State Government “Gravy Train” Rolls On . . .

State Government “Gravy Train” Rolls On . . .

June 26, 2007 Posted by J. Scott Moody - No Comments

The Portland Press Herald today reports that the recently negotiated state contract for 10,000 state employees was signed today by the Maine State Employees Association. For FY 2008, state government employees will get a 2 percent raise and a $700 check cut on July 1, 2007. For FY 2009, they also get a step up on the pay scale (the lowest step is eliminated and a new top step is created) which results in a raise that is “closer to 4 percent.”
This is bad news for Maine taxpayers for several reasons:
First, Maine state government employees are already highly compensated relative to private sector employees. Our recent report, “The State Government ‘Gravy Train,'” revealed that “Maine state government employment on average receive 32.1 percent higher overall compensation than private sector employees.–$51,003 versus $38,617.
Second, the article does not mention how the higher nominal wages will also result in increased outlays for benefits. In fact, from our report: “benefits are the largest driver of the compensation gap with an average benefits package that is 120.2 percent higher ($14,982 versus $6,805) for state government employees versus those in the private sector.”
Third, these raises exceed the forecasted rate of inflation. The Maine Consensus Economic Forecasting Commission’s January 2007 forecast projects inflation in FY 2008 at 2.2 percent and FY 2009 at 2.1 percent.
Fourth, private sector income, after adjusting for inflation, has actually declined slightly since 2000.
Which begs the question: If real private sector pay is declining and the gap between the private sector and the public sector pay is already way out-of-whack, why is the new state contract boosting the pay scale of state government employees by almost twice the rate of inflation? If anyone knows the answer, please let me know.