Overcompensating Federal Workers

Are federal government employees overpaid in comparison to their private industry counterparts?  A recent Wall Street Journal says the answer to that question is “yes,” and that federal workers get a significant premium in pay and benefits — as well as the job security that comes from working for an entity that doesn’t lay people off due to foreign competition or falling sales.  Federal officials have argued that the pay discrepancy is due to federal workers having more education and experience, but those differences don’t account for the full amount of the difference.

Anyone who has ever worked for the federal government knows precisely why working for the government can be an attractive option.  I worked for the federal government on two occasions — as a congressional staffer in the early ’80s and as a judicial clerk in 1985-86 — and each time I received competitive pay, extraordinary benefits, and incredibly flexible working hours.  In particular, the federal employees health plan was notably better than private plans.  You didn’t pay anything, and it covered everything — even dental and glasses!

I’m not saying we should be cheapskates with our federal employees, but I don’t think we need to pay them over market, either.  Our economy would be much better off if the “best and brightest” eschewed government service, took some risks, formed their own companies, or assisted existing American companies in becoming more competitive, developing new products and services, and creating new jobs.

When Should The Extensions Stop? (Cont.)

The Senate has gone on recess without acting on a bill to extend unemployment benefits, and the debate about whether to further extend the extended payments continues.  Some economists argue that continuing to pay unemployment benefits has a stimulative effect on the economy; Arthur Laffer — of Laffer Curve and supply-side economics fame — argues to the contrary.

Competing economists always seem to be able to mine and then cite obscure economic statistics to support their competing arguments.  Practically speaking, however, it’s hard to see how the extended unemployment compensation benefits paid to date have had any appreciable stimulative effect on the economy.  It is also hard to see how we can continue to pay people, indefinitely, for not working.  Human experience certainly suggests that someone who is paid for months without working is going to have less incentive to aggressively seek work — or, for that matter, to start his or her own business venture.