Help Wanted, No Private Sector Experience Required

Nick Schulz has posted an excellent chart from a J.P. Morgan research report that illustrates the private sector experiences of cabinet officials since 1900.

The chart includes secretaries of State, Commerce, Treasury, Agriculture, Interior, Labor, Transportation, Energy, and Housing & Urban Development, and excludes Postmaster General, Navy, War, Health, Education & Welfare, Veterans Affairs, and Homeland Security—432 cabinet members in all.

Over 90 percent of the current cabinet’s experience was in the public sector.

Are Government Workers Overpaid?

Using data from the National Compensation Survey, Zubin Jelveh matched 588 common jobs in the private and public sectors. “This chart looks at how the pay differential between the two sectors changes as we move up the pay scale in the private sector:”

The above chart shows that government employees enjoy higher compensation at lower-paying jobs, though the reverse is true at higher-paying ones.

Overall, there is a 20% difference in pay between government and private sector employees. Government employees earn an average of $49,479 while private sector workers earn an average of $40,996.

Zubin Jelveh poses the following question:

Does this mean that we should cut the pay of the average public employee by 20%? (A back-of-the-envelope calculation puts the cost savings from this at $94 billion.)

I don’t think so. One reason: By choosing to work in the public sector, a person pretty much gives up the option of having a high or very high salary, so the pay differential may compensate for that. Are there other reasons?

Medicare Denies More Insurance Claims Than the Private Sector

Mark Perry writes:

The purpose of the American Medical Association’s “2008 National Health Insurer Report Card” is to provide physicians and the general public a reliable and defensible source of critical metrics concerning the timeliness, transparency and accuracy of claims processing by the health insurance companies that are responsible for paying these claims. Billions of dollars in administrative waste would be eliminated each year if third party-payers sent a timely, accurate and specific response to each physician claim.

An analysis of almost 10,000,000 insurance claims by the AMA to seven private insurance companies and Medicare between March 2007 and March 2008 reveals that more than half a million (574,591) claims were denied, and the chart above displays the percentage of claims denied by each insurer during that period. Medicare led the group with the greatest percentage of insurance claims denied (6.85%), more than double the denial rate for private insurers like UHC (2.7%), Coventry (2.9%), Humana (2.9%) and CIGNA (3.4%).

Federal pay

From the Economist:

Chris Edwards, the author of “Downsizing the Federal Government”, points out that the average compensation (pay plus benefits) of a federal worker is now nearly $120,000 a year, twice what private-sector workers make.

And that’s in addition to cast-iron job security. A federal employee has only a 1 in 5,000 chance of being fired in any given year.

Just a thought, as the deficit explodes: can we afford such generosity?

Click here to read my previous post on the ascent of Federal pay.

The Continued Ascent of Federal Pay

The Bureau of Economic Analysis has released its annual data on compensation levels by industry. The data show an expanding pay advantage for federal civilian workers over private-sector workers.

Figure 1 shows at average wages. In 2008, the average wage for 1.9 million federal civilian workers was $79,197, compared to an average $49,935 for the nation’s 108 million private sector workers.

Figure 2 shows that the federal advantage is even larger when worker benefits are included. In 2008, federal worker compensation averaged $119,982,smore than double the private sector average of $59,909.

Why millions of the world’s poor still choose to go private

Tim Harford from the Financial  Times writes,

Imagine that your daily earnings were less than the price of this newspaper. Would you consider buying private education and private healthcare?

Before you make up your mind, here are a few considerations: government healthcare and primary education are free; the private-sector doctors are ignorant quacks and the teachers are poorly qualified; the private schools are cramped and often illegal. It doesn’t sound like a tough decision. Yet millions of very poor people around the world are taking the private-sector option. And, when you look a little closer at the choice, it’s not so hard to see why.

Take the doctors of Delhi, who were studied carefully by two World Bank researchers, Jishnu Das and Jeffrey Hammer. These doctors are busy people – the average household visits a doctor every two weeks, and the poor are particularly likely to visit. And, surprisingly, three-quarters of those visits are to private practitioners – despite the fact that public-sector doctors are better qualified. Why?

Click here to continue reading.