Quote :

"What nobody seems to be asking is: Why are important projects now unaffordable? Decades ago, when the federal and state governments were much smaller, they had the means to undertake gigantic new projects, like the Interstate Highway System and the space program. But now, when governments are bigger, they don’t. The answer is what Jonathan Rauch of the National Journal once called demosclerosis. Over the past few decades, governments have become entwined in a series of arrangements that drain money from productive uses and direct it toward unproductive ones. New Jersey can’t afford to build its tunnel, but benefits packages for the state’s employees are 41 percent more expensive than those offered by the average Fortune 500 company. These benefits costs are rising by 16 percent a year. "

Excellent article by David Brooks in todays NYT: http://www.nytimes.com/2010/10/12/opinion/12brooks.html?_r=2&ref=opinion

10/13/2010 8:28:42 AM

I'm left wondering what important projects this guy wants built. That tunnel in NJ just sounds like a money hole, especially considering we are in a recession. Maybe he means green energy research or something, well wait . . . . . thats too socialist.

He mentions NASA spending but their budget has been more or less the same since 1970. Congress just approved them for $50 billion through 2013.



I just don't get the continued attacks on government workers.
I just don't see how paying a worker benefits that were promised to them is "unproductive." Manufacturing jobs used to be pretty high paying and have good benefits, probably similar to what lower level government workers receive, but many of those jobs got sent overseas. We just can't outsource government workers (well maybe some, but not a majority).


I'd recommend we stop rebuilding other countries (after we have blown them up) and instead focus that money on our own country.

10/13/2010 9:17:06 AM

The problem is that a larger and larger chunk of money is going to pay these benefits instead of providing services. With our healthcare people are living 40+ yrs on retirement, this is a path towards insolvency, just ask GM.

Our manufacturing base left for cheaper labor, we have to address these issues. At the very least we need to end them for younger workers.

10/13/2010 9:40:37 AM

^do you have a link on employee benefits as a % of the budget over the years, I'd be interested.

I did a couple searches but only came up with

http://www.cbo.gov/doc.cfm?index=821&type=0

I didnt read it yet but the tables seemed to show that government workers were only compensated about 7% higher than private sector workers

and


http://epi.3cdn.net/8808ae41b085032c0b_8um6bh5ty.pdf

which seemed to show that government workers were compensated 2-3% less.

10/13/2010 10:18:22 AM

I dont.

The problem is, just the same with GM, is when your company/govt is suppossed to provide a certain level of service but more of its assets are tied up in retirements/benefits it either has to lower the quality of what it actually produces and eventually has to stop producing it eventually. Now in govt you can argue we can just raise taxes, but examples have shown that will just worsen the problem as producers flee.

Like the article states that in California people are retiring before 50 and at 90% of their salary. That is a TON of obligation for decades.

The private sector has been, rightfully so, away from pensions and more to contribution plans. That way you can predict the actual costs and plan accordingly. The public sector HAS to follow this plan, the longer they wait the more painful the results will be. imo

[Edited on October 13, 2010 at 10:28 AM. Reason : .]

10/13/2010 10:27:33 AM

10/13/2010 10:49:42 AM

FWIW, that chart came from this report: http://www.cato.org/pubs/journal/cj30n1/cj30n1-5.pdf

It is easiest to focus on California since the problem is most pronounced there and a good bit of data exist. According to some number cited by former Speaker of the California State Assembly Willie Brown, employee compensation (including wages, benefits and pensions) consumes as much as 80% of the California budget. I don't know that it is that high, but it is significant. Employees who opt to retire at 55 and receive a $3000 check per month for life effectively have the equivalent of $1m saved in the bank (presuming the state of California doesn't default). Few private sector employees have that kind of savings. CALPERS projects that spending on retirements in California will increase 10% year over year and retiree health care costs will increase 12%. Retirement costs alone in California have doubled in 7 years. To top it all off, they're all locked in by union negotiated contracts, so those numbers cannot be changed by legislators. (http://calpensions.com/2009/02/09/state-retirement-costs-may-skyrocket/)

Furthermore, I think focusing on one or two "big" projects misses the point of the article. The fact is that governments, as they exist now, function to provide public goods to it's citizens. When paying for employees who are no longer providing those services, it is failing to uphold it's end of the social contract.

