Government Workers Make 45 Percent More Than Private Sector Employees

A new report from the Bureaus of Labor Statistics that was released today, shows that almost 15 million Americans are currently out of work and unable to find jobs. Worse still, those with jobs have not seen their wages increase much in the last 10 years. However, government workers are enjoying a boom in hiring and generous salary increases thanks in large part to very cushy pensions and other benefits.

The pay differential between public sector employees and the private sector shows a troubling trend. Government workers have benefited greatly, even during the severe recession, and their wages now outpace the employee compensation in private industry. According to recent research done by Mark J. Perry, professor of finance and economics at the School of Management of the University of Michigan government employees make on average 45% more than private sector employees.

state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits) for total employee compensation in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits). In other words, government employees make 45% more on average than private sector employees.

According to another BLS report, compensation for private industry workers has increased by 6.9% between December 2006 and December 2009, compared to a 9.8% increase for government workers (state and local) over the same period.

Meanwhile, the unemployment situation in the US progressively deteriorates with few signs of improvement. Finding a job for ordinary Americans has gotten much harder. Forbes summarizes the many problems workers still face:

Finding a job got much tougher last year, as the number of available openings fell by nearly one quarter.

At the same time, the unemployed population soared by more than one-third, leaving more laid-off workers competing for fewer jobs.

All told, there were 6.1 unemployed workers in December, on average, for every available position, according to Labor Department data released Tuesday.

That’s a sharp increase from 3.4 jobless workers per opening in December of 2008, and much worse than the 1.7 unemployed people per opening in December 2007, when the recession began.

That may seem like a lot given the severity of the recession, but that’s down from 3.2 million in December 2008. And it’s way below the 4.8 million openings that existed in June 2007, the peak reached before the recession.

The U.S. economy has lost approximately 8.7 million jobs since November 2007 when a high of 146,483,000 jobs was reached. As of January 2010 the U.S. had barely over 137 million private sector jobs. From the CyberEconomics blog we get this depressing information:

The number of employed (total jobs) dropped by 589,000 from Nov to Dec. Most did not move to unemployed but dropped out of the labor force. In the past year, (December to December) 5,390,000 jobs have been lost–that is drop in the number of employed. However, there is some good news–the October unemployment rate was revised from 10.2% to 10.1%.

The labor force participation rate has dropped from 66.5% in December 2008 to 64.6% in December 2009. As people lost jobs, many left the labor force. If they had stayed in, being counted as unemployed, the unemployment rate would be 11.6%.

Given the lack of real economic leadership, virtually no free-market policies coming from the White House, coupled with aggressive taxation and anti-business policies from the Obama administration and the Democrats in Washington, there is little hope that job losses will abate any time soon. Things may even get worse. Dark clouds are on the horizon for the American workers.

On the other hand, government workers are enjoying their amazing good fortune, richly rewarded with our tax dollars by career politicians who seem to have forgotten their oaths of office and constitutional responsibilities. We get to sacrifice and they get all the benefits of power. The political elites in DC keep thinking they can have their cake and eat it too, while the American taxpayers have to make do with the crumbs left over from the government lavish feasts and perpetual bailouts of the unions, failed car companies, failed banks, failed programs, etc..

I believe they’re in for a big surprise come November 2010.


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