Regulatory Reform

Hired With a Silver Spoon?

At a time when states are tightening their budgets and looking everywhere to find savings, one area has been largely overlooked. A new study released by Citizens Against Government Waste (CAGW) highlights the major disparity between state workers and private sector workers. In the new report, titled Public Servants or Privileged Class: How State Government Employees are Better Paid than their Private Sector Counterparts, CAGW finds that, in an across the board average, state employees are compensated about 6.2 percent higher than their private sector counterparts.

However, the report also goes on to find that in some industries the pay disparity can be dramatically higher. For instance, in the “Architecture and Engineering” industry, state employees are paid about 40 percent more than their private sector counterparts. That 40 percent figure also applies to “Protective Services” and “Education, Training, and Library” as well. To highlight this severe difference in employee compensation, CAGW released a video comparing two architects, Bob (a private sector architect) and Jerry (a state employed architect).

The study also finds nationally, no state government pays their state employees below or even on par with what is earned in the private sector, despite the identical occupations. This is even true for the growing number of states that are inching ever closer to declaring bankruptcy, and at a time when total state pension unfunded liabilities alone are estimated to be about $4.6 trillion. That is not to say that some states did not do better than others. CAGW graded states based on how close their state employees were paid compared with the same occupations in the private sector.

The Citizens Against Government Waste report is not an outlier either. Recently the Howard Jarvis Taxpayers Association in California released the a study that shows that state employees’ benefits grew 3 times faster than those of their private sector counterparts in the state of California. This same state also currently has the highest level of debt than any other state at about $617 billion. Similarly, work done by the American Enterprise Institute and the Heritage Foundation reflects this type of higher-government-pay bias on the federal level as well.

As states continue to strain their budgets and look for ways to eliminate waste, nothing should be off the table. State debt, unfunded pension liabilities, and exorbitant state employee compensation policies will all have to be addressed as states look to responsibly balance their budgets without harming their economic growth or overall competitiveness.

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth