Free Markets, Free People

Daily Archives: January 31, 2012


The Federal Government vs. the Private Sector: wages, benefits and total compensation

Reading over the CBO’s analysis and comparison of private sector wages vs. federal government wages revealed some interesting things.  The CBO broke down its comparison by education – or lack there of.

It seems that if you have a college degree or a professional degree, pay is about equal in the private and government sectors (although benefits are greater if you work for government).  If you have a PhD, you’re much better off in the private sector.

But, if you’re a high school grad or college drop out, the Fed is for you.

Wages:

Federal civilian workers with no more than a high school education earned about 21 percent more, on average, than similar workers in the private sector.

Benefits:

Average benefits for federal workers with no more than a high school diploma were 72 percent higher than for their private-sector counterparts.

Total compensation:

Federal civilian employees with no more than a high school education averaged 36 percent higher total compensation than similar private-sector employees.

Now I note this for a very simple reason.  Who do you think is attracted to federal service vs. who do you think might seek employment first outside of federal service?  And what effect do these inflated wages and benefits have on the labor market?

It is sort of like the subsidy/tax question.  If you subsidized something you get what?  More of it.   If you tax it you usually get what?  Less of it.

Well, if you pay wages and benefits far above the market to a certain segment of the population, who are you likely to attract?

And are we necessarily best served by that?

I don’t have anything against high school grads.  I’m simply illustrating a point.  This isn’t a market driven phenomenon.  It is, however, something that will effect labor markets.  It is sort of the opposite of the Medicare problem in the health profession.  Medicare artificially bids down the price of health care to the point that as it continues to lower its payments, more and more health care providers refuse to take Medicare patients.

In this case we have government artificially bidding up the price of labor with arbitrary wage, benefit and total compensation numbers (they’re obviously not tied to private market compensation except somewhat in the case of college or professional degrees).  And, of course, you have to factor in government unions as big reason for this.

What it means is government will take potential workers from the market that might have worked in the private sector at a lower wage.  Now, certainly, there’s no shortage of labor at this point in our economy, however, you get the point.   If we were in such a place (you know, like a recovery with a rapidly expanding private sector?) then you’d have government bidding up wages artificially – and we all know what that means to consumers.  Higher prices.  And to potential employers – higher wages and benefits.

The result – well, probably reduced hiring.  Because any good business is going to do a cost-benefit analysis to determine whether the job they’re considering adding is worth the price they’ll have to pay in wages and benefits.   This is probably one of many factors, at this time, which point to the “no” button.

It is this sort of intrusion in markets (in hundreds of ways driven by government) that distorts them, artificially moves the equilibrium point and causes prices to rise and unemployment to stay high.

~McQ

Twitter: @McQandO


Economic Statistics for 31 Jan 12

Today’s economic statistical releases:

The Employment Cost Index rose 0.4% last month, 2% from last year, as wages are showing upward pressure at odds with the slow economy.

The Chicago Purchasing Manager’s index fell from 62.5 to 60.2 as Chicago area business conditions cooled slightly.

S&P Case-Shiller report their home price index shows continued erosion in prices, down -0.7% for the month on a seasonally adjusted basis. Remove the seasonal adjustments, and the picture is even worse, with the 20-city index down -1.3% for the month and -3.7% from last year.

The Consumer Confidence Index slid from 64.5 last month to 61.1 this month. The Conference Board says the estimate of current conditions is weak.

The State Street Investor Confidence Index fell to 92.4 from last month’s 99.3.

In weekly retail sales, ICSC-Goldman reports a lackluster 0.1% increase for the week, up 3.9% from last year. Redbook is also relatively muted in the January sales increase, coming in at 2% above last year.

~
Dale Franks
Google+ Profile
Twitter Feed


Global cooling?

But, but, polar bears, rising oceans, melting ice, oh my:

The supposed ‘consensus’ on man-made global warming is facing an inconvenient challenge after the release of new temperature data showing the planet has not warmed for the past 15 years. The figures suggest that we could even be heading for a mini ice age to rival the 70-year temperature drop that saw frost fairs held on the Thames in the 17th Century. Based on readings from more than 30,000 measuring stations, the data was issued last week without fanfare by the Met Office and the University of East Anglia Climatic Research Unit. It confirms that the rising trend in world temperatures ended in 1997.

For those alarmists still stuck in the alarmist convenient “science” of the 20th century, this is the inconvenient scientific truth of this century … no warming despite the fact that man-made CO2 levels have gone up.  As David Rose remarks, “the ‘supposed’ consensus” is apparently wrong.article-2093264-1180A4F1000005DC-28_468x286

 

I’m sure you understand why this temperature data was released last week with little “fanfare”.  Had it been the opposite finding, we’d have been treated to a parade of alarmists again claiming that we need to tax ourselves back to the stone age in order to save the planet.

