Budget Misery and the Government Payroll Economy

Rhode Island is not alone in facing budget deficits as many other states (if not most) are in the same predicament. As a recent study by the Cato Institute shows, a lot of the deficit problems stem from generous public employee compensation packages.

State and local governments face large budget deficits as revenues have stagnated and spending has remained at high levels. To reduce deficits, large savings can be found in the generous compensation packages of the nation’s 20 million state and local workers. In 2008, wages and benefits of $1.1 trillion accounted for half of total state and local government spending.

Cato’s charts speak for themselves.


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Part of the problem is that there are now more government workers than “goods producing workers” (construction, manufacturing, mining, agriculture) in the U.S. (source, h/t):



As John Carney and Kamelia Angelova (who produced the above chart) explain:

We’ve gone from providing jobs in profit-making private industry to providing jobs in profit-eating government work. Toward the end of 2007, the total number of government jobs exceeded the total number of goods producing jobs. Welcome to the government payroll economy.

Yup.

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michael
michael
11 years ago

This economy has become a service based economy. Comparing government jobs with goods producing jobs for tit for tat purposes is misleading.

George Elbow
George Elbow
11 years ago

[Rules are rules, and George has yet to apologize for the activities that led to his being banned. — JK.]

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