Public “Servants”? Or Public Thieves?

Competitive Enterprise Institute's Iain Murray wrote the book on public thieves

“Public service” sounds like sacrifice: lower pay, fewer benefits, longer hours in a lousy job. This myth must be jettisoned before government can ever shrink. The greatest “special interests” fighting for a larger and larger state aren’t in the private sector–they’re in the government, and they’re called public sector unions. Here’s some useful information USA Today reported last summer:

Federal employees’ job security is so great that workers in many agencies are more likely to die of natural causes than get laid off or fired, a USA TODAY analysis finds. Death — rather than poor performance, misconduct or layoffs — is the primary threat to job security at the Environmental Protection Agency, the Small Business Administration, the Department of Housing and Urban Development, the Office of Management and Budget and a dozen other federal operations. The federal government fired 0.55% of its workers in the budget year that ended Sept. 30 — 11,668 employees in its 2.1 million workforce. Research shows that the private sector fires about 3% of workers annually for poor performance.

It’s actually worse than this because almost most of the “fires” were in the first two years of employment, which indicates that even those fires weren’t for performance. When the federal government fires people, it’s mainly due to a budget crunch, and they let go the last people hired. It’s even more absurd for highly-paid federal workers:

White-collar federal workers have almost total job security after a few years on the job. Last year, the government fired none of its 3,000 meteorologists, 2,500 health insurance administrators, 1,000 optometrists, 800 historians or 500 industrial property managers. The nearly half-million federal employees earning $100,000 or more enjoyed a 99.82% job security rate in 2010. Only 27 of 35,000 federal attorneys were fired last year. None was laid off. Death claimed 33.

What’s even more outrageous are the wages and benefits received by these workers who have complete job security. According to the Bureau of Labor Statistics, state and federal public sector workers make almost $7/hr more than their private sector counterparts in wages or salaries, and more than $5/hr more in benefits. All told public sector workers make $40.54/hr compared to $28.10 in the private sector. USA Today found that when compared directly to similar private sector workers by category (secretary, engineer, lawyer, etc.), public employees were actually earning double, $123,049 v. $61,051.

Many people responded to the USA Today report by arguing that public sector workers deserved higher wages because they were much more highly educated. In January this year, however, the Congressional Budget Office (CBO) debunked this fiction as well, showing that actually the least educated workers in the government were the most overpaid and the highest educated were actually underpaid. In fact, for every category except advanced degrees, public employees were overpaid. But once you consider that this last category includes many political appointees who are motivated mainly by power and not wealth, your empathy washes away. Worse, many in this high-category (lawyers, PhDs, etc.) go onto make double in the private sector as lobbyist with political connections.

If you want to understand where those federal stimulus dollars did to the federal government, check out these numbers from USA Today:

Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months — and that’s before overtime pay and bonuses are counted. The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available. When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.

All told the number of federal employees earning over $150,000/yr increased from about 7,500 in 2005 to over 82,000 in 2010–that’s some price inflation! It’s also no surprise that the more stimulus dollars a state received the more public sector workers those state had (both before and after).

These overpaid employees will soon bankrupt the government (or destroy the private sector instead). Consider that in 2008, Pew Center for the States found $1 trillion in unfunded pension and health care benefits for public sector retirees. Barron’s found in 2010 that the real number was actually double, $2 trillion. Later that same year, a paper by University of Chicago’s Robert Novy-Marx and NW University’s Joshua Rauh found unfunded liability only for the states totaling at least $3.2 trillion, but could be as high as $5.2 trillion. Rauh and Novy-Marx’s numbers are probably actually more reasonable given that they didn’t simply assume the rate of returns the pension funds claimed they would receive. Baron’s pointed out:

Most public employees, if they hang around to retirement, can count on pensions equal to 75% to 90% of their pay in their highest-earning years. And many public employees earn even more in retirement than their best year’s base compensation as a result of “spiking” their last year’s income by working ferocious amounts of overtime and rolling in years of unused sick and vacation days into their final-year pay computation. A survey by the watchdog group California Foundation for Fiscal Responsibility found that some 15,000 Golden State public employees are knocking down $100,000 or more.

In other words, thousands of public employees will retire early (earlier than their private sector counterparts) and continue to make almost $100,000 each year off the backs of the taxpayer for doing absolutely nothing. It’s why my CEI colleague Iain Murray wrote a book called Stealing Us Blind: How Government Fat Cats Are Getting Rich Off You. These fat cats might be stealing us blind, but it’s time somebody at least tried to open their eyes.

Most of the information here was taken from citations in this speech by Reason’s Adrian Moore