Today the BLS released employer costs for the 4th quarter of 2023. Let’s investigate how much state and local government workers make compared to private industry workers.
Information from the BLS report on Employer Costs.
The Employer Costs for Employee Compensation (ECEC) measures the average employer cost per employee hour worked for total compensation, wages and salaries, and benefits, and costs as a percent of total compensation. These data are collected through the National Compensation Survey (NCS) and provide information about average compensation in the economy at a point in time.
Employer Costs $ Per Hour Comparison
- State and local government worker’s total compensation is $60.56 compared to $43.11 for private industry.
- State and local government worker’s salary is $37.53 compared to $30.33 for private industry.
- State and local government worker’s benefits are $23.03 compared to $12.77 for private industry.
Employer Costs Percentage Comparison
- State and local government worker’s total compensation is 40.5 percent higher than private industry.
- State and local government worker’s salary is 23.7 percent higher than private industry.
- State and local government worker’s benefits are 80.3 percent higher than private industry.
Employer Costs Per Hour Private Industry 2023 Q4
Private Employer Costs Table
Where to Seek and Avoid Employment
- If you can get a job in government, go for it. But that does assume your city or local government will not go bankrupt with benefits slashed. So, think carefully about those promised benefits, 80.3 percent higher than private industry.
- Financial activities and information are high on the list but so are utilities. The latter is likely due to monopolies and/or government ties.
- Avoid if you can Leisure and Hospitality, especially fast food restaurants. But that is likely the only option for high school kids (except those whose parents are in government jobs and able to get high paying summer jobs for their kids. Clout matters).
- Also wait staff at upscale restaurants likely do pretty well, but local dive restaurants, not so well.
Minimum Wage for Fast Food Workers
On September 28, 2023, I reported Minimum Wage for Fast Food Workers Jumps 30% to $20 Per Hour in California
When it takes effect on April 1, fast food workers in California will have among the highest minimum wages in the country, according to data compiled by the University of California-Berkeley Center for Labor Research and Education. The state’s minimum wage for all other workers — $15.50 per hour — is already among the highest in the United States.
Cheering fast food workers and labor leaders gathered around Newsom as he signed the bill at an event in Los Angeles. “This is a big deal,” Newsom said.
The $20 minimum wage is just a starting point. The law creates a fast food council that has the power to increase that wage each year through 2029 by 3.5% or the change in averages for the U.S. Consumer Price Index for urban wage earners and clerical workers, whichever is lower.
California Lead the Nation
More inflation is coming your way. California leads the way. Expect unemployment in California will rise.
Metropolitan Areas Unemployment Rate
The BLS metro report released today. Unemployment rates were up in 218 of 389 metro areas. Nonfarm employment only rose in 59 areas.
For discussion, please see Unemployment Rates Rose in 218 of the 389 Metropolitan Areas
California lead the nation in minimum wages and the unemployment rate. Who could have guessed that?
A Blue State Exodus
California is not always number one. In terms of numbers fleeing the state, it is a very respectable #2. Well, I’m sure it can try harder.
For discussion, please see A Blue State Exodus: Who Can Afford to Be a Liberal?
The top exodus states are New York, California, Hawaii, Alaska, and Illinois. Note that Illinois is also #7 in highest unemployment rate.
And as long as we are trashing Illinois, please note the Chicago Teachers’ Union Seeks $50 Billion Despite $700 Million City Deficit
Returning to California, the Cost of Running a McDonalds Jumps $250,000 in CA Due to Minimum Wage Hikes
California is highly dependent on technology stock options and payrolls. Yet, with the economy allegedly booming, and the stock market at an all time high, California faces a $73 billion deficit.
Good luck with that.
Most government jobs would not exist in the private sector. For those jobs, the value is zero at best making the entire outlay an overpayment.
Not true. Many states underpay their technical staff. My state job is low median compared to private sector. where people get 6 figure salaries.
After a 28 year career in corporate taxation in numerous large corporations, both private and publicly traded, I took a job auditing the business income tax returns for my hometown municipality.
I can only speak for my city and state – we are nonunion (except for police, fire). We are very busy in my department – in fact we are overwhelmed with work because our goal is to help residents meet their tax obligations, so we spend a lot of time helping them do so. I focus on catching businesses and their work from home employees
I spent my first 4 years in local taxation for a large city before getting my CPA and moving to business. I knew once I hit my late 50’s, being white and male meant I would be on the severance list.
Compared to when I started, working in Corporate America absolutely sucks, and they far more woke and politically correct than my municipality.
I pay 10% into my pension, which is more than social security.
It’s a great job to finish your career, and earn a pension. They pay is not that great, but your employer also doesn’t look at you as an expense on a spreadsheet.
You compare apples to oranges. What is the educational and experience requirements for govt workers. They do not have many remedial out of high school jobs that bring the averages down. Many of these jobs are in higher cost of living areas vs many rural low pay areas.
Benefits of private workers were destroyed the last few decades. They need to be restored, not blame the govt employees.
Delusions of grandeur everywhere.
My father works for the government he makes more than almost everyone around us
I’m surprised South Carolina is a high growth state. It may be low cost but it has a high crime rate and its probably has a low education level. Heck just look at Nikki Haley. She thinks the causs of the Civil war is a hard question.
In Indiana, state government workers have been underpaid for decades. So much so, the state recently provided a significant pay raise in 2023. I heard IT got the bulk of the raise due to massive turnover.
Indiana also has a measly pension for most state employees and teachers: Highest five years of wages (based on 20 consecutive quarters) X full time years of service (additional services years can be purchased) X .01 = Yearly pension. So someone who works 30 years as a teacher or public employee under this plan, has a high wage of $50,000, will make only $15,000/year for the pension. There is also a retirement annuity where the employer (in some cases the employee) pays in 3% of the wage during employment.
Young people couldn’t afford to stay in lower paying public sector jobs just for the pension. The low pay just meant a low pension payout. The low pay also made it hard to save anything outside the plan. Rent in most decent areas of the larger metro areas seems to be $1,000/month now.
So of course young IT folks bailed from their $45K/year state jobs to their upper five, if not six figure, private IT job. So the state did something about it and I heard the raise was decent for most positions.
The simple solution is to pay a similar market rate and scrap the pension. Pensions bankrupt entities because if based on pay, with pay always increase, the future payment obligations become unaffordable.
I have a relative who’s publicly traded employer’s C-Suite boss’s compensation is published in the company’s annual report. Needless to say, that compensation – and my relative’s – is exceedingly high. My relative declines that company’s health insurance and instead the family uses my relative’s spouses’s health insurance which is provided by the State of Indiana. It was an odd feeling for my relative to drop coverage in favor of the spouse’s State provided coverage as my relative was the person insuring the family for many years.
The point is that the benefits and pension and salary are excellent in Indiana in my highly compenstated’s relative’s real world experience.
I don’t think pay and benefits are keeping the State from filling positions- even teaching.
Based on map, productive citizenery fleeing states controlled by unproductive citizens who vote to steal their income/wealth. John Galt alive and well. Blue states soon to begin death spiral and will ask red states to bail out pensions, etc.
The cost for a Chicago cop is the same as the cost for a Phoenix cop now. Teachers in Arizona and Kentucky have gone on strike for pay increases. Red states are becoming blue states. The southeast states have large numbers of retirees coming there instead of “done” Florida. Government workers arent gonna work for free forever. The nuns have left the building.
California js exporting it’s inflation to other states. Rising real estate prices leads to rising prices of all things bc wages must rise to keep up with cost of living.
Like my $40hr neighbor that works labor on the fort. Idk what he does but it cant be much he cant make it up his stairs without gasping for air.
