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Put the Free Market in Government Employment December 26, 2008

Posted by federalist in Unions.

Public employees, unionized or not, have a miraculous tendency to accrue above-market wages and benefits.  Well, perhaps not so surprising, as Everett Chamberlain points out in a recent WSJ letter:

Think about it. Where is the competition in the public sector? Uncompetitive wage and benefit packages for public-sector employees are simply funded through the increase in taxation on the public at large. Uncompetitive wage and benefit packages in the private sector cause companies to close their doors or move offshore. In business, when your costs no longer allow you to sell your product at the market price, you are finished.

“Ho hum,” you may say, “You’re surprised to discover yet another dimension in which government is less efficient than private markets?”  Well here is a proposal that could put a prompt and proper end to this problem:

Government should implement the following rule without exception: Any non-elected public job should be open to continuous bids.  This means that if a qualified individual comes along and offers to sign a contract to do a public job for a lower cost than the existing employee, then the incumbent must either agree to work under the conditions of the cheaper contract or else relinquish the job to the cheaper contractor!

There is no justification in a non-socialist society for government employees to enjoy tenure or excess rents on their job.  In a recession like this it becomes even easier to see that public employees are being granted job security and compensation starkly in excess of what can be found in the private sector.



1. federalist - May 19, 2009

Noted in Steve Malanga’s essay, “Unions vs. Taxpayers:”

A study in 2005 by the nonpartisan Employee Benefit Research Institute estimated that the average public-sector worker earned 46% more in salary and benefits than comparable private-sector workers. The gap has only continued to grow. For example, state and local worker pay and benefits rose 3.1% in the last year, compared to 1.9% in the private sector, according to the Bureau of Labor Statistics (BLS).

But the real power of the public sector is showing through in this economic crisis. Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession, and the jobless rate for government workers is a mere 2.8%. For anyone who thinks such low unemployment numbers are good news, remember that the bulging public sector must be paid for with revenues that most governments don’t currently have.

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