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Great Resources

Where Are Taxes Going?

Didn’t Obama say we were ALL going to have to sacrifice?

The Obama Administration handed out more than $400 million in awards to federal employees last year, up by more than $80 million from the prior year, according to new government data. h/t Big Government

Of course, the federal unions can always explain why government employees don’t have to sacrifice.

Awards in the federal system “are a very, very small portion of federal employees’ compensation,” Sherk said. Efforts under President George W. Bush to move the civilian employees in the departments of Defense and Homeland Security to a more merit-based pay system failed because of stiff opposition from government unions, he said.

With fewer incentives, employees have little motivation to do a better job, Sherk said. “They are human. We are all human. People respond to incentives,” he said. “If your pay is based on your performance, you work harder.”

Obama has been an outspoken critic of bonuses and incentives in the private sector.  Democrats have even suggested taxing private sector bonuses at a special punitive rate.  Beyond that, however, the assertion that incentives are a small part of the compensation for government employees is true – unless you consider a much higher pay scale and very generous benefits package part of  their “incentives”.  I think we’ve accidentally stumbled upon the truth.

Figure 1. Average Wages Federal Civilian vs. Private Industry

Figure 2. Average Total Compensation Federal Civilian vs. Private Industry

Am I the only one who considers higher pay and better benefits to be incentives for government workers?  Given the huge pay disparity and benefit packages between government workers and private sector employees, why in the world do government workers need additional incentives?

Comparisons of federal and private pay often just look at wages and do not consider the superior benefits received by government workers. The Bureau of Economic Analysis provides data showing the average value of federal and private-sector benefit packages. In 2008, federal workers enjoyed average benefits of $40,785, which compared to average benefits in the U.S. private sector of just $9,881. That huge advantage stems both from more federal workers receiving certain types of benefits and from particular federal benefits being more lucrative than those available in the private sector.

Federal workers receive health insurance, retirement health benefits, a pension plan with inflation protection, and a retirement savings plan with a government match. They typically receive generous holiday and vacation schedules, flexible work hours, training options, incentive awards, generous disability benefits, and union protections.

Lily Garcia, a human resources specialist who contributes to the Washington Post, noted: “The primary advantages of working for the federal government are generous benefits, solid pay, and relative job security, a combination that is challenging to find in the private sector, even in the best of times. Garcia summarized the federal benefits package:

  • “Health Care: The Federal Employee Health Benefits Program offers the widest selection of health care plans of any U.S. employer. Federal employees also have access to vision and dental plans, life insurance, flexible spending accounts, and long-term care plans.”
  • “Paid Time Off: Federal employees enjoy liberal amounts of paid time off, including 13 days of sick leave per year, 10 paid federal holidays, and 13 to 26 days of paid vacation, depending on years of service.”
  • “Retirement Benefits: Federal employees have access to retirement benefits through the Civil Service Retirement System or the Federal Employee Retirement System. Under both plans, retired employees receive an annuity, which is complemented by Social Security benefits and participation in the Thrift Savings Plan that offers 401(k)-type investment options.”
  • “Family-Friendly Policies: Another notable benefit of federal employment is family-friendly policies, including flexible work schedules, telecommuting, part-time jobs, and job sharing. Not to mention the fact that federal employees enjoy first priority and subsidies at a number of top-notch day care facilities.”

Once hired, government employees really hang on to those jobs!

There is another important benefit of federal employment: extremely high job security. U.S. Bureau of Labor Statistics data show that the rate of “layoffs and discharges” in the federal workforce is just one-quarter of the rate in the private sector. Only about 1 in 5,000 federal nondefense workers is fired for poor performance each year.

It seems clear that federal wages and benefits have grown to excessive levels in recent years. But we can “market test” that proposition by looking at the worker quit rate—at what rate do workers voluntarily leave the federal government to take other jobs? It turns out that the quit rate in the federal government is only one-quarter the quit rate in the U.S. private sector. Federal workers know that they have a gold-plated compensation package and high job security, which is hard to match in the private market, and so they stay put.  (Read more.)

Sherk’s statement that “we are all human” is true.  Some of us humans are getting tired of  having our taxes raised to pay exorbitant government employee salaries.

Read more @ Big Government.


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