Arnold Kling  

A Note on Public Sector Pay

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Michael Mandel looks at the numbers.


The chart shows that public and private sector pay rose in parallel from 2001 to 2004. Then the lines diverged. Since early 2005, public sector pay has risen by 5% in real terms. Meanwhile, private sector pay has been flat.

Keep that in mind when people tell you that we absolutely have to prevent "fifty Herbert Hoovers" from having to make cutbacks in state and local budgets.


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CATEGORIES: Fiscal Policy



COMMENTS (4 to date)
Ironman writes:

It's surprising more people aren't concerned by this large contributing factor to increasing income inequality in the U.S.!

David R. Henderson writes:

@Ironman,
I went to the link you suggested and read it; then I went to the earlier link and read that. Very impressive. Thank you.

Dan Weber writes:
Since early 2005, public sector pay has risen by 5% in real terms. Meanwhile, private sector pay has been flat.

There is a substantial portion of the population that will see those 2 sentences and come to the conclusion that we need more public sector employment.

Tom Grey writes:

"public sector" pay is, in fact, government pay -- the sector funded by force, not agreement.

"Government choice" theory made a huge PR mistake when it chose the name Public choice theory.

All small gov't, anti-force folk should be separating the expenditures between the force sector (funded without choice, involuntarily by taxes), and the peaceful agreement sector.

Thus..."Force sector pay has risen by 5% in real terms. Meanwhile, peace sector pay has been flat."
Hopefully this can reduce the demand for an increase in the force sector -- and is also an indication of why the force sector does so poorly in return on investment relative to the peace sector.

All peace sector deals are win-win agreements (or else no deal), but the force sector has win-lose deals, with the losers (taxpayers) not having a choice.

Ayn Rand was wrong about selfishness being the key virtue of capitalism -- peaceful agreement is the key virtue.

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