Wednesday, May 23, 2018

When Did Working For The Government Beat the Private Sector?

Decades ago, working for the government was seen as a lesser endeavor.  You didn't get paid much, but on the other hand, you didn't work too hard and couldn't get fired very easily.   Today, many government workers effectively make far more than people in the private sector.

A reader writes, sending me this link to an article that argues that doctors make less money than teachers.  It is a compelling argument in this day of "underpaid teachers" who are illegally going on strike to make more money.   They argue they are underpaid, because they "only" make $40,000 a year in places like Arkansas.   This is not far off the median income in the US of $50,000 per household, and if both husband and wife work at similar jobs, they are well above the level of middle class - particularly in rural States where the cost of living is low.

It is odd, but when I was a kid, teachers were indeed underpaid.   That was 50 years ago.  Today, even in the worst States, they make close to the median income in America.  In the best States, nearly double that.  You can make over a hundred grand teaching third graders in New York State - provided you get lots of useless Master's degrees over the summer and accumulate seniority. 

Then there are benefits - health insurance, a cushy retirement, and of course, summers and holidays off.  When you retire, you get 3/4 of that for the rest of your life - living large in places like, well, where I live.  Except that while I scrimp and save and try to make my savings last the rest of my life, my retired teacher friends buy new cars every three years - taking out loans, of course!

Today, the public sector is better than the private!

Now consider a doctor or lawyer - a self-employed individual in many cases, having to pay for their own benefits, fund their own retirement, and taxed at a much higher rate - to the point they are really not doing better than many teachers or other public "servants".   Sure, you make a big "salary" but then again, you pay an 18% self-employment tax on top of the highest rates of income taxes.   And that doesn't address the years you spent learning the trade and the tens (if not hundreds) of thousands of dollars you spent getting your degree.

Sure, a few doctors and lawyers make millions, with specialty practices and celebrity clients.   But the vast bulk actually have to work like dogs - as my previous doctor did (before the stress killed her).   Being a small businessperson in addition to your job is a lot of stress - which is one reason why I decided not to do it anymore.

And then there is the risk. As a doctor or lawyer, you can be sued out of existence. As a teacher (or fireman, or police officer), you can only be fired - and keep your benefits.

Like the guy in Florida who refused to go into the school building and confront the school shooter. He retired and has $100,000 a year in pension.

What the fuck happened?  When did being a government employee become the best option, rather than the last resort?

Well, to be sure, there has been pressure on wages and salaries across the board.   You can't get too many cushy jobs in the private sector anymore, as there is competition from overseas, and even competition from your fellow Americans, particularly those just graduating, willing to work cheap to pay off student loans.

Then there is the cost of education - skyrocketing.     I left the Patent Office and got my law degree, so I could make more money.   A lot of young people ask me how to get into the Patent business, or whether they should leave the USPTO and become lawyers.   I advise them to think hard about this, as a job with the Patent Office can be a guarantee of income for life, whereas working for a law firm is maybe a 5-10 year commitment (on their part) before they throw you out.  And the odds are, they will throw you out.  Many are hired, few make partner.

Today, rather than going to law school and becoming a lawyer, I would have stayed at the Patent Office - I'd have eight weeks of vacation and be ready to retire!   You read that right - eight weeks of paid vacation, by the time you have 20 years in (and by now, I'd have 32!).

Now, some on the Left argue that we shouldn't be "attacking" teachers and other public servants, but instead all fighting for a "fair wage" whatever that means.   But the problem with public sector employees, is that they have been using blackmail to get pay raises as of late.   Today, so many parents use school as a daycare center, so they get upset when school is closed - they have to scramble to make alternative arrangements.   And no one wants to see the "Blue Flu" or a Fireman's walkout, if you are being mugged or your house is on fire.

And in many cases, such as the ill-fated Bell, California (no relation) the lick-spittle union lackeys stuffed the city council with their own goons, and then all voted themselves a huge pay raise, bankrupting the town.   And that case is not an isolated incident, particularly in California.

The sad thing is, to me, is that these government employees aren't saving a nickel of it.  Like lottery winners, they go out and buy big houses, fancy cars, and go into debt - and then argue that they are "living paycheck to paycheck" and need a raise.   But a funny thing - my teachers back in 1968 were actually underpaid, but they managed to make ends meet.   For many salary slaves, money works like Boyle's law - spending increases to accommodate more income.

The teacher's unions have been using a different tactic as of late - instead of arguing they need a pay raise (which they are actually arguing for) they claim they want new taxes enacted to give more money to the schools, which makes them look more altruistic.   But of course, if you give money to a "school" the building really can't spend it, it ends up in the hands of teachers, in the form of salaries.

They also argue that they are due a raise because they haven't had one in a long time, and are making less money, effectively, today, than in the past.   But since inflation has been at record low levels (ask any Senior about their Social Security Cost-of-living adjustments over the last ten years!) there hasn't been a need for a pay raise.  And if you were overpaid to begin with, well, maybe it is time to adjust salaries downward a bit.

The real cost of these pay raises is already being felt in the Northeast, where having a five-figure property tax bill is the new norm.  I ran into a couple who have a house in New York, and their tax bill is over $20,000 per year.   This would drain my finances down to nothing in short order.   So they are forced to sell a house they bought in 1970 and paid for over the years and hoped to retire in, but now can no longer afford, even with no mortgage.

What is odd to me, is that many of these latest teacher strikes are occurring in rural "Red" States, where you'd think the legislature would take a firmer line.  But they have all folded, like cheap umbrellas, one after the other, as angry constituents call them and want their free daycare back.

As a result, the legislatures have had to pass tax increases.   And this surely will affect the economy and fuel inflation, which is already on the rise.   And teachers will no doubt strike next year or in the next State, as they see other teachers wring concessions from cowardly lawmakers.   And since each raise will be wiped out by inflation, strikes will continue.  Welcome to France.

The sad thing is, to me, is that our current economy rewards people who avoid risk, but who can get an "in" with a cushy job.   It is like factory workers in the 1960's and 1970's - if you got into a union plant, you made a ton of money and had the good life.  If not, well, screw you.  And whether you got in or not depended less on your skills, and more on your connections - as well as your willingness to swear loyalty to the mafia bosses who ran the unions.

Risk-takers, such as businesspeople, are less and less rewarded.   Or more precisely, small businesspeople take huge risks and at most, earn meager rewards - on par with a government employee.  The people at the very top take little risk and reap huge rewards - often guaranteed, or by risking other people's money - usually yours and mine.