|Why We’re Boiling Over: Federal Salaries Now Twice That of Private Sector|
By Timothy H. Lee
Thursday, August 12 2010
Noonan mourned the increasingly hostile state of our union, that “fraying of the bonds that keep us together.” She also recalled with unease a 1994 column in which she forewarned, “I can imagine, for instance, in the year 2020 or so, a movement in some states to break away from the union, which would bring about, of course, a drama of Lincolnian darkness.”
The sources of heat inciting that boil are many and multiplying. Three separate but related recent outrages, however, manifest the centrifugal dynamic she describes well.
This week, the Commerce Department announced that personal incomes fell in metropolitan areas throughout America last year, except those with higher concentrations of federal jobs. As The Wall Street Journal reported, only three of 52 American cities exceeding one million in population witnessed growth in net earnings and overall personal income:
“The new data offer the most detailed, ground-level look at the impact of federal government employment and spending last year, highlighting those parts of the country that have received the most benefits and those that have been hit hardest by the drop in private employment. The support of government was reflected nationally last year, with private wages falling 6% in 2009 even as government pay rose 2.6%.”
In a separate but similarly revealing report of Bureau of Economic Analysis data by USA Today, federal workers now earn double their private sector counterparts. For 2009, federal civil servants’ combined pay and benefits averaged $123,049, compared to the private employee average of $61,051 in total compensation. That federal/private sector income differential has now doubled during the past decade, expanding from a $30,415 gap in 2000 to a $61,998 gap in 2009. Sadly, it also marks the ninth consecutive year in which federal government employees have received larger pay and benefit raises than their private sector counterparts.
So while private workers across America watch their jobs disappear and their salaries stall, privileged federal bureaucrats enjoy earnings that reach twice the size of the very private workers who pay them.
The analysis also noted that federal salaries have grown 33% faster than inflation since 2000, and that overall inflation-adjusted compensation has grown 37% since 2000, compared to 9% for private employees.
Coming at a time of $1.5 trillion federal deficits, it’s no surprise that Americans are approaching the boiling point that Peggy Noonan referenced.
As if those income reports weren’t outrageous enough, three Congressional Democrats have now introduced something they call the “Tax Equity Act” to reduce federal tax burdens in higher-income cities. In other words, residents of such places as San Francisco, New York City and Washington, D.C. would suddenly receive tax relief versus Americans living in areas with lower incomes, lower taxes and lower costs of living.
We’re not making this up.
The proposed legislation introduced by New York Democrats Jerrold Nadler, Nita Lowey and Steve Israel would “adjust federal tax rates to account for the actual cost of living in major metropolitan areas”:
“As New Yorkers know too well, the basic costs of life in the New York region are much steeper than in most parts of the country. The reality is that a dollar in New York isn’t worth nearly as much as a dollar in Spokane or Knoxville or Topeka… Residents of the nation’s most expensive areas – i.e. New York, San Francisco, Los Angeles, Honolulu, Washington – spend a greater share of their paychecks on everyday necessities and, hence, their incomes are stretched thinner than those living in other areas. Yet, New Yorkers and others are taxed the same as the rest of the country, which produces an unfair burden on New Yorkers and other metropolitan residents. The Tax Equity Act would ensure that no such burden exists and would require people to pay only their fair share of taxes.”
In other words, people living in posh locales made more expensive by their own poor policy choices and high state and local taxes would suddenly receive federal favoritism vis-à-vis Americans who vote with their feet and flee toward more rational locales.
This is nothing short of a federal bailout for liberal districts.
When everyday Americans look around and sense that they’re shouldering heavier burdens than privileged federal workers and see bailout proposals for residents of tonier cities, it’s no wonder we’re approaching a national boiling point.