The New York Times rues Ohio’s pending legislative effort to cut back on public-sector union clout when government jobs are the only decent ones left in an area of southern Ohio:
Decades of industrial decline have eroded private-sector jobs here, leaving a thin crust of low-paying service work that makes public-sector jobs look great in comparison.
(Actually, government jobs not the only decent ones: if you have saleable skills, there are “good jobs” in a local hospital and two power plants, reports the Times.)
Apparently the Times thinks that there is no possible connection between a shrinking private sector and a well-padded public one. The funding for outsized government health benefits and pensions just magically appears, rather than being stripped from private investment. So why not then put everyone on a government job and solve all our economic woes?
The notion that government jobs are higher paying and have better benefits is largely bullshit. I’ve turned down employment in the government sector for years because of low salary and benefits (turned down an opportunity in the federal sector just yesterday matter of fact). In addition – the vast majority of government jobs do require more skills than working at a McDonalds. So they should pay better than McDonalds on average.
We can have serious discussions about what role government should play – but bitching about salaries of public sector workers is not helping.
“So why not then put everyone on a government job and solve all our economic woes?”
Exactly. This is my problem with the idea of a Keynesian stimulus. I remember “learning” in macroeconomics class that government spending helped the economy, and there was a magic “multiplier effect” where if the government spent $10 billion, and the savings rate was 5%. the new effect would be $200 billion dollars to the economy. It was too big a class for me to ask the obvious question: Why not spend $100 billion? a trillion?…
You can’t get something for nothing. It’s easier to see with bigger numbers than smaller ones, but the effect is the same.
Yoshi, we should both have serious discussions about the (currently ludicrous) role of government, and the (horrendously bloated) pay and benefit package for public “servants”.
Yoshi, there is a wide variance on how well public sector employees are compensated — many have formed powerful voting blocs, and enjoy benefits (and future pensions) that the rest of us can only marvel at.
The larger point is that as you shift more of the economy to government work, you eat away at the very engine that funds those jobs.
There is indeed a connection.
To Yoshi: Perhaps you have specialized skills or earning history which puts *you* above the mean government wage in the sector *you* are seeking. If we look at more than one data point…
One of the articles below points out that public workers quit less than private sector, and there are many applicants queued up for available public sector jobs, another strong signal that these jobs are more attractive than comparable private sector work.
The benefits package, attractive retirement options, and pensions, and value of job security must be taken into account as well.
Federal workers earning double their private counterparts.
http://www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm
Wisconsin one of 41 states where public workers earn more.
http://www.usatoday.com/news/nation/2011-03-01-1Apublicworkers01_ST_N.htm
Oregon public employees make more than private workers.
http://www.oregonlive.com/business/index.ssf/2011/03/report_oregon_public_employees.html
Do Government Workers Make More than Private Sector Workers?
http://blog.heritage.org/2011/02/24/do-government-workers-make-more-than-private-sector-workers/
Fred: We will all have jobs soon. The government is spending more on everything.
Mike: Who is going to do the hiring? I’m investing less in everything.
→ Why Stimulus Doesn’t Stimulate
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10/01/10 – Sacramento Bee by economist Ribert Higgs
[edited] Team Obama theorizes that additional government spending (demand) will cause businesses to boost production, add jobs, and trigger additional consumer spending that will ripple through the economy for a stronger overall recovery.
Yes, consumer spending is about 70% of America’s gross domestic product, and an increase in consumer spending would provide an immediate boost. But, consumer spending increased slightly as a percentage of GDP during the downturn.
There was no decline in consumer spending, so what caused the downturn? Answer: a sharp decline in private investment. To revive investment, the government needs to stop threatening the profits from investment and remove the regulation and uncertainty that paralyzes new, long-term projects.
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→ 06/26/10 – Easy Opinions – DIY Stimulus Policy
You too can do economics on a cocktail napkin, just like the guys from Harvard Business School. Don’t be afraid of a few equations. They are only addition in a form that will impress your friends and the general public.
yoshi,
i’m a pharmacist. i work for both govt and for a private company. my pay is better at the govt job. my benefits are substantially better at the govt job.
and even worse, the govt could hire a non-pharmacist to do my job…probably for 1/3 my pay.
Yoshi is pretty much right on. I’m an exec at Walmart and make much more than were I working for the state or feds. My job is to fight unions, which would sap the strength of this great institution.
Don, I think that you have the “specialized skills or earning history” that Steve was talking about. Nobody in government makes as much money as a corporate CEO, but most people who work in the private sector aren’t CEOs. Unskilled workers and clerical-type workers definitely have better pay (including benefits) than private sector workers, and far better job security.
Yer right John! While I am far from a CEO, we do aim to keep those labor costs down as low as possible so we can give the best value for the dollar on our products. We are quite able to secure products made in China, where labor costs are even lower. The real threat to us is that labor costs will rise in China. We would have to seek labor elsewhere, if that is the case. Someday perhaps labor costs will be low in this great country, if we can suppress these unreasonable demands of public workers. They are what are killing this country.
“Apparently the Times thinks that there is no possible connection between a shrinking private sector and a well-padded public one.”
What evidence do you have that this public sector is so well-padded? It sounds like the jobs left town and were replaced by nothing, so about the only non-service employment is in government. Where does the “padding” come in? The assumption that the public sector is “well-padded,” or that it had as large a role in the decline of that town as you imply, has no basis in anything but your own speculation.
Also, for crying out loud, they profile a couple in the town who, together, make $63,000 per year, putting them in the upper strata of the town. THAT’s “well-padded”? Egad.
“a shrinking private sector”
20 years ago, Ohio’s taxes were about the same but it had much more prosperous private sector and median private wages well above the national average.
Now it doesn’t thanks to you and your elite friends shipping all their factory jobs to Mexico and China. Your neo-con friends also have killed thousands of the children of such people and imposed crippling tax burdens on them by starting two multi-decade asian land wars. Great work!
“well-padded public [jobs]”
Oh yes, the $9 an hour that lady featured in the article is making caring for retarded adults at a state funded home is completely unacceptable.
Please think of more clever ways to grind her down and entertain your defense-contractor-subsidized friends at Weekly Standard and City Journal with them. She belongs back at the trailer park her previous “market-rate” $5.25/hr, $11,000 a year afforded her.
Private sector employment in the US, as distinct from government and “quasi-public” (education, health, social assistance, etc) has been trending down for at least 10 years, public + quasi-public trending up. Possibly, that is some sort of “padding”.
It is also a very “European” pattern.
Yoshi,
there is one thing in the United States that it is nearly impossible to do if you are a privat sector employer and that is hire someone who works for the government
@Lorenzo: OK, so let me get this straight: you believe that a slight upward national trend in public vs. private sector employment accounts for the dramatic loss of private sector jobs in one particular town, as opposed to the actual loss of private sector jobs in that town due to factories closing and/or moving away.
Yeah. That’s the more likely scenario. Real job losses pale in comparison to broad, slow trends; at least where employment numbers are concerned.
But then again, it’s “European,” which is apparently means something really, really bad. So bad, it doesn’t even require elucidation.
Lorenzo,
the slight upward trend is actually a freaking tsunami and everyone of these public sector guys are essentially regulators who produce nothing and force businesses to look elseware for hiring
@Brian: I think you were trying to respond to me. Please make an argument based on something like evidence, rather than repeating simplistic talking points.
Sean,
i was mistaken on the response, since i run a small business myself with over 130 employees, i don’t have time to ferret out empirical evidence like some government drone who works about 4 hours a day 4 days a week. All i can tell you is that if you had to meet a payroll or pay suppliers you would quickly learn what regulation costs.
@Brian: I am not a “government drone,” and the only time I worked for the government was when I was an enlisted man in the Army. Why would you assume such a thing? I mean, seriously: wtf is wrong with you?
As to your point, “regulation costs money” is not the same as saying, “regulation, in this case, is a greater influence on employment than large local employers going out of business or moving.” It’s the scale of the claim that makes no sense. Had you the time, you could google to your heart’s content, but you would never be able to honestly account for the job losses in that town if your argument was merely, “regulation did it.” I know you wish that were the case, because it would justify your belief system, but it just isn’t.
Sean,
the town you are referring to is not part of the issue. You guys all claim there is a loss of manufacturing jobs and wish to equate with a macro economic cause. I am only saying that the biggest disadvantage that American employers face is the onerous regualtion which is in part caused by a bloated public sector. If you believe that even a moderate percentage of these people can be justified on any kind of cost benefit analysis you cannot have been in business. It would be better for the country to have 40% of the public sector drawing Unemployment than have them earning bloated salaries and benefits to regulate business.
“the town you are referring to is not part of the issue.”
Actually, the town I’m referring to is the example cited to make the author’s poiont, and the basis for this entire blog post. Just because you decided to make incoherent, contentless arguments agreeing with the author in this thread does not mean that the original example is “not part of the issue.” No, the only change is you deciding to ignore it.
Hmmm… I wonder why you would do that? Is it because you can’t argue with me on merits?
I understand that YOUR point is that regulations are bad for business, but you might want to demonstrate this, rather than continue claiming it without evidence. My only point was to show that the article linked in this piece does not show what the author claims. I hope you adhere more closely to demonstrable facts and evidence in your business dealings than you do in your rhetoric and (presumably) voting habits.