Wednesday, December 15, 2010

A New Deal, Replacing Raw Deal

The Scott Walker apocalypse is coming soon. Well, at least several state employees would have you think so.

In a letter to the JT today, one such employee argued that state employees are the ones who will stimulate the economy. Not the $9 per hour folks that can't afford to leave the home.

Why not have everyone be a highly compensated state employee. Now that would really stimulate the economy, right?

Of course not. The money for such largesse has to come from somewhere. It comes from the rest of us. If we pay to much for state employees, we are wasting the taxpayers money.

How do we know if we are paying too much for labor? One clue is comparisons with similar private sector employment. Another is to look at the attrition rate of state employees. My guess is that if we looked at these factors, we would find that state employees are compensated better than their peers in the private sector and that they hardly ever leave for better opportunities.

State employees should be paid fairly. Taxpayers should be taxed fairly. The best indicator of fairness in trade for products, service labor or whatever is to observe what happens when things, such as labor, are traded freely. That is, to see what happens in the private sector.

Why not peg state employee compensation to averages in private sector employment of the same type? As a generous taxpayer, I would be willing to sweeten the pot and throw in the de facto tenure for no charge. What a deal for state employees!


Sean Cranley said...

Careful what you ask for Denis. A state employee with comparable education and experience to mine makes about 60% to 70% of what I do.

I'm told by an Information Technology professional who works in the private sector, but has consulted with the State that the same is true for IT.

This is one of the reasons that the public sector has a good benefits package, to attract good workers (my experience with them which is substantial, is that by and large they are good). By pooling workers into benefits packages, economies of scale are achieved whereby the state gets more bang for our bucks and makes up somewhat for the lower pay.

Once again, your facts are wrong and resultant logic flawed. Only a fool would believe they can balance the state budget on the backs it workers and maintain a quality workforce. I guess we'll find out whether Walker is fool soon enough.

Denis Navratil said...

Sean, what company do you work for? I am looking for some short selling opportunities.

Your tale begs a few questions. Why would an evil corporation pay you considerably more than they need to? Why not just steal the states talent with a 10% pay increase? Why do state workers stay at a job when they could do so much better in the private sector?

Any chance you are using the union playbook by conflating pay and compensation?

And finally, are you really going to use a conversation with a private sector IT guy as proof that state workers are being compensated less than their private sector counterparts? Before going through the hassle of proving you wrong, would you please offer some tangible evidence for your claim?

Tim the Shrubber said...

It can be sort of hard to make comparisons because many State jobs do not have clear private sector equivalents.

That being said, I think I have seen similar pay differences as what Sean mentioned in my own job type. If I were to take my own set of programming skills and use them to get a state job I would have to take a substantial pay cut. 60% to 70% would seem about right, and perhaps even a bit high.

And that is just the salary difference. Let's not forget I would also have to give up potential bonuses, company stock purchase plan, etc.

"Why not just steal the states talent with a 10% pay increase?"

They do all the time. If I surveyed my peers at work I would bet 75% of them had their first job at a state university or with a state or local government. Professional state jobs are a great places for new graduates to get their foot int he door. The state will hire them with little or no experience while the corporate world probably will not. Once they get some experience the good, hungry, ambitous ones are hired off my corporations while the okay b-team stays in the government jobs. The state is not paying for top talent and it shows.

BradK said...

You can't compare salaries between sectors much less individual organizations without honestly assessing overall compensation packages (benefits, etc), skillset, education, experience, locality, competition (related to locality, usually), etc.

Salary-only discussions are barely scratching the surface of the analysis. That having been said, I've not done that holistic research, so I'm not in a position to take a side in this discussion.

But I'll watch while others do for my own amusement....

Sean Cranley said...

These five myths about federal workers no doubt apply somewhat to state workers as well:

Sean Cranley said...

Sorry, here is the correct link: