It’s Been a Good Decade: Why Public Employees Make So Much of Freezes or Minor Cuts

To those of us not in the public sector, it seems outsized when public employees and politicians make so much of temporary pay freezes or a few minor cuts (or reductions in the expected increases!). Red Jahncke adds some context that will help us understand their perspective by explaining how, nationwide, local and municipal government employee compensation has outpaced the private sector. He backs it up with two tables (6.2D and 6.5D) from the National Product and Income Accounts of the U.S. Bureau of Economic Analysis.

Table 6.2D shows that, nationally, state and local government worker compensation grew 45 percent from 2000 to 2007 — plus another 8 percent in the next two recession years, while private-sector compensation grew only 33 percent from 2000 to 2007 and — surprise, surprise — fell 3 percent in the recession. [Incidentally, the chart also shows that Federal Gov’t grew 52% 2000-07, 11.5% during the next two recession years~ed.].
Table 6.5D reveals that, during the 2007-2009 recession, private-sector employment fell by 8 million jobs to a level below its total in 2000, while state and local public-sector employment grew by 185,000 jobs, reaching 1.3 million, or 9 percent, above its total in 2000.

As Jahncke notes, public sector salaries were ahead of private before the Great Recession. He continues:

The 2007- 2009 data speak to the issue of fairness — massive job losses and pay cuts in the private sector, continued job gains and a smart compensation boost in the public sector. In 2010, relatively few jobs were regained in the private sector or lost in the public sector.
And the data for the full decade speak to the issue of sustainability: How can slower-growing private-sector income produce the taxes to fund a public-sector payroll growing at almost twice the pace?
The answer is that it can’t, and it isn’t.

So now we get even Democrats making cuts and both they and the unions think they’re making significant sacrifices. Given their experience over the last decade, I can understand why they think that. But they have to understand that the sacrifices they are making now have already been wrung from private sector employees over the last decade. So forgive us if we don’t hail them as martyrs for giving some of what they earned–even during the Great Recession–back.

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Russ
Russ
10 years ago

What utter nonsense! This guy is a management consultant? Ha!
“Table 6.5D reveals that, during the 2007-2009 recession, private-sector employment fell by 8 million jobs…”
What’s the point of that stat? I take it that during a recession because there is less consumer demand the fringe-right also thinks we should have less plowing of roads, less responsive police and fire departments, etc? It just doesn’t add up. Yes, if only we had more unemployed during the recession, how rosy the economic picture would be!
As for the comparison of compensation by industry, it’s just the same nonsense numbers. First off, Jahncke looks at total compensation by industry not how much an individual’s salary changed. (oddly calling it “worker compensation”). That’s highly misleading (or possibly just foolish) and implies that because manufacturing is increasingly automated, teaching should also be increasingly performed by robots!
Not to mention the question of why a downturn in employment in construction, manufacturing, or mining should have anything to do with the number of people working in government functions. Sorry, your kindgartner was just “laid off” so the overall compensation numbers don’t look out of wack!

BobN
BobN
10 years ago

Russ wants you to believe that the only government employees are police and firefighters, and that employees in government “functions” are somehow above the laws of economics that the rest of us live under, so their jobs and pay levels are inviolate regardless of the taxpayers’ ability to pay.
This is the real utter nonsense.

Russ
Russ
10 years ago

Actually, that’s not the case, Bob, and I’m happy to expand the conversation. My intent was just to get you folks to stop and think about whether the statistics sited make sense.
Since you bring it up, why not tell use which public sector jobs are related to consumer demand? Surely some are, but what percetage of the public sector fall into that category? Then let us know which public sector jobs are inversely related to consumer demand? Surely some fall into this category as well (e.g. unemployment benefit administration). So what percantage to those jobs constitute of the number overall?
Now consider how many of these “bad” jobs are related to the military, supporting the foreign occupations, and expansion of homeland security. Perhaps we should cut the number of CIA agents or FBI terror investigations during a recession? I’m not judging one way or another, just asking you folks to get real about what you’re simplistically advocating.
Maybe accounting for factors like these (and others) the numbers might be relevant, but otherwise you folks are just talking nonsense.

Dan
Dan
10 years ago

Russ – The central error in your logic is your assumption that government services are all necessities that must be provided regardless of whether the tax base can reasonably afford them or not.
In reality, many government services are luxuries or don’t serve any useful purpose at all (e.g., HUD, DEA, Ed., 80% of DoD, etc.) and should be downsized or eliminated by a prudent society the moment that economic circumstances cause them to no longer be practical.

BobN
BobN
10 years ago

Russ, Dan got to the point before I saw your post. The correct analysis of the problem is that government, especially at the federal level, does far too many things that are not legitimate functions of government under the Constitution. Strip those away (including the “wealth redistribution” programs) and you eliminate the deficit without hurting defense, interstate highways, the National Standards bureau (i.e., weights and measures), the judicial system, or any of the other legitimate functions.

Justin Katz
Justin Katz
10 years ago

Even without getting into scope-of-government-activities arguments, though, one can observe that consumer demand isn’t really an appropriate gauge for government, because (1) government services appear to the “consumer” as free or subsidized, and mainly for that reason, (2) the feedback system is less direct and more corruptible in the public sphere (voting, lobbying, etc.) than in the private sector (willingness to pay).
Yeah, when times are hard, more people want more free stuff, but to provide it, government has to take more money from other people, which might otherwise be used in a way that’s more economically productive.

BobN
BobN
10 years ago

I’d add to Justin’s point that it wasn’t always that way. Only after the Progressives got people to believe that government was the source of their salvation did people look to government in hard times. The recession of 1921 was the last time that the economy was allowed to heal itself, and it did so in less than 18 months. Government meddling has prolonged every economic downturn since then, in some cases (especially 1929-41, 1973-81, 2007-present) very badly.

David S
David S
10 years ago

So if you choose to try your luck in the private sector and make money-you can laugh at public sector workers and heap scorn on them for being ordinary ala Dan. But, if you do not “win” you get to demand public sector workers to get stuffed – all because of your choices. So much for the conservative creed of personal responsibility. It should be named- If I win it is because of me, but if I lose it is because of you. Nice.

BobN
BobN
10 years ago

I don’t know whom David is describing in his post above, since nobody expressed such a sentiment. Perhaps he is projecting his own approach to life?

David S
David S
10 years ago

Swing and a miss.

BobN
BobN
10 years ago

Yes, David, you whiffed. But I’m sure you’ll keep trying.

Dan
Dan
10 years ago

I don’t understand why I am referenced in David’s comment. It has nothing to do with my own comment, from what I can tell.

Russ
Russ
10 years ago

The central error in your logic is your assumption that government services are all necessities that must be provided regardless of whether the tax base can reasonably afford them or not.

No, that’s the cartoon version of what a leftist thinks and a transparent dodge to avoid discussing the nonsense numbers offered up above.

The correct analysis of the problem is that government, especially at the federal level, does far too many things that are not legitimate functions of government under the Constitution.

I’m not entirely in disagreement with you on that one, although I’m sure we’d disagree about many of the specifics. But like the comment above, it’s also unrelated to the point about the use of nonsense numbers to “prove” that the public sector is bloated relative to some benchmark in the private sector.

Monique
Editor
10 years ago

“I don’t understand why I am referenced in David’s comment. It has nothing to do with my own comment, from what I can tell.”
All right wing commenters look alike; it’s easy to mix them up …

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