In an August 30th piece, Forbes joins the discussion on public- vs. private-sector pay disparities, and offers a look at the consequences – current and future – should this trend continue.
By now, most Americans are familiar with the newly revealed statistics concerning federal pay. As we slept, as it were, our federal minders awarded themselves impressive pay/benefits increases that average out to $123,000 per year, compared with $61,000 in the private sector.
This is remarkable on its face considering that those of us in the private sector produce goods and services to earn our wages, while a federal government that lacks resources must expropriate our wealth in order to fund its own activities. To put it simply, federal employees have enjoyed larger average pay and benefits increases for nine straight years, and their benefactor has been us.
If it’s true that government workers are more educated and in possession of greater skills, then it’s also true that a still-difficult economic situation has been made more difficult by virtue of some of our best and brightest offering their skills to the inefficient government sector over the private economy. Their gain is the recessed economy’s loss.
It should also be remembered the perverse incentives that exist among federal workers. Not able to advance based on profits, and doing more with less, workers in the government succeed the more the bureaucracy they work for grows, the more lawsuits they win against private actors, the more regulations they impose, and the more fines/fees they lift from the increasingly empty hands of the average American taxpayer.
Not only are we fleeced to cover the rising pay and gold-plated benefits of federal workers, we’re essentially paying them to make our lives more difficult. The more they’re able to do so, the more they advance.
Contrary to the conventional wisdom suggesting that it’s our grandchildren that will pay the bill for an out-of-control government, the more realistic truth is that we’re paying the government tab right now through high, and soon to be higher taxes, along with reduced innovation and productivity in the for-profit sector thanks to Washington bidding limited human and financial capital away from the productive parts of the economy. We must always consider the “unseen,” and in this case it’s the wealth we won’t create and the companies that will not materialize thanks to the greedy hand of the federal government.
So while it’s surely bad news to find out that how well compensated our federal employees have come to be on our dime, the greater shame here is what this means for the U.S. economy as a whole. Washington is in hiring mode with our dollars, and we’re set to pay for its spendthrift ways through less capital formation, lower wages and reduced innovation.
Click here to read the entire article.
