An article in the Wall Street Journal on Friday lays out one reason why many U.S. states are facing deep budget deficit issues. From the article:

“What if government workers earned the average of what private workers earn? States and localities would save $339 billion a year from their more than $2.1 trillion budgets. These savings are larger than the combined estimated deficits for 2010 and 2011 of every state in America.”

In fact America’s most privileged class are the unionized  workers. Private sector workers on the other hand do not get paid great salaries and benefits like the public sector workers. Over the years as private sectors workers faced rising layoffs, wage and benefit cuts, competition from overseas workers brought into the US, off-shoring of jobs, etc. public sector workers have enjoyed job security with rising compensation.

The chart below shows the difference these two class of workers in America today:

Some of the interesting points noted in the article include:

• From 1998 to 2008 public sector employee compensation grew by 28.6% compared to 19.3% for private workers
• Last year despite the great recession and budget deficits more than half the states gave pay raises to their workers
• In 2008, for  every $1 received in pay and benefits by a private sector employee, a government worker earned $1.45
• The pay gap between private and public workers is the widest in states with the highest deficits which include New Jersey, Nevada and Hawaii
• In California, 3000 retired teachers and school administrators who retired at the early age of 55, receive $100,000 a year in pension payments
• States such as California, Nevada and Ohio allow workers to retire in their 50s and then get re-hired for the same job and get paid twice – once in the form of retirement checks and the other as the salary for the job. This scam in Ohio allows some teachers in Ohio to earn as high as $200,000 each year

Considering the facts above, it would not be an exaggeration to call some of these states as “failed states” for the inability to reign in on lavish payouts to employees and reckless spending of tax payer money. In addition one can come to the conclusion that in today’s capitalist USA, unless one can get an executive-level job in the private sector with nice golden parachutes it is wise to take a government job whether it is at the state, local or at the federal level. It is a bit ironic that in a country that believes in the virtues of free market capitalism and the private enterprise, the best paying jobs are actually in the government sector.