[Edited on October 13, 2010 at 10:58 AM. Reason : .]

10/13/2010 10:55:17 AM

Quote :

"The problem is, just the same with GM"

so you don't think a big part of GM's problem was they built shit cars that no one wanted?


In states like California and New Jersey I think there may actually be some truth to this. Those states may have gone off the deep end and promised what they couldn't afford, especially now that we are in a recession (although I think entitlements to non-state workers make up a bigger percentage of their deficits). But thats no reason to attack all government workers and call them overpaid, because as my links above show, it just isn't true.


I will say that I am not against taking a close look at what government has promised people in the future, as any reasonable person shouldn't be, and making sure that what we are doing makes fiscal sense. Especially considering the current economic situation.

But everything I have read so far just doesn't make a very strong case that this is the huge problem some folks are trying to sell. Federal worker compensation is a tiny amount of the total federal budget.


EDIT:


oh right, the cato institute. we may just have to agree to disagree. Sorry, but I really can't take anything they say seriously.

Quote :

"When paying for employees who are no longer providing those services, it is failing to uphold it's end of the social contract. "

what services would those be?




[Edited on October 13, 2010 at 11:04 AM. Reason : .]

[Edited on October 13, 2010 at 11:06 AM. Reason : just to be clear, I could care less that California is in over their head, not my problem]

10/13/2010 10:56:54 AM

Quote :

"so you don't think a big part of GM's problem was they built shit cars that no one wanted?"

It is, and people punished GM for this by buying other cars. If not for the intervention of the Federal Government the entire system would have collapsed.

The opportunity-costs of doing this to a state or local government are significantly higher than choosing to buy a non-GM car.

10/13/2010 11:01:32 AM

Terd you are shifting the arguement, Im not sure you realize. We are talking mostly about STATE govts who have to balance their budgets not federal that can run deficits. However, the same issues exist at the federal level as well, unfunded promises that cannot be met.

Yes part of the problem with GM was their shit cars. This is partly due to the fact that GM was spending more on their retirees than their current workforce. How much of that money could have been used for better RandD, quality materials, lower cost to consumers?

You can choose not to look at the graph, but you can't ignore the looming fiscal problems these unfunded promises pose. And so far, no one Ive seen, other than christie, has the political balls to address them. Im sure there will be protests, strikes, etc when those cuts HAVE to be made. Hell I get people bitching about their medicare deductible going up to 155 a year.


You might not care about the mess in California, but it is your problem. YOU will be paying for it.
[Edited on October 13, 2010 at 11:15 AM. Reason : .]

[Edited on October 13, 2010 at 11:16 AM. Reason : ..]

10/13/2010 11:13:40 AM

What do you guys think the solution is? Can they cut benefits to people who were promised them? Drastically cut future benefits? I know this sounds like a loaded question, but I genuinely don't have a concrete opinion on this and would be interested to know what people think.

10/13/2010 11:21:24 AM

There seems to be some debate on that issue. It seems to my understanding that state and federal governments enjoy sovereignty on this issue. As the pension promises are a form of public debt they took on voluntarily, with a mere majority they can legally make these obligations go away, just as they can legally make their public debts to creditors go away. But such cannot be done in a court of law, it must be explicit legislation declaring the debts noncollectable.

However, to my knowledge no U.S. state has ever used this power against its own employees. There was a lot of debt repudiation by states after the civil war under the theory of "Odious debts". There are several examples from the 20th century, as well, although these most often involved non-explicit repudiations of the form "We'll pay you when we pay you" which tended to be settled in court for a reduced sum (in the case of Mississippi, many decades after payments on the debt ended).

10/13/2010 11:43:26 AM

Quote :

"Terd you are shifting the arguement, Im not sure you realize"

Not really, go back and read David Brook's column. He points to New Jersey and California as states that are in trouble, and can't provide public goods to the tax payers in part because they promised too much to their workers. Then he conveniently lumps ALL federal and ALL state and local workers in with those states and says they are ALL being paid too much. He then whines that our government won't be able to build another highway system or go back to the moon.

I'll admit that California and New Jersey are in deep, I just haven't read anything that convinces me that the same is true for a majority of the other states and its definitely not true for the federal government

[Edited on October 13, 2010 at 12:33 PM. Reason : .http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_201-250/WP233.pdf

10/13/2010 12:27:20 PM

i read this article the other day. good read. no good, easy, fair answers to this issue. it ties in with the large issue of the increasing cost of the government safety net. not just pensions, but social security and medicare/medicaid. these programs will evicerate the economy eventually. everyone can acknowledge this, but no one is willing to do anything about it. i'm afraid the shit will first have to hit the fan before reform occurs.

10/13/2010 12:57:23 PM

Generally speaking, pensions aren't a great idea. It would be better to pay the employee in question more while they're actually working, which is saying, "Okay, you can save the extra money you make, or you can piss it away and be miserable when you're old." When you give or receive a pension, that's making a declaration that the money will be there when it's needed, and that it will be paid out. That's an incredibly dangerous situation, because you're putting your life in the hands of an organization/business that may or may not be solvent later in life.

When it comes to the private sector, the auto makers are a great example. Unions pretty much forced the companies to provide these lavish retirement benefit packages to workers. As someone that worked for UAW retiree benefits, I can tell you that even after the benefits were cut, they were still pretty good, considering the retirees paid 15-30 bucks a month. Ideally, governments would not honor union contracts, which would make unions all but useless.

On the public sector, striking workers should be fired and replaced. People have the right to form unions, but the taxpayer shouldn't have to pay because some government workers are twisting arms.

10/13/2010 1:32:27 PM

^^,^two excellent posts.

Public sector unions should be outlawed imo. Im not sure how that ever came about. Countless examples have shown them bleeding private companies to bankruptcy or overseas, but the Fed simply steps in to "aid" these states without recourse and the record continues to play.

Our federal and state govts have shown they handle their money like Bernie Madoff time and time again, yet people want us to give them more power and money. Remember how quickly the states went through the tobacco settlement money that was meant to provide health care to tobacco users instead of burdening the state... Should be interesting when those costs start hitting, they can just use that fund to pay for it.....oh wait. Same with the SS surplus for decades....oh wait...

10/13/2010 2:22:23 PM

Quote :

"Remember how quickly the states went through the tobacco settlement money that was meant to provide health care to tobacco users instead of burdening the state... "

Eh? Links please.

10/13/2010 6:22:25 PM

Governments just don't have the teeth to battle unions like private companies do (although even they struggle with them), and unions have more political power than they should already. I'd agree there should not be unions for government workers, there are other means for them to fight for workers rights.

10/13/2010 7:00:39 PM

Quote :

"oh right, the cato institute. we may just have to agree to disagree. Sorry, but I really can't take anything they say seriously. "

so, do you have any evidence to discount them? or are you just engaging in attacking the source and not the message?

10/13/2010 7:11:47 PM

^jah

The Cato study doesn't adjust for worker age or education level, which can both have a big affect on compensation. If you don't adjust you can end up comparing teachers with burger flippers at McDs.

the only sub groups mentioned in the Cato study (pg 5)

Quote :

"These BLS data allow a public-private comparison for three broad occupational groups: “management and professional,” “sales and office,” and “service.” For the first occupational group, average public and private compensation was similar, but public sector workers had a large compensation advantage in the latter two occupational groups."

They never actually tell us what entails a sales and office job or a service job (is it based on the type of work? education level? experience needed? etc ) and they never actually tell us how big the "large compensation advantage" is. Instead they just continue to lump all workers together, thats sorta back-of-the-envelope to me.


which is why I prefer these two studies:

http://epi.3cdn.net/8808ae41b085032c0b_8um6bh5ty.pdf

http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_201-250/WP233.pdf

which do adjust for education level and come to the exact opposite conclusion as the Cato study.




also


http://www.wral.com/news/state/story/4567637/

Quote :

"Cowell: State pension fund needs $358M "

In the deepest recession in 80 yrs, our state needed to come up with an extra 2% from the budget to keep the pension on track with future projections. Yes its a lot of money, but I'm just not running for the hills quite yet.

[Edited on October 13, 2010 at 8:08 PM. Reason : ,]

10/13/2010 8:03:19 PM

Was this bullshit intentional or unintentional on your part?

How many gov't-employed burger flippers and cashiers have you run into?

10/13/2010 8:56:01 PM

I've actually run in to a few of them. but then again, I've been on a few military bases, so does that count?

10/13/2010 8:59:25 PM

Do they still use enlisted personnel to serve food? I thought that was all privatized, these days?


Regardless, those E1's are blessed by St. Reagan, so it's all cool.

10/13/2010 9:04:37 PM

i dunno. been a while. but, I'd imagine most of the stateside bases are privatized.

10/13/2010 9:06:05 PM

Quote :

"How many gov't-employed burger flippers and cashiers have you run into?"

I've seen a contractor request for an ice cream server in Afghanistan.

10/13/2010 9:15:02 PM

1) Contractors aren't gov't employees

2) Ignoring that, what percentage of total public sector employees is your anecdotal ice cream man?


Original point: gov't employees tend to be educated/skilled professionals. Of course they're paid more, morons.

[Edited on October 13, 2010 at 9:19 PM. Reason : ]

10/13/2010 9:19:23 PM

i'd beg to differ about contracted employees. They are effectively paid by the government. ergo, they are government employees

10/13/2010 9:21:57 PM

1) Their whole existence is dependent on the fact that they're not *paid* like government employees.

2) They're not counted in the stupid chart cited above.

10/13/2010 9:29:09 PM

1) They are still *paid* by the government. They are just not directly managed by the government.
2) No government, no contract, no job. They are, in effect, a government employee

10/13/2010 9:44:18 PM

Sure... but how is that relevant to the topic at hand?

10/13/2010 9:55:03 PM

Quote :

"1) Contractors aren't gov't employees 2) Ignoring that, what percentage of total public sector employees is your anecdotal ice cream man? Original point: gov't employees tend to be educated/skilled professionals. Of course they're paid more, morons."

The ice cream man wasn't a serious rebuttal, just a tangential comment.

And no, contractors are not government employees. Despite their unpopularity they are, in the long run, significantly cheaper than government employees.

Quote :

"Original point: gov't employees tend to be educated/skilled professionals."

So the DMV clerk is a skilled employee? So public trash collection is performed by college graduates? So the janitor in the Wake County Public Schools building is more skilled than a janitor elsewhere?

Quote :

"Do they still use enlisted personnel to serve food?"

I've seen it done in stateside mess halls. Not overseas.

10/13/2010 10:01:32 PM

Quote :

"Despite their unpopularity they are, in the long run, significantly cheaper than government employees."

Not in wages. Now, in the amount that is spent on recruiting, retention, and the like, maybe. But that would hinge on the contract not being a cost-plus one, in which case, even that would be covered.

10/13/2010 10:06:58 PM

Quote :

"1) They are still *paid* by the government. They are just not directly managed by the government. 2) No government, no contract, no job. They are, in effect, a government employee"

no. they're really not. speaking as a contractor, that is not how it works at all. the government pays my contracting agency some amount of money (i'm not privy to that information). my company then pays me some portion of that as well as provides insurance, benefits, etc.

people who are their own contractors i guess would be paid directly, but that's not how most gov't contractors (at least federal, of which i'm most familiar) operate.

