Are Federal Workers Overpaid? (II)

About a year ago I wrote a post about whether federal employees are overpaid. It’s a never-ending debate — and now the Congressional Budget Office has weighed in.

The CBO conducted a study that compared the wages, benefits, and overall compensation of federal employees and private-sector employees who shared certain comparable observable characteristics.  The study noted, of course, that certain important qualities that can have a significant impact on compensation — such as effort and motivation — can’t really be compared.  So, the study focused on objective, measurable factors, like educational levels, years of experience, occupation, geographic location, and demographic characteristics.

The study found that federal workers with just a high school level of education make considerably more than their private-sector counterparts — 36 percent higher in total compensation.  Federal employees with a bachelor’s degree also made materially more, receiving 15 percent higher total compensation.  Only when education levels reached graduate degrees and doctorates did private-sector employees earn more than federal workers, pulling in 18 percent more in total compensation.  Overall, federal workers earned 16 percent more than comparable private-sector workers.

The CBO study probably isn’t the last word on this topic — but it does provide significant ammunition for those who think government workers often are overpaid, and that we should look long and hard at the federal government payroll as a potential target for federal spending cuts.

At The Ohio Statehouse Union Rally

A view from the Statehouse steps onto the northwest lawn

Today, after lunch, Richard and I walked over to the Ohio Statehouse to check out the big union rally against Senate Bill 5, the bill that would affect the ability of public employees to engage in collective bargaining rights.  I had been hearing the hubbub outside my office window and was eager to see the turnout.

We got to the Statehouse about 12:45 and entered at the Third Street entrance.  There were some union folks out on Third Street and milling around the entrance.  We saw people wearing public employee union t-shirts, jackets and buttons in the map room and in the Atrium above.  Rows of chairs had been set up in the Atrium, facing each other across a center aisle, and as we walked through a large, leather-lunged woman was leading the crowd in “We want respect” chants.  I would estimate that several hundred people were in the Atrium, and they were in good spirits.

Signs at today's Statehouse rally

We crossed through the Statehouse Rotunda and exited out the Broad Street entrance, which was where the real action was.  A temporary stage had been erected and two singers with guitars were singing union songs.  The crowd covered about two-thirds of the west lawn and sidewalk, with people sitting on the benches and standing on parts of the McKinley memorial.  There were lots of union t-shirts, hats, and some very creative signs criticizing Governor Kasich.  Some of the signs seemed to be generated by outside forces.  For example, we saw several signs referring to Governor Kasich and Wisconsin Governor Walker as “Koch-heads” or “Koch addicts,” and I’m not sure most union workers would focus on the Koch brothers as sign material without some kind of prompting.

The people at the rally were pleasant and friendly, and the whole gathering had an upbeat open-air feel.  The Ohio Highway Patrol had officers at points in the Statehouse, and they were professional and friendly as always.  We later heard an estimate that 8,500 people were at the rally.  I’m not sure it was that large when we were there, but there definitely were thousands of people in attendance.  We did not see any counter-protest.

Regardless of your politics, if you are downtown restauranteur you have to like these protests.  We saw lots of protestors crowding into the Tip Top, Dunkin Donuts, and other restaurants in the core downtown Columbus area.

Protest, And Response, In Wisconsin

We are learning a lot about a changing America, and a changing political landscape, from watching the ongoing story in Wisconsin about legislation that would affect collective bargaining rules for public employees.  The story began with public employee unions flexing their muscle.  They prevailed upon their members — many of whom apparently called in “sick” — to flood the state capitol in protest.  They also prevailed upon Democratic state senators to flee the state and bring the legislative process to a halt due to lack of a quorum.

But then something surprising happened.  Yesterday, a counter-demonstration occurred, as thousands of “Tea Party” activists and other citizens came to the state capitol to support Wisconsin’s Republican Governor in his budget-cutting efforts.  In all, police estimated that 68,000 people came to the state capitol to either support or oppose the collective bargaining bill, and they did so peacefully.  Even more interesting, police report that there were heated arguments between the opposing sides, but no violence.

It is not surprising that teachers and public employees would turn out to protest; their pay and benefits will be directly affected by the outcome.  What I think is extraordinary, however, is that thousands of citizens whose interests are not directly affected were motivated to spend a Saturday outside, advocating in support of the budget-cutting efforts of Wisconsin’s governor.  It says a lot about the deep level of alarm about out-of-control spending that thousands of people would spend their precious weekend hours at a counter-protest.  Wisconsin’s governor, and his Republican allies in the state legislature, must have been encouraged by the strong show of support — which probably is the tip of a much larger iceberg.

It also says something that thousands of people could turn out to support competing sides of a hotly debated issue without violence.  The teachers, public employees, and citizens who went to the state capitol to exercise their rights to free speech and assembly look a lot more adult than the Wisconsin Democratic Senators who turned tail and ran out of state rather than participate in the political process as they were elected to do.

