PeakTrader.com

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PeakTrader said...

There are studies that show public employees are underpaid. Here's one example:

"It (the study) controls for education, experience, hours of work, organizational size, gender, race, ethnicity and disability and finds that, compared to workers in the private sector, state government employees are undercompensated by 7.55 percent. Local government employees are undercompensated by 1.84 percent. The study also finds that the benefits that state and local government workers receive do not offset the lower wages they are paid."

My comment:

I suspect, the "experience" factor doesn't take into account job security and easier work (along with low job turnover).

Also, the "organizational size" factor doesn't include the low benefit to society for the cost (e.g. $2 in cost for $1 in benefit).

Moreover, the "education" factor doesn't take into account people who cannot succeed in the private sector, but can succeed in the public sector, or at least appear they're succeeding (e.g. Obama's economists returning to teaching).

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Rajat said...

I am not disagreeing with the idea that net pay for public sector workers maybe higher but I think you cannot just overlay the unemployment rates and say they have more job security. You have to adjust this for educational level.
The unemployment rate for all people with a college degree is only 4.2% and I believe a larger portion of the public sector workers have college degrees. So you have to make that adjustment for a real apples to apples comparison.

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PeakTrader said...

Rajat, it may be difficult to make a "real apples-to-apples comparison:"

Comparing Private Sector and Government Worker Salaries
May 10, 2010

"Governments hire more educated people not because job duties demand more education, but rather simply because they can...Some fields of study are more rigorous than others, and some universities and colleges are more prestigious than others...Governments typically achieve significant cost savings by outsourcing the provision of services to the private sector."

Rajat says: "...net pay for public sector workers maybe higher."

According to the BEA:

On average, federal government employees receive higher benefits in the form of pensions and health insurance contributions than private-sector employees:

Average federal government civilian employees: $37,774 in 2006.

Average private-sector employees: $9,544 in 2006.

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Hydra said...

I don't see it. Public workers I know have job security, but they don't get paid that great, and their jobs are a pain.

"The "organizational size" factor doesn't include the low benefit to society."

Yeah, OK when was the last time that you saw a comapny include its external costs as par of its value statement? $2 in cost for $1 in benefit, implies what, 100% overhead? Plenty of companies are worse than that.

Also, succeeding in the public sector means you need more patience than I have. I'm reasonably intelligent, and educated, but not equipped to succeed in the public sector.

I don't think such denigrating statements are accurate or meaningful.

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PeakTrader said...

Hydra, the $2 in cost for $1 in benefit implies "organizational size" is too big (in the study), because of capital destruction from inefficiencies, unlike the private sector, which creates capital through efficiencies.

Ross Perot was also not "equipped to succeed" at GM before it went bankrupt.

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Hydra said...

"The $2 in cost for $1 in benefit implies "organizational size" is too big."

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What does that say about the (supposed and claimed) efficiency of large urban areas?

Hydra said...

"Which creates capital through efficiencies."

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You mean like billing the government till it bleeds?

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PeakTrader said...

Hydra, it's wrong to blame the private sector for wasting tax money.

Next you'll be telling me Wall Street caused the financial crisis.

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Hydra said...

"Hydra, it's wrong to blame the private sector for wasting tax money."

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Why is it wrong when I've seen it happen? I've been on both sides of this: I've been a contractor who could not succeed because of changing requirements, creeping scope, and generally lusy management by government, And I have seen companies that game the system to make themselves unmanageable by government.

I think there is plenty of blame for both sides.

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PeakTrader said...

Hydra says: "I think there is plenty of blame for both sides (government and private sector).

What you fail to understand is government creates the conditions, through confiscation and imposition, the private sector responds to.

Why should the private sector be blamed for reacting rationally?

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Hydra said...

Government creates the conditions....

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That is your claim, but I don't believe it.

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PeakTrader said...

Hydra, perhaps you can explain why U.S. consumption at 70% of GDP is the highest in the world, given all the "corporate chiselling that continues today."

Have you ever considered government is irresponsible, or more accurately foolish, with your money (along with foreign money, your grandchildren's money, etc.)?

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Hydra said...

Easy.
Corporate chiselling counts as part of gdp.

Would you trust a gas pump that was not calibrated and certified by government?

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PeakTrader said...

Hydra, 70% of GDP is consumption. The other 30% is investment, government spending, and net exports.

Consumers would save instead of spend, or spend somewhere else, if there was "corporate chiselling."

You seem to have little faith in the free market and individual responsibility.

Government has many functions. However, one of them shouldn't be creating trillion dollar crises, and then spending trillions of dollars to fix them.

Unfortunately, that's what happens when a bunch of lawyers micromanage an economy.

The $5 trillion of added national debt over the past four years could've been better spent.