^and for my particular job i'm fairly convinced that it would be cheaper for the gov't if i were a gov't employee. but whatever.

Quote :

"So the DMV clerk is a skilled employee? So public trash collection is performed by college graduates? So the janitor in the Wake County Public Schools building is more skilled than a janitor elsewhere?"

a lot of those jobs are covered by contractors these days.

[Edited on October 13, 2010 at 10:15 PM. Reason : .]

10/13/2010 10:13:27 PM

Quote :

"Not in wages."

Calculating the cost of an employee in wages alone falls somewhere between intellectual dishonesty and statistical incompetence.

10/13/2010 10:21:02 PM

Quote :

"Not in wages. Now, in the amount that is spent on recruiting, retention, and the like, maybe. But that would hinge on the contract not being a cost-plus one, in which case, even that would be covered. "

Cost-plus are few and far between in the public sector.

10/13/2010 10:53:40 PM

The statistics has been studied extensively. Even adjusted for inflation, government employees tend to be overpaid. However, why should we adjust for inflation? Why do government employees need more education to do the same work as their private sector counterparts? I don't think they do, but government compensation packages as negotiated by public sector unions, reward education regardless of whether it helps you do your job. As such, government workers keep getting worthless degrees just for the pay bump, while private workers go to night school only if it will help get them promoted.

10/13/2010 11:44:36 PM

Quote :

"The statistics has been studied extensively."

You are writing his statement off, it's completely reasonable to state that the jobs that government employees fill are, on average, more skilled than the average private sector job.

Quote :

"Why do government employees need more education to do the same work as their private sector counterparts?"

Because their work demands it. The average private sector employee is not a counterpart. You could say the same thing about the average IT firm, why do they need more education, why do they need better benefits, it's obvious.

I actually agree with the point you want to make, but your approach here is terrible.

10/14/2010 12:53:43 AM

My observation is that low-skilled workers get better total compensation in the public vs the private sector but higher skilled workers tend to take a hit working for the state. Somewhere I read a study that supported this and looked at total compensation and controlled for education and job category--but I'm too lazy to look it up.

But on the local level this is completely false where I live in the California. In my town of 80k there are 185 city workers with salaries over 100k (out of about 550 total employees) and the city manager makes a cool 300k. If I had a kid I'd tell him forget finance or med school--be a fireman, police officer, or public administrator in the local government.

10/14/2010 2:31:18 AM

The government doesn't experience recessions.

10/14/2010 2:34:23 AM

Quote :

"My observation is that low-skilled workers get better total compensation in the public vs the private sector but higher skilled workers tend to take a hit working for the state. "

I came here to post this. I'm with the DoD and making 30% less than I was in the private sector doing work that is more difficult. I am privy to the FERS annuity but that implies I state with .gov for a long time and provided I continue to progress and grow in my career, that wage gap will go increasingly wider the longer I am in. I also work with the wage laborers and they are paid better than what they would be in the private sector but not egregiously so, not like these criminals working State jobs in Cali.

10/14/2010 6:01:52 AM

Quote :

"Because their work demands it. The average private sector employee is not a counterpart. You could say the same thing about the average IT firm, why do they need more education, why do they need better benefits, it's obvious."

I don't know why I wrote the word inflation, I meant position. Adjusted for position, a government accountant tends to have more education than a private sector accountant. Why does a government accountant need a masters while a private sector accountant does not? I believe the answer is that they don't, they got the masters because the union has negotiated automatic pay increases for masters degrees, so even if a masters has no impact upon his job performance, a government worker will acquire one for the pay bump.

10/14/2010 10:46:48 AM

Quote :

"Adjusted for position, a government accountant tends to have more education than a private sector accountant."

