An alarming study by the libertarian Cato Institute suggests that a new class is being created in America — a government working elite with special privileges, quickly outpacing the private sector in the salaries and benefits it receives.
The study found that average federal government workers’ total compensation — salary and benefits — now is nearly double that of the average worker in the private sector. In 2004, the year studied, federal workers on average received total compensation of $100,178 a year, or 93 percent more than the private-sector average total compensation of $51,876.
And the gap has been widening, especially in recent years. In 1950, federal workers earned 19 percent more in total compensation than private-sector workers. As recently as 1990, the total compensation differential was only 51 percent. But in the Clinton 1990s and the Bush 2000s, the gap rose sharply, to 68 percent in 2000 and the current 93 percent.
The total wages and compensation for all 1.9 million federal civilian workers (not including military) now is nearly $200 billion a year. Put another way, if the gap in total compensation were cut back to the level of 1950, a hefty 38 percent of cost, or $76 billion, could be saved. Even in wild-spending Washington, D.C., with trillion-dollar budgets, that’s a lot of money.
Chris Edwards, the study’s author and director of tax policy studies at Cato, said it’s the old problem of concentrated benefits and dispersed costs. Members of Congress “constantly are pumped for greater pension plans and salary increases,” he said, referring to the large presence of federal workers in Washington, where it’s easy to lobby. By contrast, he lamented, members of Congress “never hear the other side of it because there are no organized interest groups” of taxpayers, whose compensation, though half the size of that of federal workers, is burdened with paying for everything.
Edwards added that, during the 2001-02 recession, wage increases slowed in the private sector because the money just wasn’t there for raises. By contrast, federal workers even then got slow, steady increases every year. “That impact accumulates over time,” he said. And, the kinds of government jobs added in recent years tend to be higher-paying.
Of course, we’ve seen public unions choose to press during bargaining either salary increases, medical benefits and/or pension increases, depending on the political climate at contract time. But at least one of the three always rises.
These are further examples of how government is more and more a remote ruling class that will soon be out of touch with the hardships — in taxes and regulations — imposed on the folks who pay the bills.