D. Dowd Muska


Real Inequality: Public vs. Private Compensation

November 28, 2013

This summer, Phoenix’s outgoing city manager boasted that he hadn’t “taken a sick day in 10 years.”

Taxpayers probably wish he had.

David Cavazos, 53, left the Valley of the Sun’s municipal behemoth in October, and in “retirement,” became the city manager for Santa Ana, California. Last month, after demanding details from Phoenix officials, The Arizona Republic revealed that by salting his final-salary calculation with unused sick leave, the bureaucrat was “able to inflate his annual pension to an estimated $235,863.” Santa Ana is providing annual pay of $315,000. Notify Occupy Wall Street’s hipster hippies -- Cavazos is now a member of the Top 1 Percent.

For millions of state- and local-government employees, the Great Recession and Prolonged Stagnation haven’t had much of a sting. Recent years have seen high-profile battles to trim retirement benefits, temporarily freeze wages, and increase healthcare-premium shares in places such as Wisconsin and New Jersey. But surveying 2013’s legacy-media reportage of government “work” yields the conclusion that not much has changed:

• Florida’s lawmakers approved what the Tampa Bay Times called “a compensation bump of between 5 and 10 percent” for 70 percent of the state workforce. Several months later, the Times exposed raises for capitol staffers of “about three to five percent for most … but as much as 20 percent for others.”

• An investigation by the Austin American-Statesman disclosed that the number of employees in Texas government schools “with salaries of more than $100,000 has jumped 78 percent over the past five years.”

The Cincinnati Enquirer uncovered a stampede of county-worker retirements in Southwest Ohio, driven by cost-cutting reforms of the state’s pension system. The “retirees” grabbed “nearly $5.5 million in accumulated sick and vacation pay,” and dozens were put back on payrolls through “a controversial practice sometimes called double-dipping.”

• The California Citizens Compensation Commission hiked state-legislator salaries to $95,291, which The Sacramento Bee calculated to be “more money than about 85 percent of full-time, year-round workers in California.”

• The Las Vegas Review Journal reported that while Southern Nevada’s new top educrat had “no previous superintendent experience,” his salary will be $260,000, plus “a $700 monthly car allowance, $600 a month to offset costs of participating in community events and $4,000 for professional development.”

• The Hartford Courant wrote that the “vast majority of the state’s 45,000 unionized and non-unionized employees” will receive “raises of 5 to 6 percent” in the 2014 fiscal year. (Connecticut has the highest federal-state-local tax burden in the nation.)

• An Associated Press review found that based on the “premise that they serve governments and the public,” lobbyists “in at least 20 states … get public pensions because they represent associations of counties, cities and school boards.”

• The Beaver State’s legislature “approved $5,000 annual salary hikes starting Jan. 1 for all statewide elected officials,” wrote The Oregonian. Unionized employees were awarded a contract that offered some wage hikes “of 6 percent a year starting Dec. 1.”

• An Oklahoma Watch probe, published in The Oklahoman, found that taxpayers contribute “the entire cost of [state-employee] insurance premiums, which total $18,113 per year for … families.”

• An Associated Press examination in Minnesota discovered “scores of local officials -- city managers, police chiefs, parks directors, county health agents among them -- now drawing bigger paychecks than the governor. In some cases, pay for the same position shot up more than $40,000 in about eight years.”

• New Hampshire’s state employees approved a collective-bargaining agreement that included, according to the Concord Monitor, “a $300 payment … in lieu of retroactive pay,” “a 1.5 percent increase in salary in [the] next paycheck,” and “a 2.25 percent increase beginning July 1, 2014, and another 2.25 percent increase beginning Jan. 1, 2015.”

At the broadest level, the gap between private and “public” pay remains capacious. Federal labor economists estimate that the total cost of hourly compensation in the private sector is $29.11. The figure for state and local employees is $42.09. Eighty-nine percent of non-federal government workplaces supply pensions or 401(k) plans, 87 percent provide healthcare coverage, 79 percent offer life-insurance benefits, and 89 percent grant paid sick leave. The comparable shares for the competitive-and-accountable sector are 64 percent, 70 percent, 57 percent, and 61 percent.

It all leads to an unquestionable, and maddening, conclusion: “Public servants” continue to live on Easy Street, where raises aren’t linked to performance, benefits are majestic, and double dipping can’t be killed.

Politicians and bureaucrats are interested in your wealth. You should be interested in theirs.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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