Under Obamanomics, Government Workers Win, You Lose

Heritage Foundation

Today the House of Representatives is expected to approve yet another bailout for those states that have proved incapable of controlling their spending on government worker pay, benefits and pensions. The $26.1 billion price tag will be funded in part by $11 billion in tax hikes on U.S. companies that compete internationally. From his trillion dollar economic stimulus to his $3 trillion tax hike it has become clear that President Barack Obama views the private sector the same way the Huns viewed a city - as something to be sacked and plundered for the benefit of public sector workers.

The effect of President Obama's policies is becoming clear. The Wall Street Journal reports that personal incomes fell across the U.S. last year except in areas with a high concentration of federal government jobs. Washington D.C. was one of just three metro areas that saw both net earnings and personal income rise. And those gains were due entirely to the growth of the federal government; private sector compensation in the Washington metropolitan area actually fell. Nationally, private wages fell six percent in 2009 while government pay rose 2.6 percent. And USA Today reports that federal employees' average compensation has grown to more than double what private sector workers earn.

Responding to the new numbers, National Treasury Employees Union President Colleen Kelley told USA Today: "The data are not useful for a direct public-private pay comparison." And it is true: federal workers often are better educated and more experienced than private sector workers. But after controlling for education and experience, The Heritage Foundation's James Sherk found that federal employees get paid 22 percent more per hour on average than private-sector workers. Throw in the lavish benefits that federal government workers receive, and federal employees earn approximately 30 to 40 percent more in total compensation than comparable private-sector workers.

And it is not just federal worker compensation that has been insulated from the current recession. Unlike the private sector, the federal government has actually been adding jobs, too. According to Heritage Foundation analyst Rea Hederman, since the start of this recession in December 2007, private sector employment has fallen by 6.8 percent while federal government employment has actually increased by 10 percent. Even after factoring in state and local government job losses, governments, on net, have added 64,000 jobs during this recession while the private sector has lost 7.8 million jobs.

Also according to USA Today, while President Obama may have ordered a freeze on bonuses for 2,900 political appointees last week, he also requested a 1.4% across-the-board pay hike for the other 2 million federal workers who are also eligible for additional seniority pay hikes.

This is why Obamanomics is failing. Instead of forcing federal, state and local governments to make the hard decisions on government worker pay, benefits and pensions, President Obama is bailing them out. Instead of cutting and simplifying taxes, the President wants to raise them and use the tax code to punish American companies that compete overseas. Instead of cutting the marginal cost for private employers to hire new workers, the President is creating new taxes and regulations that make hiring more expensive. At 9.5% unemployment, every private sector worker must be worried about their job under the Obama regime. But not government workers. President Obama will always have a bailout ready to protect their jobs.