For years, I’ve been pounding the table about how public sector wages and compensations have steadily outpaced those found in the private sector. This is no more readily apparent than in New York where runaway budgets and deficits continuously fleece the taxpayer.
The private sector has several factors in place that help control runaway costs, chief among them being competition. The profit motive in the private sector keeps compensation at levels where economic factors limit them to their true market value, reflecting economically rational and fair compensation levels. On the other hand, there are no such competitive inhibitions in the public sector where politics and cronyism, rather than economics, create a fairy-tale negotiation for wages and benefits.
Here’s a tale of two states: New York and Florida. In New York, it is clear that public service unions are a significant reason why the cost of living is higher. In 2010, Florida’s population was 18.8 million while New York’s was 19.3 million. In the past ten years, New York experienced population stagnation (19.4m) while in Florida, the population grew to 21.8 million and continues to be one of the fastest growing states in the country. Yet crucially, over the same period, New York’s budget increased to $177 billion while Florida’s was a mere $93 billion, up from 70.4 billion in 2010. One could argue that New York does more for its people than Florida does, but the reality is that they just spend more money. Bloated public service payrolls and off-the-charts cost burdens of regulation are the main culprits. And that’s the problem.
I propose that the people of New York withdraw its authorization to its elected officials to enter into any contracts with public service unions that provide compensation, benefits, and terms in excess of those being paid for similar work and skills in the private sector. Furthermore, there should be a requirement that restricts any federal government employee from receiving a raise if it puts his compensation in excess of the benefits and wages paid for the same work in the private sector.
By “competing” per se with the private sector for compensation, the government can do its part to help keep its budget and deficits from getting any more out of control.