I grew up in a blue-collar world listening to jokes and snide remarks about government workers. They were uttered frequently by my father, and the fathers of most of my friends, especially during tax season. I came to perceive that government, at all levels, was riddled with chumps, lackeys, and dullards — people who couldn’t make it in the private sector but found a home in the lackadaisical workplace of government.
It was tacitly assumed that public employees earned less money than their private sector counterparts and that “psychic income” explained their willingness to do so. Psychic income has been defined as “something apart from money that you get from your job, and which gives you emotional satisfaction such as a feeling of being powerful or important.” Anyone who has dealt with government bureaucrats (from IRS agents to building inspectors and DMV clerks) can attest to its allure. My father probably would have described psychic income as a negative salary differential that gave this army of self-important, insecure underachievers a pass. That is, as long as they made less money, their shoddy (good enough for government) work could be tolerated.
That was back in the late 1960s. The Great Society was shifting into high gear. Big government was booming, and the demand for government workers was exploding. In those auspicious days, the job of many public servants was to invent jobs for more public servants. As government revenues continued (1969 to the present) to grow more than 15 times faster than median income, additional public servants were needed just to spend the extra tax money.
During the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.
But my father’s suspicions about the negative salary differential were partly wrong. Federal civil servants were already making more money than their private sector brethren. And they, as well as state and local public servants, were on track to make much more. I didn’t have the heart to tell my father that the lower salary — the only redeeming characteristic of the shiftless and slothful government workforce — was an illusion. And the grudging tolerance of his generation was being augmented by the unwitting generosity of mine to unleash relentless public sector growth. My generation rewarded public sector workers with unprecedented income — both real (salary and benefits) and psychic (power and importance), sweetening the deal with unprecedentedjob security. The tail began wagging the dog.
Today, the average federal civilian worker earns twice as much in wages and benefits as the average worker in the private sector ($123,049 vs $61,051, annually). The benefits (healthcare, sick days, vacation time, retirement plans, etc.) are profligately generous, as are the taxpayer contributions that pay for them. For example, in 2007, state and local governments paid an average of $3.04 an hour toward each employee's retirement; private employers paid only $0.92/hour. And, in recent years, the pace (of both hiring and wage increases) has accelerated. For example, when the recession started, the Department of Transportation had only one person with a salary of $170,000 or more. That number has now reached 1,690. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009.
We are told (by President Obama and many others) that such obscenely generous compensation is required for attracting the best and the brightest to run government programs. Just think of the mess that Social Security, Medicare, Medicaid, the Postal Service, Amtrak, public housing, education, etc. would be in if managed by less competent professionals. And who could do a better job fighting the wars against poverty, drugs, cancer, AIDS, etc. than the people presently employed? With successes such as these, no wonder they have moved on to protecting us against such menaces as trans fats, sugar, secondhand smoke, bicycles, and toys (the lead-painted ones from China and the obesity-inducing ones from McDonald’s).
And since we must be regulated in both good times and bad, public service is a recession-proof industry. During the recent recession, the federal government added 192,700 jobs (+ 9.8%). State and local governments added a paltry 33,000 (+ 0.2%), but the private sector lost 7.3 million (-6.3%). The average federal government salary increased 6.6%; the average state and local government salary increased 3.9%. To summarize, during the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.
It has reached a point where even big-government advocates have become appalled. For example, Mort Zuckerman, billionaire businessman and generous contributor to the Obama campaign, has recently discovered that “public workers have become a privileged class — an elite who live better than their private-sector counterparts. Public servants have become the public's masters."
It is of no small significance that the big gainers in the government hiring binge are regulators, lawyers, and public health and safety experts. They are the most annoying of public servants. Operating as social engineers, and under the assumption that without their guidance we (individuals, families, and businesses of all types and sizes) will make bad decisions, they serve two principal purposes: (A) ensuring that we obey every silly law with childlike compliance, and (B) writing more silly laws. This is the tail slapping the dog.
Feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions, managed to come up $7 trillion short, and now expect taxpayers to foot the bill.
Much of the sting from the slap comes from their colossal ineptitude. They are simply terrible at what they do. The vigilant financial regulators who protected us from the subprime mortgage debacle are a case in point. They include the elite that was running HUD, Fannie Mae, Freddie Mac, and the SEC (whose crack securities experts were downloading porn while credit default swaps and Bernie Madoff ran amok). Their predecessors were equally inadequate in preventing the S&L crisis, the junk bond fiasco, the Enron and WorldCom scandals, and the dotcom bubble.
It should be no great surprise, therefore, that our public masters running government pension funds have reached no higher level of competence. According to a recent report from the Employee Benefit Research Institute, federal pension plans now have unfunded liabilities exceeding $1.6 trillion. Unfunded state and local pension liabilities are estimated at $3.6 trillion. With healthcare benefits added in, state and local government unfunded retirement liabilities could be as large as $5.2 trillion. Consequently, our children face a huge future slap in the form of a tax bill approaching $7 trillion. To summarize: feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions (at a rate three times that of theprivate sector), managed to come up $7 trillion short, and, instead of going to jail, now expect taxpayers to foot the bill.
Then there is Public Service Recognition Week (PSRW), a nationwide campaign honoring public servants and educating citizens about the sacrifices they make while serving the nation. Federal, state and local public servants spend the first week of every May honoring themselves and bragging about the terrific jobs they are doing. They have exhibits showcasing “the innovative and quality work performed by public employees.” They even have parades “recognizing and thanking their unsung heroes.” This is the tail slapping the dog with disdain.
Public servants have come a long way from the banal, ambitionless, unproductive horde of my father's generation.They are now grossly overpaid, insidiously more powerful, and routinely unaccountable for bad, often abysmal, performance. No doubt most are good people with good intentions, some making legitimate sacrifices. I would go to a parade honoring most policemen, firefighters, teachers, and emergency workers. But there should also be a parade ridiculing those whose malfeasance, indolence, or avarice has failed the public and contaminated the perception of civil service. Regrettably, such a parade could not be held; it would last well over the week allotted.
Today there are simply too many public servants — even good ones. With staggering deficits and staggering public debt, we can no longer afford them. Public resentment deepens the more their compensation is scrutinized, as all levels of government begin trying to cut their budgets. Most are overpaid, especially at the federal level. And today's administrators, regulators, inspectors, social engineers, and the like have painted a disturbing "public masters" portrait of themselves. Furthermore, psychic income as a reward for sacrifice is a thing of the past. As public sector payrolls expand during private sector contraction, it's difficult for taxpayers to see the sacrifice. Public servants have become the "haves," and taxpayers, who pay their salaries, have become the "have-nots." Psychic cost — the economic burden of the government workforce — is a more realistic concept.
From 1787 through the 1920s, federal government spending didn’t exceed 4% of GDP, except in wartime. It has now reached 25% of GDP. Combined federal, state, and local government spending has reached 43% of GDP, and the average taxpayer has to work from January 1 to the middle of each April to pay for this largesse. But even that is not enough. In recent years, federal spending has exceeded tax revenue. It has taken an unprecedented leap since 2008, producing today's massive annual budget deficit of $1.5 trillion. To pay off this deficit, the average taxpayer would have to work until mid-May —and consequently have to miss the Public Service Recognition Week parades.