salary numbers.

"The Federal Salary Council, an advisory body of academics and leaders of public employee unions, suggested last month that federal workers are underpaid by an average of 35 percent relative to nonfederal employees. The council’s data come from the "President’s Pay Agent," the bureaucratic entity that conducts the federal government’s annual pay comparison.

If these figures are to be believed, federal employees are paid only 65 cents for every dollar received by nonfederal employees doing the same work. Put another way, the average federal employee who shifts to a job outside government would increase his salary by 54 percent."

Weak private sector employment persists. Wages are stagnant or regressive. New jobs are sporadic, at best. Prospects of a prosperous recovery are slim. Government dependency seems like the only growth occupation. No bureaucratic study or public union advocacy changes the facts that the private enterprises are fighting a rear guard effort to subsist.

With the election of President Obama to a second term, the reigns of restraint on public agencies and expenditures are non-existent. Democratic Leader Nancy Pelosi says ‘No Time To Waste’ On National Debt is a factual appraisal of the attitude that drives the disparity between employment in enterprises that have to earn their way to profits and public agencies that are protected from the harsh consequences of a balanced budget. "We look forward to hearing from voices across the private sector as we work together to reach a balanced agreement," said Pelosi.

The relationship equilibrium between the private and public spheres is out of line. More government spending never generates a genuine economic recovery. Making matters worse, the prospects of a rise in government salaries only exasperates the problem. The need for a true dramatic across the board reduction in federal agency budgets is the proper response. Private businesses understand the need to scale back in a depressed economy in order to survive. In spite of this certainty, the federal government operates as if their ranks are the new and only economy.

In an age of disappearing private pensions and job security, why allow "public servants" to dominate the job market because of odious taxpayer subsidies. The current pay differential between the free market and the federal bureaucrat guarantees a marginal economy at best.

James Hall – December 12, 2012

Source : http://www.batr.org/negotium/121212.html

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2012 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

BATR Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife