Creeping wealth in the public sector

In both the public sector and academia and in the military as well the tale has been one of suffering service ameliorated by back end security. The suffering itself has been withering and the security has been growing and a result is another facet of the Social Security dilemma. Stephane Fitch describes the problem in Gilt-Edged Pensions.

The common presumption is that public servants forgo high wages in exchange for safe jobs and benefits. The reality is they get all three. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector’s $19, according to Bureau of Labor Statistics data. Throw in pensions and other benefits and the gap widens to 42%.

Four in five public-sector workers have lifetime pensions, versus only one in five in the private sector.

That’s a lot less than Social Security’s $11 trillion unfunded liability. But the feds have lots of wiggle room to lessen their burden by, say, raising the age at which you become eligible to draw benefits. Most public employees’ benefits, by contrast, are set in stone.

The pension problem has already bankrupt some communities. The actual employment salaries, especially for those public workers subject to overtime, is becoming an issue as local governments seek to deal shrinking budgets.

There will be some adjustments. The only question is when and by how much. Bush’s efforts to deal with Social Security early and small was defeated. Its defeat is still being defended by making an example of the asset bubble bursting (studiously ignoring the long term in order to make the point). Will lessons be learned or will they need a more harsh teacher?

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