Public Employees: Myths and Realities

With all the venom directed at public employees these days, it’s hard to separate the facts from the attacks. Here’s a guide to common claims made about government spending, taxes, and public employees.

The Claim: Government employees are overpaid.

The Facts: The Economic Policy Institute measured state and local public workers against their private sector counterparts with the same age, experience, and education. They found that public workers earn about 11 percent less.

Public workers had better benefits on average, but even when health care and retirement were included, public workers were still 4 percent behind private sector counterparts.

Claims that state and local government workers are overpaid often fail to account for their education and experience. Fifty-four percent have at least a four-year college degree, compared to 35 percent in the private sector.

The Claim: The federal deficit is out of control.

The Facts: It’s true that this year’s budget deficit—projected to be 10.3 percent of U.S. economic activity—is the highest since World War II. Whether it’s a problem depends on your time frame and how we address it.

Short-term government spending was the only thing that kept the economy from cratering in 2008. It staved off a second Great Depression.

With no private sector investment in sight, public spending will be the only engine for job creation in the foreseeable future. Aside from the pain created by high unemployment, no jobs means no recovery for tax collections and therefore a widening deficit.

The deficit is a long-term problem if we do nothing, but before doing something we have to look at spending and revenues. The bulk of federal spending is on the military (22 percent) and health care, including Medicare, Medicaid, and children’s health programs (21 percent).

The obvious place to start trimming is today’s military budget, which is two and a half times what it was 10 years ago. Health care costs are also skyrocketing, because they are driven by for-profit health care. A single-payer system like “Medicare for all” would correct that.

The Claim: Taxes are too high.

The Facts: Depends whose taxes you mean. According to Citizens for Tax Justice, overall taxes in the U.S. are the third lowest among industrialized countries (only Turkey and Mexico are lower). Corporate taxes are also lower than in most other industrial nations.

But there are inequities—and they favor the rich. People at the bottom of the income ladder, the lowest 20 percent, pay almost twice as much of their income in state and local taxes as the top 1 percent. The poor pay 11 percent, the rich just 6 percent.

At the end of World War II corporations paid more than a third of all taxes collected by the federal government. Today they pay only 10 percent. The burden was shifted to individuals, and as taxes on the wealthy were cut over the last 30 years, the liability has been transferred to working people.

The Claim: The private sector is more efficient than government.

The Facts: Advocates claim outsourcing will save money. But after more than two decades of experience, reality isn’t so clear-cut.

Cost overruns combined with the cost of contract monitoring and administration often makes privatization more expensive than in-house services. According to a 2007 survey by the International City/County Management Association, more than one in five local governments had brought previously outsourced services back in house.

In most cases insufficient cost savings were cited as a primary reason. And where contracting out does produce savings, they typically come from lower wages and benefits for workers—not some supposed inherent superiority of business.

The Claim: Government waste, fraud and abuse are rampant.

The Facts: Government-bashers love to talk about overpaid, do-nothing bureaucrats, but if you’re looking for misused tax dollars your best bet is to scour the Chamber of Commerce’s membership list. Defense contracts and construction projects like the “Big Dig” in Boston hold taxpayers hostage with wildly inaccurate, often fraudulent cost estimates.

According to the Project on Government Oversight’s database of federal contractor misconduct, the top five defense contractors have racked up 156 instances of misconduct since 1995, totaling $3.57 billion in fraud and waste.


A version of this article appeared in Labor Notes #382, January 2011. Don't miss an issue, subscribe today.

Comments

thetimeisnow (not verified) | 01/04/11

There is a definite assault on UNIONS. By the constant labeling of GREEDY UNIONS, or "I like him, he stands up to union"..."he's tough on unions". So New York Gov. Cuomo shows us that he plays fair...he will also take a cut in pay - 5% of the $100,000 salary. While California Gov. Gerry Brown also joins the chorus. I'm sure their lifestyles will not change. But the State and Federal employee's lifestyle will change, just as the Private union workers lifestyle will change as well, for surely we are next. Everything that you do and use has gone up including the monies that you pay to get to work. The tax cut will not save you from these assaults yet the Republican and Corporate message to the public is that the starving child is stealing from them, and they're the victim. This is what propaganda does and those Corporations whom they are in bed with, own the media - the mechanism- that is constantly getting that message out. The Unions did not play a part in the factors that caused the recession, however they continue to try and fix it on the backs of the worker.

The Federal Government and the State Government are trying to renege on a contract that they had with the workers. The workers kept their bargain by working yet the Government was not paying into the Pension Plan as they had promised. So now they set out to ruin the name of Union in order to cover their misdeeds, deceptions and downright lies.

The Corporations have a voice with our Government and we the worker do not! We the People must reclaim the power that corporations and right-wing governments have long usurped. It is each and every individuals responsibility to learn how to STAND-UP and FIGHT and WIN!!!

http://ourunionvoices.com/2011/01/03/2011-solidarity-how-do-we-achieve-it/

carlgold (not verified) | 12/21/10

Why no mention of federal employees? There is as much venom directed to the feds as towards local government workers. Federal workers are facing President Obama's hiring freeze, Republican calls for furloughs, hiring freezes and other cutbacks, and the arguments that federal workers are overpaid are the same lies that are thrown at local government employees.

The Virtual Pic... | 12/22/10

I actually wrote an article on low paid federal employees, which can be read here:

http://www.inthesetimes.com/article/6665/the_federal_underclass

If you cut the salary of each of the members of the US House of Representatives from 177k to 100k for a year, it is the equivalent of freezing the salaries of 50k federal employees earning less than 50k a year. You can read more on this here:

http://talkingunion.wordpress.com/2010/12/07/triangulations/

David Kreindler (not verified) | 12/20/10

According to a recent study by Public Citizen, the pharmaceutical industry now tops not only the defense industry but all other industries in the total amount of fraud payments under the False Claims Act. In just the last five years, the pharmaceutical industry has been required to pay $14.8 billion in penalties resulting from fraud -- including illegal off-label promotion of drugs and deliberately overcharging state health programs (mainly Medicaid).

When it comes to waste, it is also worth noting that the pharmaceutical industry spends far more on marketing, advertising and lobbying than it does on research and development. In fact, the pharmaceutical industry spends more on lobbying than does any other industry.