State and Local Government Pay Is Much Higher Than Private Sector Pay

Wed, 2011-07-20

State and local government workers earn one third greater wages than private sector workers, according to 2009 US Bureau of Labor Statistics as reported by the Cato Institute. They also earn benefits 70% more generous than private sector benefits.

Everyone wants to pay our government workers fairly, but it is fair to ask if this disparity in wages and benefits is “too fair.” In this new economic climate with no end to this “recession,” all governments seem to be faced with recurring deficits, even Acton. The Acton Board of Selectmen recently announced that one of their goals for this fiscal year is for them to address Acton’s continuing deficit spending to maintain its level services budget.

This deficit spending was continued this fiscal year since Acton continued its policy of agreeing to substantial pay and benefit increases in the new budgets, as noted in several Acton Forum articles. In contrast, the news has been filled with stories of layoffs and job losses in the private sector, something that happens only one third as often in the public sector.

The details of the Cato Institute study can be found at http://www.cato.org/pubs/tbb/tbb-59.pdf, or see attachments.

Of particular note is the health insurance benefit which is more than twice (218%) as generous for state and local government workers as for private sector workers. This is topical because Massachusetts just passed legislation that could allow towns like Acton to move employees to the State plan as a potential cost savings to Acton. Details of potential savings and potential fairness will be discussed in the coming months at meetings of the Finance Committee, the School Committee, and the Board of Selectmen.

Also of particular note is Acton's unfunded liability for retiree health benefits, a benefit that is "rare" in the private sector. At April Town meeting the Finance Committee acknowledged this unfunded liability and is in the process of defining what it is and how it will affect Acton's long term fiscal outlook. Again, this topic will be discussed in detail in the next few months.

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AttachmentSize
catostudy.pdf74.3 KB

Comments

Unfunded Liability in the Public Sector

Taxes have gone up, the bottom has fallen out of the stock market, forclosures are rampent, no SS COLA the past 2 years,401k's are going down the drain faster than you what through a goose,unemployment is high and growing higher every day, illegal aliens are stealing jobs and welfare benefits, health care costs are going up faster than a NASA space rocket,etc.. Now don't you wish you worked (sic.)for the government ? Don't worry the politicians have a solution: raise taxes.