Weirdness In Wisconsin, Coming To Ohio?

The old saying is that “elections have consequences.”  That truism is playing out in Wisconsin, where Republicans were swept into control of statewide offices in November.  Wisconsin Democrats and their supporters are trying to thwart the Republicans’ agenda — to the point where Democrats in the Wisconsin Senate have high-tailed it out of the state to prevent the Senate from achieving the quorum it needs to conduct business.

The key issue at present is public employee unions.  New Governor Scott Walker and Republican legislators want to change the collective bargaining rights of most public employees and require those employees to pay half of their pension costs and 12.8 percent of their health care costs.  Wisconsin is facing significant budget shortfalls, and the measures are expected to save $300 million during the next two-year budget cycle.  Public employees, their unions, and Democrats in the Wisconsin legislature adamantly oppose these efforts.  Public employees have flooded the Wisconsin capitol building to protest; many were teachers who called in “sick” to participate.  Meanwhile, stout-hearted Democratic state senators boarded a bus and fled Wisconsin so they would be beyond the jurisdiction of the Senate Sergeant at Arms.  The Democratic senators who skedaddled have been found at a Best Western resort in Rockford, Illinois.

It tells you a lot about the power of public employee unions in the Democratic party that they can prevail upon elected officials to engage in such a petulant and embarrassing stunt.  And it tells you even more about the sweet deal that public employees must have in the Badger State if paying only half of their pension costs and less than 13 percent of their health care costs causes them to prevail upon their Democratic allies to go to the mattresses.  Most private sector workers I know would be thrilled to have their employers paying half of their pension contributions and 87 percent of health care costs.  And who do you suppose is paying for the sumptuous lodging at the Rockford Best Western?

This drama will be reenacted elsewhere, as cash-strapped states look to employee costs as a place to achieve savings.  The issue may be coming to a head soon here in Ohio, where a bill attempting to overhaul collective bargaining for public employees is working its way through the legislative process.  Yesterday there were large rallies for and against the measure at the Ohio Statehouse.

Are Federal Workers Overpaid?

The debate about whether federal employees are overpaid in comparison to private sector employees is never-ending.  Attempts at comparison are criticized for involving small sample size, for not accounting for differences in education level, and on the basis of other factors.  The Weekly Standard now weighs in on this ongoing debate with an article that concludes that, in fact, federal workers are overpaid. I’m sure that the article will not be the last word on the subject.  It does, however, provide ammunition for those who think that we can safely freeze federal employee compensation without losing out on qualified workers.

I’m not sure that debating the compensation levels of federal employees versus private sector employees is really all that meaningful.  To me, the more pertinent question deals with productivity and performance.  Speaking as someone who has worked (twice) in the federal government and also in the private sector, I am convinced that private sector workers must work harder, be more productive, and maintain a higher level of performance.  If you are a salesman, you have to sell up to your quota if you want to keep your job.   If you are a mechanic who botches a few repair jobs, you will find yourself out on the street.

How many federal employees get fired for poor performance?  Not as many who should be, no doubt, because the process of firing federal workers is incredibly difficult and time-consuming.  The result is that crummy workers keep their jobs, and the government hires additional employees to do what the poor employees can’t, or won’t, do.  The lack of a meaningful threat of discharge inevitably results in a bloated workforce.  The real answer to cutting the federal payroll is not to freeze salaries, but to get rid of the absurd limitations on discharging bad employees and require federal employees to meet the same meaningful productivity and performance standards that are applied to private sector workers.

Two Worlds, Two Sets Of Rules

The Washington Post has done some good reporting on the amount of taxes owed by Capitol Hill staffers, White House aides, and other government employees.  All told, federal employees owe $1 billion and Capitol Hill employees owe $9.3 million.  In the Obama Administration White House, 41 aides owe $831,000 — or about $20,000 per person.

I recognize that there are lots of Americans who owe taxes — but they aren’t getting paid by other taxpayers, nor do they have a hand in establishing and enforcing federal law.  The Post story linked above notes that a Republican Congressman has proposed legislation requiring that any federal employees who owe back taxes be fired unless they enter into a payment plan (and presumably comply with it).  Surprisingly, only eight Republicans have co-sponsored the bill, and no Democrats have done so.  Why not?  Is it really so unreasonable to insist that employees who get paid from the federal till meet their obligations to pay their taxes to the federal government?

This is the kind of story that drives the average American crazy.  We hear so many politicians talk about raising taxes, or expanding the number of IRS agents to increase tax collections, and then we learn that congressional staffers and other federal employees are ignoring their own obligations.  Before Washington looks to us for more money, let’s collect the $1 billion owed by the folks drawing a federal paycheck.

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.