Public sector jobs - not just a US problem

"It was the best of times, it was the worst of times"
- A Tale of Two Cities by Charles Dickens

Instead of two cities the Dicken's quote now applies to a tale of two working classes - a state sector awash with taxpayers' cash while the rest of the economy struggles to stay afloat. A recent study by centre-Right think tank Policy Exchange shows that Public employees in the UK work nine years less than their private sector counterparts AND are paid 30 per cent more.

Those in the private sector work 23 per cent longer - equivalent to an extra nine years and ten weeks - than public sector employees. This is thanks to a combination of shorter hours, more time off and earlier retirement for public workers. Now it used to be that these public benefits compensated for lower pay. You had to offer something to encourage talent to give up high paying private jobs and work for the state instead. But today the public sector has better benefits AND better pay. The report says that on an hourly basis, the typical public sector worker is 30 per cent better paid than their private sector counterpart.

And the retirement pensions are quite generous for public workers. Ironically when 63% of the private sector workers retire without any pension at all, they will still be taxed and paying for a comfortable retirement for civil servants.

Bottom Line

In many countries the fox is in charge of the hen house. The government pays itself well and when the money runs out it will raise taxes or just print more money. In the US I expect the problem to continue until we reach the status of Greece and Spain where public sector expenses bankrupt the nation.

The New Ruling Class

“People who are supposed to serve the public have become a privileged elite that exploits political power for financial gain and special perks. Because of its political power, this interest group has rigged the game so there are few meaningful checks on its demands. Government employees now receive far higher pay, benefits, and pensions than the vast majority of Americans working in the private sector. Even when they are incompetent or abusive, they can be fired only after a long process and only for the most grievous offenses.” - Steven Greenhut

When people speak of "the ruling class" they usually refer to wealthy CEOs or other private individuals. But in the article, Class War: How public servants became our masters, published on http://reason.com/, Steven Greenhut describes how public servants are now "the ruling class" with little hope of change. They give themselves perks, top pay, great pensions, and keep hiring more staff. For example, if Obama Healthcare is passed, there will be 183 new government boards mandated by law. Greenhut explains,

Bigger government means more government employees. Those employees then become a permanent lobby for continual government growth. The nation may have reached critical mass; the number of government employees at every level may have gotten so high that it is politically impossible to roll back the bureaucracy, rein in the costs, and restore lost freedoms.

Consider,

The United States had 2.3 state and local government employees per 100 citizens in 1946 and has 6.5 state and local government employees per 100 citizens now. In 1947, Hodges writes, 78 percent of the national income went to the private sector, 16 percent to the federal sector, and 6 percent to the state and local government sector. Now 54 percent of the economy is private, 28 percent goes to the feds, and 18 percent goes to state and local governments.

Since 1946 the population of the US has increased by 115%. The number of state and federal workers has increased 492% over the same time period. A large government is not sustainable as California and Illinois have learned. Both states are bankrupt and unable to pay its bills. A significant portion of the bill is pensions to public servants. See the article for examples of pension abuses.

Bottom Line

“It’s a two-tier system in which the rulers are making steady gains at the expense of the ruled. The predictable results: Higher taxes, eroded public services, unsustainable levels of debt, and massive roadblocks to reforming even the poorest performing agencies and school systems. If this system is left to grow unchecked, we will end up with a pale imitation of the free society envisioned by the Founders.”

Update

Here's a chart showing the increase in Federal spending, not in total dollars, or inflation adjusted dollars, but as a % of the National Gross Domestic Product. In 1960 the government spent 17-18% of all dollars created through private industry. The percentage now is 25-26%.

Related Stories

MICHAEL BARONE: Public-sector Unions Bleed Taxpayers.
Recession Chugs On, Except In Government.

CHANGE: Unionized Rhode Island Teachers Refuse To Work 25 Minutes More Per Day, So Town Fires All Of Them. “The teachers at the high school make $70,000-$78,000, as compared to a median income in the town of $22,000. This exemplifies a nationwide trend in which public sector workers make far more than their private-sector counterparts (with better benefits).”

UPDATE: Public Workers Feel No Pain In Recession.