The U.S. Bureau
of Labor Statistics reported that state and local government employee
total compensation is now 47 percent higher than for private-sector employees.
Total
compensation for federal, state, and local government employees cost
taxpayers $1.9 trillion in 2016, or about $15,176 per
household. Although a 2010 study by
the Bureau of Labor Statistics (BLS) found full-time private industry workers
worked an average of 12
percent more hours per year than state and local government workers,
private-sector workers on average make less in every category.
Most
Americans are under the impression that the $50.03 average total hourly
compensation for state and local employees versus the $34.53 an hour for
private-sector employees is due to public-sector defined benefit pension costs.
BLS hourly
data reveals that state and local government employees receive $18.80
in benefits compared to $10.48 for the private sector, a spread of $8.32 or 79
percent more. But state and local employee hourly wages and salaries
average $31.23
versus $24.06 for private-sector employees, a spread of $7.17 or 30
percent more. That means that public-sector paychecks are also 29
percent higher than private-sector paychecks.
When
confronted with the fact that public-sector workers make tremendously more than
the average working taxpayer, progressives claim that the lower private-sector
worker "average" hourly wages and salaries are due to businesses paying
their top 10 percent of executives disproportionally more than public-sector
managers to do similar work. But the BLS
reported that per hour wages and salaries for the top 10 percent of
state and local employees were $53.54 versus $45.08 an hour for the top 10
percent for the private sector, a spread of $8.46 or 16 percent bigger
paychecks for public-sector managers.
The
highly lucrative pay for public-sector workers comes despite state and local
governments' near-death experience during the 2008 to 2012 "Great
Recession." The Brookings Institution found that during
the first 18 months of recession, state income tax collections
plunged by 27 percent, and total state tax collections tanked by 17 percent.
The American Recovery and Reinvestment Act of 2009
directed about $145 billion in federal cash to state and local governments for
general fiscal relief. But despite the largest government bailout in
history, the Obama administration saw just 2 percent annual economic growth
from the bottom of the recession in mid-2009, the slowest economic expansion on record. As a
result, Pew Research analysis demonstrated that after inflation, only 34
states' revenues
have recovered from recession levels.
Moody's
Financial Services warned that state and local government credit
ratings are still lower than before the recession. Furthermore, the
"new normal" is expected to be "uneven economic recovery and
tepid growth, rising deferred maintenance, higher fixed costs, and changing
demographics as populations age or relocate."
State
and local spending of $3.8 trillion this year is rapidly approaching the
$4.4 trillion in federal spending. The risk of default for the federal
government is very low, due to Congress's right to pass deficit budgets and
print unlimited amounts of dollars. But almost all states require
their municipal and local entities to pass balanced budgets.
The
BLS analysis of state and local governments' highly inflated wage structures
coincides with the release of Duke University's year-end CFO Global Business Outlook that found that after a
near-decade-long burst of global economic growth: "Nearly half (48.6
percent) of U.S. CFOs believe that the U.S. will be in recession by the end of
2019, and 82 percent believe that a recession will have begun by the end of
2020."
If
the coming recession is like the 2008-2012 event, annual state and local tax
revenue might fall by about $1 trillion in the first 18 months of the
downturn. Congress has the authority to pass another
multi-trillion-dollar ARRA bailout, but the probability of such action is low
after President Obama's 2009 state and local government rescue contributed to
the Democrats' 2010 epic loss of seven Senate seats and 65 House seats.