Oh, and remember that big, hot, yellow thing that hangs in the sky that I have mentioned repeatedly should be factored in to the “science” of global warming vs. being ignored? Henrik Svensmark, Denmark’s National Space Institute seems to feel the same way:

World temperatures may end up a lot cooler than now for 50 years or more. It will take a long battle to convince some climate scientists that the sun is important. It may well be that the sun is going to demonstrate this on its own, without the need for their help.

So alarmists can’t ignore this anymore.  They can’t fall back on consensus, because consensus isn’t science.  In fact, right now, given the new data, it is their reputations on the line, not that of the skeptics:

If temperatures continue to stay flat or start to cool again, the divergence between the models and recorded data will eventually become so great that the whole scientific community will question the current theories. The real issue is whether the model itself is accurate.

And, of course, indications are (many indications are) that they’re not.  For instance:

The responsible thing to do would be to accept the fact that the models may have severe shortcomings when it comes to the influence of the sun,’ said Professor Curry. As for the warming pause, she said that many scientists ‘are not surprised’.

he argued it is becoming evident that factors other than CO2 play an important role in rising or falling warmth, such as the 60-year water temperature cycles in the Pacific and Atlantic oceans.

‘They have insufficiently been appreciated in terms of global climate,’ said Prof Curry. When both oceans were cold in the past, such as from 1940 to 1970, the climate cooled. The Pacific cycle ‘flipped’ back from warm to cold mode in 2008 and the Atlantic is also thought likely to flip in the next few years .

Pal Brekke, senior adviser at the Norwegian Space Centre, said some scientists found the importance of water cycles difficult to accept, because doing so means admitting that the oceans – not CO2 – caused much of the global warming between 1970 and 1997.

One of the other indicators was to be found in the Lysenkoish conformity that was imposed on this branch of science by alarmists.

Although the number of publicly dissenting scientists is growing, many young scientists furtively say that while they also have serious doubts about the global-warming message, they are afraid to speak up for fear of not being promoted—or worse. They have good reason to worry. In 2003, Dr. Chris de Freitas, the editor of the journal Climate Research, dared to publish a peer-reviewed article with the politically incorrect (but factually correct) conclusion that the recent warming is not unusual in the context of climate changes over the past thousand years. The international warming establishment quickly mounted a determined campaign to have Dr. de Freitas removed from his editorial job and fired from his university position. Fortunately, Dr. de Freitas was able to keep his university job.

This is not the way science is supposed to work, but we have seen it before—for example, in the frightening period when Trofim Lysenko hijacked biology in the Soviet Union. Soviet biologists who revealed that they believed in genes, which Lysenko maintained were a bourgeois fiction, were fired from their jobs. Many were sent to the gulag and some were condemned to death.

Certainly dissenting scientists weren’t sent to actual gulags but attempts were to made banish them to academic gulags with their credentials in tatters.

16 scientists wrote the above two paragraphs and then reveal what drove this breech of the scientific method was, as we’ve mentioned before, pretty mundane and fairly obvious if you just took the time to look:

Why is there so much passion about global warming, and why has the issue become so vexing that the American Physical Society, from which Dr. Giaever resigned a few months ago, refused the seemingly reasonable request by many of its members to remove the word "incontrovertible" from its description of a scientific issue? There are several reasons, but a good place to start is the old question "cui bono?" Or the modern update, "Follow the money."

Alarmism over climate is of great benefit to many, providing government funding for academic research and a reason for government bureaucracies to grow. Alarmism also offers an excuse for governments to raise taxes, taxpayer-funded subsidies for businesses that understand how to work the political system, and a lure for big donations to charitable foundations promising to save the planet. Lysenko and his team lived very well, and they fiercely defended their dogma and the privileges it brought them.

These 16 scientists also give a little political advice that should be heeded:

Speaking for many scientists and engineers who have looked carefully and independently at the science of climate, we have a message to any candidate for public office: There is no compelling scientific argument for drastic action to "decarbonize" the world’s economy. Even if one accepts the inflated climate forecasts of the IPCC, aggressive greenhouse-gas control policies are not justified economically.

No compelling scientific argument? 

See above.

For 15 years the earth has not been warming even while man-made CO2 levels have risen. 

That’s scientific fact and it is time the alarmist crowd began dealing straight with the public using facts.

~McQ

Twitter: @McQandO

michael kors outlet michael kors handbags outlet michael kors factory outlet