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The large – and growing gap – between private and public sector benefits

Post by Kim Bradford on April 27, 2010 at 12:41 pm with 11 Comments »
April 29, 2010 12:48 pm

Our editorial yesterday on the Pierce County payroll made reference to the recession’s effect on the standing of private sector workers relative to their public sector counterparts.

The gap shows up most prominently in the area of worker benefits. Michael Mandel, a former BusinessWeek chief economist, took a look recently at some Bureau of Labor Statistics data. His findings not only dispute the age-old idea that state and local government employees are paid less than private sector workers, they also reveal a growing gulf in health care and retirement benefits.

Somewhere in 2004, the world changed, and we didn’t realize it. Employers in the private sector put a lid on the cost of benefits (which includes healthcare, retirement, vacation, and supplemental pay of all sorts). Meanwhile the cost of benefits in state and local govt jobs just kept rising, with barely any break, both before and after the financial bust.

Mandel found that state and local governments contribute $4.45 per employee hour for health care benefits, compared to $2.01 in the private sector. The disparity was even greater in retirement benefits – $3.19 in the public sector to 92 cents in the private. Private sector retirement benefits have stagnated in the past five years, while state and local government costs for retirement rose 30 percent.

His conclusion?

This cannot continue.

Leave a comment Comments → 11
  1. Well duh!

    I’ve been complaining about this for over a year.

    The Democrats are a group of big cowards who are afraid of the unions. Unfortunately, the Republicans are not much better.

    Republicans, I know you are out voted in the legislature, but why haven’t at least given us an initiative to sign and vote on this year?

  2. ldozy1234 says:

    Thank you for sharing this information. I think many are aware but having further validation helps.
    Years ago the Federal Govt changed retirement from CERS to FERS in an effort to manage retirement costs.
    The whole county, state and federal systems need to be re- done. Civilizations have fallen when any form of govt became so fiscally irresponsible and forced to outrageous demands upon its citizens and I fear we are seeing that happen today.
    Hopefully there will be some proactive changes in reaction to the warning signs and future contracts and agreements will provide better safe guards.

  3. gowenray says:

    Yes, the problem of overstocked and underutilized governmental agency payrolls at federal, state and local levels has been the most remarkable contribution to our tax-burden for the last several decades.
    In furtherance of the problem are the TEA Party types that shout “kick all the politicians out!” Well, the current lot of politicians may be part of the problem but, can you honestly say any newcomers of late seem all that committed to a problematic fix?
    Neither can I. So, if we don’t make our wishes known to the current office-holders and hold their feet to the fire, how can we justify replacement?

  4. nwcolorist says:

    gowenray – you’re right. The problem resides with us, the voters. When we the voters get serious about holding our representatives feet to the fire, things will start to happen. But what does that actually mean?

    I’ve been voting Republican for over 25 years, writing letters to the editor , and have participated in the local political process. To what avail? I will not abandon the faith, but it sure would be nice to occasionally see some return on the efforts.

  5. I realized this information would probably inspire some no-duhs among commenters, but you’d be surprised how many people don’t understand how disproportionate public employee benefits have become. I spent some time talking on the phone today with a county employee who was upset about our Monday editorial, and became even more upset when I suggested all county employees should be contributing to their health care so they’d have a stake in the costs.

  6. tree_guy says:

    This was a really good posting, Kim. Thanks for the statistics!

  7. Thank you for this. I know there are many people like you referenced in your post above that truly believe the “public” sector employees have been underpaid. Their retirement benefits are insane, and it is time to fundamentally change the system. Unions were a great tool when they were created-as employers did have complete control over their employees. Now the unions wield corrupt power. The pendulum has shifted, and it is time to put the unions in check. We are in a tough economic time, Gregoire has destroyed our state with her bloated budgets and ideas.

  8. LaborGoon says:

    What you’ve identified is a large and growing gap between UNION and NON-UNION workers.

    It’s not like state and local governments have suddenly decided to cave to union demands and award better and better health care and pension benefits. The public-sector unions have successfully MAINTAINED these benefits while, around them in the private sector, the decline of union density has corresponded to a decline in the number of workers with health benefits (and the quality of those benefits) and the number of workers with real, defined-benefit pensions (as opposed to 401(k)s funded with their own money).

    So what you are railing about, Kim, is that the average American worker has crappier benefits now than out parents did and it’s not fair that public employees still get your parents’ good deal. So you want to take it away. This is exactly the mentality that has led to the decline of union density. Dragging each other down is the opposite of the kind of solidarity necessary to lift each other up.

    In closing this rant, those of you who’d like decent health benefits and a real pension are welcome to FORM A UNION and insist on them from your employer. Good jobs are made by people who REFUSE to quit, they are made by people who exercise their freedom of association and their right to unionize and MAKE them better.

  9. Under the free trade acts that conservative Dems and all the Republicans supported, we saw many of the lucrative private sector jobs for the middle class escape to China and India and all over the globe. In terms of our Gross National Product, the five largest banks in the US produce 76% of our entire wealth, services and they determine, top a great extent, who can get paid what. I feel sad for our economy that the private sector has diminished so much over the last two decades. That is certainly no reason to beat up on public sector workers. Republicans just want more of the same. Fewer middle class jobs with good benefits so that the richj can get richer and the gaps in income can get bigger. The way this blog has presented the informatiion is so biased and so un-American, it is ridiculous. The real shame lies in the fact that workers allow themselves to be treated as corporate slaves.

  10. Chacun en convoite de l’extra men� de cette facture.

  11. This blog won’t display appropriately on my android – you may want to try and repair that

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