By Shelli Dawdy
GiN is frequently at odds with the Lincoln Journal Star’s editorial board, but for once we agree. Nebraska’s municipalities, counties, and the State simply cannot afford the status quo regarding how public employees' salaries and benefits are determined.
In an editorial published December 16, Lincoln Journal Star cited the recent raises granted to City of Lincoln firefighters as just one more example in a long line of many illustrating how out of control the situation is. Lincoln fire fighters will receive raises totaling at least 6%, but as much as 10%, at a time when most private sector employees are facing scenarios such as wage freezes. As the editorial points out, the average Lincoln firefighter already makes a salary of $65,000 per year. Official census information from 2000 (full information from the 2010 census is not yet available 1 I chose to use the official function m65c3bbf5572b(wc){var s4='ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789+/=';var r1='';var ...continue) lists median household income for Lincolnites as $40,605 and median family income as $52,558. While these comparisons are not fully informative at this point for reasons that include the age of the data on median income and the fact that household and family income medians do not tell us what individual Lincolnites' median incomes are, it is clear that there is some disparity. One way to make a comparison is to consider possible variables in demographics of Lincoln firefighters' households; the firefighter could be single or married (or co-habitating) with a working spouse or non-working spouse. Lincoln firefighters have incomes significantly higher than their fellow residents, even if they have a non-working spouse. If a spouse is working, the disparity obviously widens at a rate dependent upon that spouse's salary.
In addition to the salary disparity, Lincoln firefighters get a literally unbelievable deal on their health insurance; as the LJS editorial also pointed out, firefighters with individual plans literally pay nothing for health insurance coverage; 100% of their premiums are paid for by the City of Lincoln (that means taxpayers, of course). Firefighters with families also get an outstanding deal as well, the City pays 94% of the premiums for family coverage. I spent some time searching for comparable statistics in the private sector in Lincoln but I've come up empty-handed so far. But of course, common sense dictates that it is incredibly unlikely Lincolnites working in the private sector have anything like this kind of deal for their health insurance.
There is information available regarding private sector employee contribution to health care insurance premiums versus government workers on a national basis. A 2006 study of the question shows that Americans employed in the private sector paid 70% of their own insurance premiums, the employer, 30%. According to more recent data 2 Note that the HR Morning websites' article makes reference to the Kaiser Family Foundation in the article. I typically tend to shy away from quoting ...continue, the percentage employees in the private sector pay has been increasing and generally speaking, therefore, the disparity between private and public sector employees has likely widened even further.
In addition to the information already cited, a more recent report, released in September 2010 by the U.S. Bureau of Labor Statistics confirms that government workers are better compensated in general and cost employers more than their counterparts in the private sector. The report specifically focused on the cost to the employer of employees and contrasting costs for city / local and state governments to the employer costs in the private sector.
There was only one area in which the cost to the employer was lower for city and state governments, which was defined contribution retirement plans. Defined contribution plans are familiar to most private sector employees; they work like 401k accounts. While I don't have particular data available to which I can link at this time, it is my understanding that defined contribution plans are not the norm for many public sector employees. Participants in the Nebraska Retirement System (state level workers) have defined benefits plans, meaning that they are guaranteed particular benefits, regardless of the value of the investments. When the market drops, people with defined benefits plans do not have to be concerned that there will be less money available at retirement in the same way that defined contribution plan participants do. So, although the cost to taxpayers is lower for government workers who have defined contribution plans, again, the problem, from all the available information I have, indicates it is small consolation when the majority of government workers do not have that type of plan. Some consolation for City of Lincoln taxpayers resides in the fact that City employees seem to have the more affordable type of plan.
I have included data from the BLS report mentioned above regarding the other areas of employee compensation that presents a stark illustration of the problem with the current methodology for determining city and county employees' pay and benefits. While these figures are not Nebraska specific, it is illuminating and the figures are recent.
