Should government workers take a pay and benefit hit? Yes.

This is one of a continuing series of debates between Tribune columnist Eric Zorn and myself on politics and public policy. It can also be viewed on Eric's blog, "Change of Subject."

From Dennis, to Eric:

You know that government employee compensation is a crushing problem when even President Barack Obama dropped a pay freeze bomb on federal employees.

Under it, some 2.1 million federal civilian workers would be frozen out of an expected average 1.4 percent pay increase in 2011 and whatever largesse scheduled for 2012. Because their health insurance premiums are going up 7.2 percent, many federal workers' take-home pay could fall.

Gee, just like so many Americans.

"I am really ticked,"

pay.jpg

raged John Gage, national president of the American Federation of Government Employees, representing about a third of the workers. He said he never expected such a "political, public-relations stunt" to come from the Obama administration, which he nailed for being "panicked" by the midterm elections.
 
And we, Mr. Gage, never expected anything less from you, squealing like a stuck pig about how tough government employees have it -- giving up a pay raise! -- when millions of Americans are, if not out of a job, if not experiencing a pay freeze, are actually suffering pay and benefit reductions.

This just doesn't apply to those who labor for the federal government -- the nation's largest employer even when excluding the military -- but state and local governments too. Look at government budgets at any level and you'll likely find that labor costs are the largest consumer of tax dollars.

Governments at all levels, including Illinois, Chicago, and many suburban towns and agencies, are getting flushed down a financial sewer from which it increasingly appears there will be no escape. Not the smallest of their problems is paying just the interest on the loans governments have floated to support extravagant wages and benefits. That interest, by the way, is crowding out what's left to pay for social services and the other programs near and dear to liberal hearts.

Like everyone else, it's time for government employees to suck it up.

To Dennis, from Eric

There's a reason that some on the left have started comparing President Obama to George McFly, the craven wheedler who is always trying to appease Biff the bully in the 1985 film classic, "Back to the Future."

George McFly audio clip

In this case, President McFly unilaterally cried "uncle!" late last month to his right-wing tormentors who've been spreading the lie that public employees are being showered with "extravagant wages and benefits" compared to the rest of us.

This claim is based on anecdotes, short-term trends and bogus comparisons.

First, let's agree that government workers ought to receive roughly the same level of compensation as their private-sector counterparts.

Not to be nice, but to be smart. If we underpay public-sector employees we'll attract mediocre talent -- the dreaded inept bureaucrats, goldbricks and paper pushers who midwife inefficiency. If we overpay them, we'll simply waste money.

The key word above is "counterparts." When economists who study the labor market look at overall compensation -- wages and benefits -- for workers with similar educational backgrounds, experience and duties, and when they control for such factors as hours worked, they find that public employees actually tend to earn a little less than comparable private employees.

For instance, a recent study by Jeffrey H. Keefe of the Rutgers University School of Management and Labor Relations mined the data and concluded that "on average, full-time state and local employees are undercompensated by 3.7 percent in comparisons to otherwise similar private-sector workers."

I'm not proposing we give government workers a raise, merely that you, our president and others stop making them scapegoats for the long-term, bipartisan mismanagement by our legislators.

From Dennis, to Eric:

I'll see your Rutgers study and raise you one Cato Institute study: "In June 2009, total compensation per hour was $39.66 in the public sector, which was 45 percent greater than the average $27.42 per hour in the private sector. The public sector advantage in average wages was 34 percent, while the advantage in benefits was a huge 70 percent."

In case you distrust the libertarian Cato Institute, the government itself, in the form of the Bureau of Labor Statistics and the Bureau of Economic Analysis, finds, after comparing similar jobs, a wage and benefit gap in favor of federal workers.

Yes, some studies say state and local workers have yet to surpass private sector compensation, but I suppose it depends on how you slice it. How can anyone deny that in Illinois hardly a private sector pension plan can touch the generosity of state and local ones. A big part of state and local financial crises are pension plans that demand too much of taxpayers and too little of beneficiaries.