Proof? If you have evidence that is adjusted for position, then you should post it, as it would be significantly less worthless than the chart posted earlier, which is not.

10/14/2010 11:19:14 AM

Quote :

"Why does a government accountant need a masters while a private sector accountant does not?"

If we're speaking about accountants in watchdog roles, it makes perfect sense.

And I, too, would like to see proof of adjustment for position.

10/14/2010 12:55:36 PM

I'll second [Potty Mouth]. Working here in DC, private sector employees make a lot more than their Federal counterparts when it comes to skilled, college-educated labor. The general rule of thumb is at least 10-20% pay differential. That being said, Federal employees gain job security and benefits: it's next to impossible to fire a Federal employee because of the paperwork involved - they'd have to screw up royally like kill someone, and even then, the circumstances may mitigate the situation. In fact, if a group wants to get rid of someone, they usually just transfer them out.

Some of the studies I've seen are heavily skewed because they didn't control for job categories. This is especially relevant because governments have been outsourcing a lot of their low end and manual labor jobs (janitorial, maintenance, printing, etc.) while keeping their skilled workers which naturally skews their average pay and benefits upward.

10/14/2010 1:44:47 PM

Here you go potty mouth

http://www.npr.org/templates/story/story.php?storyId=97081916

"Overall, less than 5 percent of the tobacco money has gone for tobacco prevention.

"It is truly one of the greatest historic missed opportunities to bring about public health change that this nation's ever seen," says Matt Myers, president of the Campaign for Tobacco-Free Kids and a key player in the tobacco talks. "Sadly, the states have used this money as their private piggy bank. Even things like golf carts for a golf course in upstate New York, to funding tobacco-related activity in North Carolina. It's gone to whatever the pet project of the local politician is."

10/14/2010 2:25:04 PM

Guaranteed, unfunded pensions are a massive problem. The pensions of public sector unions are not only unfunded, they are unfunded because they have become the plaything of various legislators who force the pensions to be managed based on politics rather than sound investment strategies.

Here's an article about this very issue from a while ago: http://reason.com/archives/2009/01/12/the-next-catastrophe

10/14/2010 7:16:49 PM

This is being discussed on C-SPAN right now for those of you awake and so inclined.

10/17/2010 9:27:36 AM

Unfunded and underfunded pensions are a serious problem, be it for public or private sector entities. What many conveniently ignore when lumping ALL governments with NJ and CA is that NJ and CA chose to make generous pension commitments because they couldn't or didn't want to keep up with cost of living in salary increases. They are in a fiscal mess because they underfunded the commitments that they made, not that they made commitments. You could also argue that having a defined-benefit guarantee tends to expose those funds to more risk borne by the employer (the government), but the government enjoys the benefit of higher rate of return in the stock market (and less money directly put in) when the stock market isn't tanking.

Also, as has been ripped apart already, "average" private sector employee versus "average" governmental employee is about as meaningless and ideologically cherry-picked statistic you can find.

10/17/2010 4:59:59 PM

Quote :

"ON FRIDAY the Wall Street Journal provided a wonderful bit of irony: despite the howls of indignation from the Democrats over private campaign spending, it turns out that the biggest sugar daddy is the American Federation of State, County and Municipal Employees (AFSCME), a public-sector labour union that spends almost all of its cash for the Democrats. AFSCME accounts for roughly 30% of spending from pro-Democratic groups. A piece from US News and World Report points out that, in total, "Big Labour" is spending more private cash than the Chamber of Commerce and American Crossroads (Karl Rove's outfit) combined. Since the WSJ article most of the commentary has involved arguments over possible Democratic hypocrisy (pro, con), but that debate misses the point. The Democrats are electorally beholden to union support, and this often leads to bad policy."

http://www.economist.com/blogs/democracyinamerica/2010/10/unions_america?fsrc=scn/tw/te/bl/labourleft

11/2/2010 7:24:31 AM

11/10/2010 2:48:21 PM