In “Class War, How Public Servants became Our Master’s”, Steven Greenhut describes the fundamental cause of the fiscal crises facing state and local governments. At the same time he highlights key issues that will inevitably become the focus of contentious electoral and legislative showdowns as citizens revolt against unsustainable levels of taxation driven by absurdly generous public employee benefits.
Unlike the claims of the political left that fundamental divisions in our country are between the rich and the rest of us, the real class division that matters in political terms is between the public sector and the private sector of the workforce. Greenhut highlights numerous examples of gross abuse of the public pension system and other perks, along with some fundamental statistics that highlight the divided country we are becoming.
According to a 2007 analysis of data from the U.S. Bureau of Labor Statistics by the Asbury Park Press, “the average federal worker made $59,864 in 2005, compared with the average salary of $40,505 in the private sector.”
And that’s before calculating the lifetime value of lavish pensions and other perks of “public service”. Greenhut continues:
But the real action isn’t in what government employees are being paid today; it’s in what they’re being promised for tomorrow. Public pensions have swollen to unrecognizable proportions during the last decade. In June 2005, BusinessWeek reported that “more than 14 million public servants and 6 million retirees are owed $2.37 trillion by more than 2,000 different states, cities and agencies,” numbers that have risen since then.
All these statistics are truly depressing for taxpayers. But far worse are some more fundamental statistics that he cites about the structure of our economy:
Michael Hodges’ invaluable Grandfather Economic Report uses the Bureau of Labor Statistics to chart the growth in state and local government employees since 1946. Their number has increased from 3.3 million then to 19.8 million today—a 492 percent increase as the country’s population increased by 115 percent. Since 1999 the number of state and local government employees has increased by 13 percent, compared to a 9 percent increase in the population.
The United States had 2.3 state and local government employees per 100 citizens in 1946 and has 6.5 state and local government employees per 100 citizens now. In 1947, Hodges writes, 78 percent of the national income went to the private sector, 16 percent to the federal sector, and 6 percent to the state and local government sector. Now 54 percent of the economy is private, 28 percent goes to the feds, and 18 percent goes to state and local governments. The trend lines are ominous.
Bigger government means more government employees. Those employees then become a permanent lobby for continual government growth. The nation may have reached critical mass; the number of government employees at every level may have gotten so high that it is politically impossible to roll back the bureaucracy, rein in the costs, and restore lost freedoms.
Adding to those numbers the huge number of people dependent on social security, welfare, government pensions or other direct government financial support of one type or another, along with all the folks in the non-profit sector and those working on government contracts, it becomes clear that the United States has ceased to have a functioning market economy. And the implications for the future are not promising in a democracy comprised of an electorate of government dependents.
Such depressing fundamental statistics on the structure of our economy indicate that the recent financial crisis is likely just the beginning of a long and politically contentious economic decline unless some fundamental steps are taken to reverse these trends.