Wikinvest Wire

Mind the private/public sector pay gap

Friday, March 05, 2010

This data is more than a year old and has undoubtedly gotten worse in the interim, all the more reason why it may be a rude awakening for many elected officials this November as more and more voters come to learn about the widening gap between public and private sector compensation and benefits as detailed in this report in USA Today.

Federal pay ahead of private industry
Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.

Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.

Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.

These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.
Someone will have to refresh my memory about how this isn't really as it appears. If memory serves, this subject was broached here some time ago and there were a few gubment workers who disagreed with the numbers for some reason.

During my working career, I always thought of private versus public sector work as being a trade-off between higher pay and better job security with slightly better benefits.

Now it looks as though you get all three.

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Anonymous said...

They do get all 3, compared to the median worker. Public workers like to compare themselves to the upper 2% of private workers. That is, executives who make a bundle. That is how public workers make the claim that they make less salary.

Unfortunately, the median private sector worker cannot really afford to pay public sector workers as if they were all top executive material. The resources just don't exist, unless the median private sector worker is willing to exist in poverty.

There is only so much property tax the median worker can pay to support million dollar teacher retirement packages. Especially when that blasted central bank is inflating away their own private sector pensions.

Anonymous said...

U.S. Postal Service loses $10 billion last year so they go to the Treasury Department to get more money instead of doing what private sector businesses would do - cut workers, pay, benefits, etc.
Private sector employers have been cutting back on benefits for years - not so in the gubment.

Anonymous said...

well, when you are stupid enough to willingly go along (or just don't care as you thought you were still getting "rich" thanks to the equity of your house) with the killing of unions and loss of other workers' rights then this is what you get.

it is hardly news at this point, but in the private sector more and more has flowed to the folks at the very top who now, in the vast majority of cases, are being paid above and beyond the value of what they are actually add.

how about showing the difference in pay between the top and bottom at private and public institutions, respectively?

John S said...

I think the biggest difference is security. The last time I had a job that was truly secure was in 1986. (The company was sold 1987, and the layoffs began.) I've had three distinct careers and seven layoffs in the decades since. Today my job is slowly drying up as business goes to India and I wonder how I'll pay my mortgage in two years time working at Taco Bell.

One thing I do know, I will not be able to keep paying $300 week in income and property taxes to keep paying public employees.

DLP said...

I know how you feel John.

Anonymous said...

Yeah Anon, the reason a school teacher teaching 7 y/o's their ABC's working 9 months a year till age 51 and then she gets millions in retirement benefits is because the rest of us don't have unions. It couldn't possibly be a problem unrelated to unions, such as oh, grossly overpaying govn't workers? How about massive illegal immigration destroying wages?

The other news is that these pensions won't be sufficiently funded or organized to handle the massive inflation govn't will create to pay for all these goodies, and many gon't workers will see their monthly checks not able to buy even groceries for a month.

Andrew Moran said...

I saw this report the other day and couldn't believe how much difference there were in clergymen at national and community level.

It pays to be a serf to the state! No wonder why people love being slaves. That's why the next catastrophe will come in stride!

Anonymous said...

And if you compare management salaries in government versus comparable positions in corporate America and I think you'll find a gaping disparity in the other direction. Your taxes are paying for them every time a government agency contracts to one of these companies.

Perhaps the corporate executives who claim their huge paychecks are 'competitive' rather than the result of manipulated corporate power politics could front up and deliver salaries to their workforce that are 'competitive' with the public sector.

As for 'regular' workers, I can speak for my own experience and that of my co-workers - government IT positions pay about one fifth less than the private sector even after accounting for benefits. There are other intangible compensations, but I don't work solely to maximize my income. I wonder if this study adjusted for seniority, as because of better job security public sector workers tend to have more experience.

And since I appear to be the only commenter here who actually works in the public sector, the quality of my co-workers and our IT support is far superior to the several corporate environments I worked in previously, with far less bureaucracy, Dilbertesque capricious management stupidity and rule by fear.

Blissex said...

«U.S. Postal Service loses $10 billion last year»

Delivering exceptional value with a public service obligation. The USPO seems one of the leanest, best value-for-money companies around paying its worker pretty poorly, and you complain about them.

Why not complain about the fabulous pay of military brass, the colossal cost of the war in Iraq, the profiteering by private companies that balloons those costs?

«so they go to the Treasury Department to get more money instead of doing what private sector businesses would do - cut workers, pay, benefits, etc.»

That's so true! Government departments JP Morgan, Goldman Sachs, Citibank, and the like are stuffed full of government workers who just pay themselves exhorbitant public work salaries and when these are threatened just go the Treasury and get a few trillions of free money.

«One thing I do know, I will not be able to keep paying $300 week in income and property taxes to keep paying public employees.»

But you have been enthusiastically happy to pay a lot more than that to inject capital into large companies and banks that have gone bust, and are paying immense compensation to the heroes of creativity and productivity who run them.

Trillions for the heroes of wall street, not a cent of tribute to the exploitative parasites who provide you with government services.

«Private sector employers have been cutting back on benefits for years - not so in the gubment.»

This is a sheer and malicious lying; private sector employers have been boosting massively benefits for their most productive and creative employees, the heroes who generate all wealth. Gold plated healthcare, pensions plans, severance payments, benefits in kinds are gratefully awarded like never before to private sector executives; the benefits going to them are many times larger than those given to their predecessors in the 50s and 60s.

As to government workers, any private sector employee who has sheer envy of the success of those with the superior qualifications and abilities to negotiate themselves better pay in the public sector are entirely free to TAKE PERSONAL RESPONSIBILITY and compete for a public sector job too, as anybody can compete and apply for an Ivy league MBA or for becoming a vicepresident of trading at Goldman Sachs.

Do you envy the bonuses at Wall Street? get an Ivy League MBA and go work there, if you have the talent!

Do you envy the benefits in government? Download a job application form and win the competition to get a government job. Anybody can apply!

Anyhow, of all the stupid, malicious talking points that the republican movement machine churns out, blaming government workers as the new welfare queens and strapping young bucks who parasitically exploit the middle classes is one of the most ridiculous as it is a blatant attempt to incite middle class envy and class warfare away from those responsible for the immense costs of business bankruptcies and failures in the past few years. Buffoons.

Anonymous said...

I'm sorry, maybe you should try reading the article closely before ranting. "Office of Personnel Management spokeswoman Sedelta Verble, says higher pay also reflects the longevity and older age of federal workers." You obviously don't have much in the way of critical thinking skills.
The average wage for federal workers is higher because the age distribution of employees is skewed. There is a glut of baby boomers employed at the Federal level that you don't see in the private sector. The private sector employs many more 20 somethings who are willing to provide cheap labor than the federal government does. You need to compare peers for an accurate salary comparison, not the mean.

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