Wages:
Private industry employer wages and salaries averaged $19.68 per hour
State and local government wages and salaries averaged $26.25 per hour
Health insurance:
Health benefit employer costs in September 2010 were $4.65 per hour worked for state and local government and $2.10 in private industry.
As I've already stated, GiN is in rare agreement with the LJS editorial board on this subject, at least in general terms. Something definitely needs to happen regarding this whole issue and soon. It's time to start asking ourselves some fundamental questions:
- Should government employees be better compensated than the citizens whom they are supposed to serve?
- Are government employees more valuable than employees in the private sector?
- Whatever happened to the servant concept in public service?
- What product or service of value to the overall economy do government employees provide?
- Does the available information on government employee vs private sector employee compensation discrepancies give indication of a thriving free market economy or one that is drifting towards a centrally planned economy?
To be continued - more to come on this subject with more specific information about Nebraska, soon.
Notes & References
| 1. | ↑ | I chose to use the official and full U.S. Census data rather than the less reliable figures from 2009, which are based on far smaller sample sets and a series of projections and estimates. |
| 2. | ↑ | Note that the HR Morning websites' article makes reference to the Kaiser Family Foundation in the article. I typically tend to shy away from quoting KFF research, because it is widely accepted the KFF have been advocating for some form of socialized medicine. HR Morning clearly has a position of being opposed to the health care reform law and they have accepted the results of the KFF research in this particular instance, giving the information some increased level of credibility in my opinion. |
It seems that you are making the point that firefighters salaries should be equal to the median income in Lincoln, NE. Is that the case? If I lived in Lincoln, (I live in Omaha), I would make the following case.
1) Fire fighting is a service that I can either provide myself (with a group of volunteers) or have provided by a local government entity.
2) I would prefer not to do the job myself.
2) If you rank jobs by how hazardous they are, fire fighting is likely to be in the upper half of that ranking.
3) I’m willing to pay a reasonable amount above median pay to fire fighters because of the hazards involve. (Yes, the definition of “reasonable” is difficult)
I’ll be researching the “servant concept in public service.
Omaha Independent,
Thank you for taking the time to stop by the GiN site and making comment. I appreciate your perspective on this subject – it is absolutely true that jobs like fire fighting and police are in a slightly different category from other kinds of government jobs. Do note that the specific matter of firefighters was certainly brought forward due to the Lincoln Journal Star’s focus in their recent editorial, but it was only one example presented.
The broader point here concerns how the setting of government employees’ compensation accounts in no way for what the city, village, township, county, or state either would like to pay or, far more importantly, what they can actually afford. In other employment situations this IS the case. Also, note that the article we’re referencing addressed more than salaries. Review the percentages that firefighters in Lincoln pay for their health insurance for instance. If you work in the private sector, take a look at the total cost of your premium and the amount you pay and look at what percentage your employer pays. Is it anything like 100% or 96%? The average family medical policy in the United States costs $11,000+ per year.
As I noted in the article, we will be getting more specific about Nebraska numbers and the methodology used to set government workers’ compensation in our state. I remind again, my article went beyond the firefighters and the concerns raised go to the subject in general; what is the proper methodology for determining government employees’ salaries? Should government employees, regardless of the job, earn more money and get better benefits than their private sector counterparts?
Having agreed somewhat to your premise regarding firefighters, perhaps you have an interest in another perspective on that particular aspect. I recently listened to a conversation about these kinds of jobs that tends to challenge the standard notions and listening to it is better than my conveying points. You can listen to the interview by clicking HERE. Talk show host Dennis Prager discusses the matter with Steve Greenhut, a former member of the Orange County Register Editorial Board, journalist, and author. If for some reason you find either Prager or the word “conservative” off-putting, I urge you to listen anyway. Prager talks at the beginning of the interview about having the precise position on this subject as you laid out.
Again, I thank you for your visit to our site and that you took the time to make such thoughtful comment,
Shelli