I was a government worker and the reason the average wage of government is higher than the private sector is the government doesn’t hire waiters and grill cooks, but mostly hires lawyers, accountants, and engineers, at the State and Federal level.
That is a good point.
Actually, to your point, government white collar workers make less than private sector, feel free to correct me.
I work off federal contracts. I make a good bit more than my federal employee supervisors, but then, I have alot more education and skills, which is the general case. The drawback is that I have no job security. If a contract ends, gets underbid, or is simply cancelled (a very common thing) you might find something else with the Beltway Bandit you work for, or, you might not, in which case you can be unemployed for months. It’s pretty much impossible to fire or lay off a federal employee.
So, in a way it evens out.
I think if I had a in the strictly private sector , that had little or no income from federal work, I’d make a fair amount more money. Unfortunately, my skill set (STEM) is such that there are very few jobs in the private sector. Nothing is made int he US anymore and the C-suite boys don’t believe in R&D.
Clearly your fake or biased,
I did land exchanges for the BLM as a commercial real estate contractor.
BLM does literally nothing all day.
They sit in an office shuffle a few papers go to lunch
Land exchanges made them work and they were not happy about it.
I have 3 friends who work for the EPA.
I ask them every time I see them, “what did you fo today”? They answer and to that I always can reply, “that’s nothing, going out to lunch with EPA people from California is literally nothing.”
Like Milei in Argentina fire half and good things will happen.
The mass firings in tech got rid of the dead wood. You would not believe how useless most employees are in large systems. The Beetle Bailey syndrome. Same needs to happen in government.
The ne’er do wells actually make the functional peoples jobs more difficult. They’re happy to see them go.
I am not fake. Do not insult me. Debate is a class, not a way to insult people.
And finacial services professionals on wall Street also “sit at their desk and push buttons all day”?
Good people don’t seek government jobs. It’s the mediocre and those wanting authority over others (comes from being mediocre). They spend their days talking about their weekend plans.
Agreed. I spent a lot of time working with the government on permitting projects. They were mostly college-educated land planners and such. In my experience, the government mostly contracts with the private sector to get work done. They don’t build the roads, just plan and fund them. The guys out shoveling asphalt and fixing potholes are all private sector.
And most of these are subpar and occupy useless bureaucratic positions.
I’m waiting to see how long it takes for these local municipalities to go bankrupt, There are sooooo many people that rely on these benefits and expect to get them for life. I expect a lot of businesses who gave the union large raises to file bankruptcy to get out of paying these benefits (salary and benefits),
They just raise property taxes.
Can’t do that in CA!
local bonds will go belly up very soon!
The bubbles chart is rising linearly at about 30 degrees, in a narrow band. No bending, no distortions. The higher the salary the higher the benefits.The top might be more dispersed with larger gaps. Few sectors will be so important they will move further to the right, like marathon runners.
Give a billionaire a job creating tax break, he invests in cheaper Chinese, Mexican or Indian labor.
Overpay an uneducated municipal knuckle dragger, he spends it all here.
.
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Really? What’s your source? Elizabeth Warren? Bernie Sanders? AOC? I’ve never seen a single tax cut that is targeted to only billionaires.
If you were an American, you’d recall the long history of “job creating tax cuts that pay for themselves” first promoted by the Reagan admin, then Bush and most recently by Trump’s GOP.
…But thanks for your opinion just the same.
Just like the Unaffordable Care Act taxes paid for all of the uninsured people? What is your point?
How about the tax cut Bill Clinton and George Mitchell gave when they cut the luxury tax on large yachts which Bush1 signed into law when he broke his promise, “Read my lips…no…new…taxes!”
He signed a tax targeting the Rich but democrats did away with it.
Private workers vs. state and federal government workers pensions?
Spirit aerosystem and Boeing suck. Airbus had a good year. Airbus has 8,500 open
orders. People will never stop traveling. If a 787 Dreamer pilot pulled the stick : blame Boeing. Everybody hates Boeing.
With less open orders on the cusp of recession and with less airlines and leasing co cancellations or bankrupcies and with a great military portfolio, good things can happen to Boeing.
My take on this won’t be popular. When I graduated high school government workers at the state and local level made lousy pay compared to the private sector. With annual inflation adjusted raises this slowly changed to where today public sector compensation is much better. This shows that private sector pay has stagnated badly. If we are going to rebuild our middle class private sector pay needs to go up not reducing pay for the public sector. The public sector pay and benefits issue is primarily limited to police, fire, and some poorly run jurisdictions.
My daughter is a super lawyer that chooses to work for the Feds for less than half what she was offered in the private sector because she finds it more personally rewarding.
It would be interesting to see this data over the last 50 years compared to inflation and broken out by line of work
It is my understanding that the Federal retirement package is quite different from many state and local government employee’s retirement packages. I could be wrong but I think the Fed package is 30 years of service AND late fifties to qualify for the full pension benefit which I believe is something like 1% per year worked. In addition to the pension, the Feds get a 401k type plan with something like 3%-5% matching contributions, but that can’t be drawn upon until 62 I believe. So I’m guessing most Feds outside of those in law enforcement roles work until at least 62.
Stop hallucinating. There will be no rebuilding of the middle class.
What there will be is ever increasing number of workers replaced by automation. And automation doesn’t pay SS & Medicare taxes or actually, any taxes at all.
Eventually everything will be made by robots and will be free for all (just like the Palestinians have been getting for 75 years).
But the transition is what is important. There will be a period of time, perhaps 10-30 years when not enough taxes are not coming in and all the civil service workers are going to lose their large retirement benefits. Hope they have a savings account.
Are public workers overpaid or are private workers underpaid? How overpaid is Boeing CEO?
Sure, everyone is underpaid! That is why a CA representative wants to raise the minimum wage to $50/hr. That will fix everything in your eyes, yes?
Do these figures include public (govt) school teachers? Do they include public university employees? If you know. Even if they dont, no doubt it’s the same deal. My brother is a DEI Dean at a major university. The amount he is paid is mind blowing. Plus he already has a pension for 20 years at another University plus 150k in accumulated sick and vacation days. I made good money as a lawyer. But I don’t have a pension. Or accumulated anything. It is really a scam. I recall the days when people went to work for the govt for good benefits and stability. Now they do it to get rich and crush the rest of us.
Good thing Mish did not analyze federal workers.
Here’s the thing though. This is not broken down by skill level and that makes a huge difference. For example, in the federal workforce computer scientists and engineers make really good money but, they can make a lot more in the private sector.. there’s been a constant battle for the last 5+ years to recruit and retain STEM employees in the Fed.
So, what are we comparing here? The average employee? Still think there’s room to make the analytics more, detailed I guess.
And if you say the word worker, you’ve using Commie language. Act right, straighten up, get your crap together.
Gov’t doesn’t hire STEM directly; those jobs are outsourced, paid appropriately, and managed by the old-time poly-sci degrees or the recent gender/ethnic-study degrees.
Then the civil servants complain their salaries are lower than the contractor’s they supervise!
Suggest you look up Job Codes on USAJobs such as 801 and 1515. You are so wrong it makes me sad. The math requirements are CALC at a minimum.
Some complain, sure. I am not.
Contractors get no benefits are responsible to pay their own taxes and pay their own FICA.
Warning: Depends undergarments recommended before reading this comment.
Government jobs vs private jobs won’t matter. Boeing is on the verge of crippling the entire airline ecosystem. Then it will cascade to other industries all because of what we all already know is happening, the aging of the labor force and subsequent depletion of the work force.
Southwest stock down 17% but they’re just the canary in the coal mine.
link to finance.yahoo.com
Shortages of engineers, aviation mechanics, supply chain professionals are all cogs in a broken wheel and it’s only going to get worse, especially with the clueless politicians at the wheel of the titanic.
It won’t stop at airlines either. By the way, there was yet another incident in the air today.
What was the air incident today?
These four and a sudden drop on 787 between New Zealand and Australia. Technically it was yesterday not today.
link to cnn.com
Wow…..I sure hope nothing catastrophic fails on one of these planes resulting in deaths.
Boeing 787 dived in Australia.
How underpaid are private workers compared to CEOs pay and benefits?
My cousins were state employees in a northern state for 30 years each (starting at 18). At 48, both retired with 80% of salary + Cost of Living + medical benefits for life. They will likely both be paid far more in retirement than in their career. I made more money than they did, but my $541/month retirement is a bit lower than theirs and includes no COLA. Thank God I have a good 401K and I built a real estate portfolio while working … if I was dependent on Social Security (which I’m not eligible for yet) and my big pension … I’d be screwed. Oh, did I mention they contract back to the state for huge hourly per diem all the time?
Depends upon how much value is placed on productivity.
In government, the answer is none.
From that Copilot thing, though I heard this years ago from a Chicago alderman, too:
Cap Sauers was known for his unconventional management style during his tenure as the General Superintendent of the Cook County Forest Preserve District. One of the most intriguing aspects was his policy of allowing workers to only work half a day. Yes, you read that right!
Then there were the Chicago guys that worked for Streets & Sanitation. They worked 1/2 day out of 14 so they would come in and collect their paycheck, and donate to the precinct captain.
Did a study on this back in 2012.for Citizens Against Government Waste. Controlled for stuff like job title and education
link to cagw.org
This article shows why it’s so hard to reform the system. As government grows, there are more and more people that become dependent on it for employment or benefits. They clearly have no incentive to cut back. The imposition of unproductive regulations and the drain of productive resources away from the private sector eventually kills growth. The situation steadily deteriorates until the private sector is no longer able to support the public sector. Unfortunately real reform then requires a crisis which more often than not results in even more extreme measures (socialism) rather than fixing the underlying problem (bloated public sector). Argentina is a classis example in which this situation can perpetuate itself for a long time as long as there are external sources of capital (e.g. banks, official institutions) who are willing to prop the whole structure up. Who bails out the U.S.?
The problem isnt the overpaid government workers (like I used to be). The problem is the business community has demanded to be let off the hook from their participation in helping the olders have a reasonable retirement. Govt retirement pensions didnt get bigger. Instead everyone else got cut off at the knees. And since the gutless legislatures give businesses everything they want, the government now has to pay for the senior buses and olders health care and doubling the size of the VA to take care of older vets. Meanwhile jerks like Buffett and Musk get out of paying their fair share. By the time Gen A can vote, these yahoos will have benefitted and died.
Anyone who thinks we can afford these benefits with a shrinking number of workers contributing to a hugely growing number of retirees is more than a bit mentally challenged.
Public unions should not exist at all. Period. Even FDR understood that.
Please get a grip on on reality.
You would have said the exact same thing in the 2000s when I found you. And yet, 20 years later ….and what about Japan, which has been living above its means for 30+ years? … where is the good disaster we shouldnt let go to waste? 🙂
And one more thing … while we look to 2,000 years of economic history to predict the future, I really think the fact we are “out of planet” and have literally nowhere else to go (unlike the fall of the Roman Empire where people fled in a million directions), we are forced to face and fix financial challenges, where in the past we just admitted defeat, picked up our possessions and started again somewhere else. This may be partly why many dismal educated predictions that happened the past havent happened yet. We are forced to make it work. We believe in the system and the dollar even when we shouldnt.
Exactly. In Cali the state and 50 counties have two pension options; PERS or Charter 37 pensions (not counting the higher education teachers that didn’t pay anything into their pensions for 20 years during the go go years). The charter 37 county pensions and probably PERS does have a deflationary feature; if the economy deflates 10 percent your COLA adjusted pension income deflates 10 percent, until your pension income achieves retirement year 0, the year you retired before any COLAs kicked in, preventing any further reductions in your pension amount due to deflation. Also, unlike teachers and paper pushers, cops can’t legally strike. Neither were those fired air traffic controllers in the ’80s. I see a lot of people are bailing out of the Juno Alaska state capital area.
Mish you are exactly right, particularly in states like Illinois and New Jersey these pension promises will never be met. However, the people that took these government jobs did so based on a wage and benefit package that was on offer and promised. You can’t blame a government worker from accepting a job with overly high wages and benefits. You can only blame the voters that promised these high wages via their elected politicians. Defaulting on the pensions is as bad as defaulting on any other contract.
I also agree that government unions are horrible, and that they should not exist; however, once again, the voters decided that they were a good thing to have. The fact that government employees were forced into the unions is also a bad thing, but….. well you know.
All of these government promises will eventually be broken either through default (Detroit) or inflation (see Argentina). As an aside, I worked as a bureaucrat for state and local government for about 7 years and could not stand it. Even though I was grossly overpaid for the tiny amount of effort that was required, it was mind numbing. I’m betting it is a lot better with work from home. Once you put in the hour or hour and a half needed to complete your tasks then you don’t have to just sit around and stare at the ceiling or play computer games.
or read mishtalks!
You just past the test verifying you were indeed a government worker. 🙂 Yes, you get your work done in the first hour or two, and the rest of the day is yours. And it is mind numbing and soul crushing being a “placeholder.”. But, I think the strength to do that kind of work (and I did do that kind of work) takes just as much stamina, inner calmness, patience and looking to the future as any other “real” job. Plus dad had a big building private sector office job. Same as a government job far as I could tell.
Ive worked in non profits, government, corporate and now have my own business. Each has its issues, but government was by far the most mind numbing.
Defaulting on pensions isn’t “bad.” What is bad is demanding oppressive future taxation of people to provide for bribed, I mean campaign contribution aimed, promises that were never affordable long term.
$8T in war funding since 2000 and a bloated Department of War that has NEVER been audited plus Homeland Security, the NSA, CIA, etc., not to mention the $2T lost and never found in Iraq would go a long, long way in paying benefits for those sacrificed pay increases for increased retirement benefits as many union worker negotiated.
Would love to see such a study in Brazil. The gap would be spectacular. Long ago i read that the deficit in the pension system created by public retirees compared to private was 50 fold. The top earning govt. retirees (bureaucrats, pols, judges, military etc.) are called Maharajahs often drawing two or more pensions federal, state and local simultaneously. I was chatting on the beach with a man who worked for the Banco do Brasil in 98. He told me he knew a retired judge receiving 42,000 Reals monthly, the equivalent at the time of 36 thousand dollars or 1200 dollars a day. It worked out to 300 monthly minimum wages or 10 per day. (Brazilians measure salaries in monthly minimum wage eg. a salary is 2 or 5 or 10 etc. minimum wages. Another example of the salary gap. I talked to a law student who was interning at the Federal Prosecutors (Procuradoria Federal). She told me if hired on permanently she would make 10 times what a private sector law firm would pay a new hire.
The competition for govt jobs is intense and millions take courses to help them score better on the qualification tests or in the selection process (concursos)
The parasite the government is going to suck the life out of the host.
and kill them both .
You exist only to feed the beast at this point. The government exists primarily to facilitate the goals of the corporatocracy while sustaining government employee loyalty. Fascism
Mish should do the math of how much $ Gov. employees put in vs how much they take out in lifetime benefits.
Sobering.
In Wa? It’s a nightmare.
In with a dime out with a dollar.
As Mish points out – it’s sheer insanity to think it’s sustainable.
Mish: I love this ability to comment on issues that I think are important. But I will not be insulted like this.
I am a CPA. licensed Colorado. I have BA on ma
However, the people are hurtinge because the Fed is violating there number one mandate, a stable currency.
Colorado.
Well that explains it.