But, the point isn't to make government workers scapegoats, as you argue. The point is that government wages and benefits are significant causes of the dire financial crisis that everyone, of all political persuasions, have ignored much too long. Obviously, compensation isn't the only thing gagging government budgets. But, like subsidies to Big Business and other pleaders, it is defended by one of the most powerful lobbies in Washington, state capitals and city halls: public employee unions. In that, they are fair game, just like everyone else.

To Dennis, from Eric:

Neither the Cato study nor the BLS data makes the apples-to-apples comparisons necessary to tell how workers of similar education levels, experience and responsibilities are compensated in the public and private sectors.

It really doesn't depend on how you slice it, unless you think it's fair to compare, say, the salary and benefits of security guards with the salary and benefits of police officers. BLS officials admit this and caution against simplistic reading of their numbers.

This is not to say that all is fair and fine among government workers. This newspaper has chronicled repeated and flagrant abuses of the pension system. And I'm all in favor of reform that would make public employees responsible for their retirement to the same extent that most of us in the private sector are now responsible for our retirement.

It's not that these pensions are extravagant -- the vast majority are modest. And it's not that they're wasteful -- pooling assets for investment can be quite efficient. It's just that, time and again, politicians have proven themselves unable to resist the temptation to pay for today's programs with money that belongs in tomorrow's pension funds.

But it's simply not true that excessive government wages are a significant cause of the financial crisis. And it's simply not fair for those on the right to try to penalize these mostly middle-income earners while leading the charge to preserve tax breaks for the nation's highest earners.

From Dennis, to Eric:

Earlier this year, USA Today crunched the BLS data and other numbers comparing private and public compensation by job type and concluded, "Federal pay (is) ahead of private industry." Its chart breaks it down.

We could fill the rest of the paper with different studies and contrary interpretations, and still not agree. But if you don't believe that government employee compensation needs major correctives, I'll mention one more: President Barack Obama's National Commission on Fiscal Responsibility and Reform. This scary document plumbs the depths of the federal financial crisis and implores us to embark on a painful journey.

Among its recommended tax, Social Security and other tough reforms is a freeze on federal wages for two years, a cut of 200,000 federal jobs over the next decade and creation of a task force to consider major reductions to government retirement plans. It also recommends turning federal employee health insurance into a voucher program, thereby shifting more costs onto its beneficiaries.

In an impressive show of statesmanship, Sen. Dick Durbin, D-Ill., the Senate's second most powerful Democrat and a commission member, supported the commission report. "This plan is not perfect, and it is certainly not the plan I would have written," he said in a statement. "If we don't act now -- if we pass this issue on to another Congress, another generation -- the tough choices we face now only get tougher."

Homeowners, businesses and many more must sacrifice. Government employees and their unions cannot be an exception.

To Dennis, from Eric

The pay issue is about fairness, nothing else.

Fairness to government workers, who deserve to be paid in line with what private-sector workers with similar qualifications and responsibilities are paid.

And fairness to taxpayers who deserve the best bang for their buck in the hiring and retention of a skilled public workforce.

Some government workers are unfairly overpaid and receive benefits that are out of line with their market value. No question about that. But every thorough, reputable study I can find says most are not, and I've posted a webliography of sources here that supports this claim.

I make no excuses for President McFly's invertebrate concession on this issue. Applying across-the-board pay freezes and maligning government workers and their unions is a simplistic, shortsighted and small approach that inflames grievances and does little to address our budget woes.

Even though I will not agree to disagree on this, let me close by thanking you for all the spirited discussions this year. We started this occasional series back in January and I've heard from many readers who enjoy the serious and civil tone of our debates.

Assuming we haven't exhausted all the topics on which we strongly disagree, let's resolve to come back for more in 2011

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  • Gentlemen......All you have to do is go over to any municipal building and just stand around.Pick an office and watch.If you could go in the back you would really see how things are done.Trying to discuss any budget cuts with a big liberal is useless.Look at the post office,been to the DMV lately? How about calling over to ANY office in washington.When do you start to cut?Where do you start to cut? How about every office start with a 10% cut NOW. What are you going to wait for???????????????????

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