Government Pay Raises--It's an Inside Con Job

Government Pay Raises--It's an Inside Con Job
by Iain Murray
07/11/2011

At the White House Twitter Town Hall on July 6, President Obama reassured the nation that he and his staff share its pain. He said, "People who work in the White House, they've had their pay frozen since I came in, our high-wage folks. So they haven't had a raise in two and a half years, and that's appropriate, because a lot of ordinary folks out there haven't either." Unfortunately, the only thing the President was being economical with here was the truth. Most White House staffers have received substantial raises in that time. Sadly, that is symptomatic of how government works in America today.

As soon as the President made that statement, Gawker's John Cook looked at the numbers. He found that last year 75% of White House staffers received raises at a time most workers around the country saw no raises at all. This year he found, "Of the 270 White House staffers who have been there for more than a year, 146—or 54%—received raises. The average salary increase was 8%. If you look at only staffers who got raises, the average increase was twice that."

Yes, in the Bizarro World of Washington you can get a salary increase without getting a raise—with a pay freeze supposedly in place. Government pay is literally out of control. But it's not just federal workers' pay.

This problem is also common in state and local governments across the nation. For example, California is facing a budget crisis so severe that former Gov. Arnold Schwarzenegger attempted to pay government workers at minimum wage rates, but was stopped by Controller John Chiang, who claimed his computer system couldn't adjust to the change. Last week it was revealed that 1,400 California state employees earn more than $200,000 a year. (Chiang, a recipient of substantial campaign donations from public sector unions, refused to release their names, despite that information being public record.)

Most egregious was one prison doctor who earned more than $500,000 in additional pay—not in bonuses for outstanding performance, but to compensate him for not taking sick leave for two and a half years. The Los Angeles Times found, "Managers of state agencies are supposed [to] cap at 80 days the amount of unused vacation time their employees can save, but routinely ignore the limit."

Fittingly, two of the highest earners were heads of compensation-related agencies. The chief investment officer for the state pension fund has a maximum salary of $612,000, while the president of the workers' compensation insurance fund can make up to $585,360. They can presumably boost these figures substantially by not taking sick leave.

Moreover, California has an extremely generous pension scheme that allows state employees to retire at age 50 with up to 90% of their salary as an annual pension—which they can still claim while working at another government job.

The facts themselves are shocking, but we must remember the context. White House staffers got raises during a pay freeze. Some California employees earn more than the governor at a time of fiscal crisis. Government tells us one thing and then does another. These pay revelations aren't just outrages, they are a revelation that we cannot trust what American government tells us any more.

That's why my new book, Stealing You Blind: How Government Fat Cats Are Getting Rich Off of You, doesn't just talk about the excesses of government pay. It looks at how the modern American state has rigged the rules to support itself at our expense. The Internal Revenue Service is allowed to ignore the Constitution. Regulations cost our economy more than the federal deficit without anyone batting an eyelid, as they turn ordinary Americans into criminals. Worst of all, our education system has ceased to educate our children and now only works to benefit the education establishment—unionized teachers and administrators.

American government, at all levels, is in need of extreme reform. Agencies need their budgets cut and their charters rewritten. Public sector unions' power must be curtailed. Genuine deregulation needs to be achieved. And government pay needs to be brought under control, so a pay freeze is truly a freeze—even in the White House.