To the People

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or TO THE PEOPLE.

Thursday, April 26, 2007

The Elite of 2020: Public Sector Employees

At some point in the not-so-distant future, there will be social unrest when the first private sector generation without pensions starts to retire and realizes that they cannot afford to support via property and income taxes the sweet deals that governments made to public sector employees, who have generous pensions and lifetime health insurance benefits. To kill the argument that public sector employees make less money than their private sector peers, public sector employees make twice in total comp than they do, according to Cato's Chris Edwards.
The Bureau of Economic Analysis released data this month showing that the average compensation for the 1.8 million federal civilian workers in 2005 was $106,579 -- exactly twice the average compensation paid in the U.S. private sector: $53,289. If you consider wages without benefits, the average federal civilian worker earned $71,114, 62 percent more than the average private-sector worker, who made $43,917.
Some recent news examples of excess government largess that we do or will have to fund include:

-- Federal workers get a $105 per month public transit allowance. Some of them don't use the benefit and instead sell it in eBay for cash.

--Federal employees also often get free parking. In DC, a reserved downtown parking space on average costs $360 per month. The sting on the workers selling their Metrocards on eBay also found that many of those employees also had free parking.

-- Metro workers' pensions are based on their three highest-paying years, including overtime. Not surprisingly, they book a ton of overtime. The result:
Overtime has a significant impact on long-term costs because pensions are based on the total number of hours worked. As a result, some retirees receive pension checks bigger than the base pay they received while working.
One could go from municipality to state around this country and find that all jurisdictions are dealing with the issue of how to fund union contracts that guarantee benefits that are basically a redistribution of wealth from private sector employees, who have no pensions or health insurance, to public servants.

Unless this bomb is defused, taxes of all types will have to go up, way up, to fund unprecedented public sector benefits, just as the first generation of people without any benefits hits retirement.

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