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Home Publications Blogs Beat the Press Can State and Local Government Pay Below Market Wages for Their Workers?

Can State and Local Government Pay Below Market Wages for Their Workers?

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Tuesday, 26 April 2011 04:41
This point should have been raised in an NYT article that discussed efforts by state and local governments to reduce their pension obligations. At present, state and local employees get somewhat lower compensation (including pension and health care benefits) than workers in the private sector with comparable education and experience. If pensions are cut back then the penalty for public sector workers will get larger. In the short-run most public employees will probably remain at their jobs even with pay cuts, however in the longer term economic theory predicts that governments that pay below market rates will have difficulty getting and keeping good workers.
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written by izzatzo, April 26, 2011 7:20
In the short-run most public employees will probably remain at their jobs even with pay cuts, however in the longer term economic theory predicts that governments that pay below market rates will have difficulty getting and keeping good workers.


Exactly. That's why all the good economists left government for the private sector so they could blow up the economy.
Except
written by Lord, April 26, 2011 12:13
private pay will also have fallen and probably by more making it easier.
Workers in Gov. Jobs are Often Over Qualified
written by Floccina, April 26, 2011 5:22
At present, state and local employees get somewhat lower compensation (including pension and health care benefits) than workers in the private sector with comparable education and experience.

The number of qualified applicants for Government jobs are high. The jobs are considered more secure and less hard that private sector jobs and are highly desired. As a friend of mine who worked for the USPO used to say: "I am under worked and over paid". My brother works for the Gov. and he likes to say" "It is good to work for your uncle." (He means Uncle Sam.)

The Government should get the best deal that it can for the taxpayers when negotiating with workers.

somewhat lower compensation (including pension and health care benefits) than workers in the private sector with comparable education and experience.

Applicants for Gov. jobs are often over qualified (E.g. 12% of mail carriers have college degrees). Their over education is evidence of overpay.

IMO if Government really wanted to help people through its employment policy it would hire more people at lower pay.
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written by Holmes, April 26, 2011 7:43
I've worked as a professional for long periods in both private and public sectors. I've seen lots of hardworking, smart people (and the opposite) in both. In the long run, as Dean Baker says, you get what you pay for.

It's funny that when the economy is humming, private sector workers think government workers are chumps for not cashing in. Then they are envious when the economy tanks. In fact, right now is when government ought to be hiring, since the applicant pool is better. If they wait until the economy improves, people will head for bigger bucks in business.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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