The Corner

Government vs. Private Employee Compensations

Are public workers “overpaid, underpaid or just right?” The Atlantic’s Megan McArdle explains the question:

I don’t think of state employment as a way to create, in miniature, my ideal labor utopia. I think of it as a way to procure services. I define people as being “overpaid” not if they are paid more than someone with a similar level of education, but if they are paid more than I need to entice to pay to attract adequate workers. To analyze that, looking at medians is probably somewhat more instructive than looking at means.

Of course I agree with Manzi that this still doesn’t really tell us whether state workers are overpaid, underpaid, or just-right-paid.  I suspect that the answer is probably “both” — adjusting for worker quality, the median government worker is probably overpaid, while in skilled specialties, salaries are probably not attracting as much of the top-flight talent as we’d ideally like.

Over at the Wall Street Journal, AEI’s Andrew Biggs and the Heritage Foundation’s Jason Richwine continue the debate by looking at some of the problems with studies like the one conducted by Berkeley’s Center on Wage and Employment Dynamics, which concluded that Golden State public employees “are neither overpaid nor overcompensated.” Biggs and Richwine explain that once we take into consideration pension benefits, retiree health benefits, and job security, California public employees are compensated up to 30 percent more generously than similar employees in large private firms. (Interestingly, Richard Cohen of the Washington Post agrees that government pensions are “an obesity epidemic.”)

Predictable crises in government finances are overwhelmingly linked to pension problems (that’s true at the federal level, too), because that’s the area where there is the greatest difference between what is promised and the revenue collected to pay for what is promised. I don’t see how the system can be sustained without driving this country over the cliff. The question is whether we can move fast enough to reform it before it’s too late.

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Most Popular

Culture

Courage: The Greatest of Virtues

EDITOR’S NOTE: The following is Jonah Goldberg’s weekly “news”letter, the G-File. Subscribe here to get the G-File delivered to your inbox on Fridays. Dear Reader (Or Listener), As the reporter assigned the job of writing the article about all of Sidney Blumenthal’s friends and supporters told his ... Read More
Immigration

My American Dream

This morning, at 8 a.m., I did something I’ve wanted to do for as long as I can remember: I became an American. I first applied for a visa in early 2011, and since then I have slowly worked my way through the system — first as a visa-holder, then as a permanent resident (green card), and, finally, as a ... Read More
U.S.

The Gun-Control Debate Could Break America

Last night, the nation witnessed what looked a lot like an extended version of the famous “two minutes hate” from George Orwell’s novel 1984. During a CNN town hall on gun control, a furious crowd of Americans jeered at two conservatives, Marco Rubio and Dana Loesch, who stood in defense of the Second ... Read More