It’s the Compensation Packages, Stupid

Source: U.S. Bureau of Labor Statistics

Legislators, county commissioners, city councilors, school-board members — New Mexico’s big spenders are in full-bore panic over the state’s fiscal crisis.

But seen from another perspective, the revenue-expenditure gap offers a terrific opportunity. Now is the time to finally close the distance between earnings in the Land of Enchantment’s private and “public” sectors.

Nationally, the gap is cavernous. As the above chart indicates, the most recent edition of “Employer Costs for Employee Compensation,” published by the U.S. Bureau of Labors Statistics, found that while the hourly rate for private workers was $32.27, jobs in state and local government paid $45.93.

Most notably, the cost for benefits was 73 percent more ($16.87 vs. $9.75), and the “retirement and savings” category was nearly four times pricier ($4.98 vs. $1.25).

It’s important, of course, to look more granularly, and explore whether the national disparity exists in New Mexico. Errors of Enchantment isn’t aware of a single study that explored the compensation packages of private vs. local-government employees in New Mexico. (No surprise there.) But in 2014, the American Enterprise Institute examined “all 50 states according to how costly their public-employee compensation packages are relative to private-sector standards.” Metrics assessed included pay, benefits, and the value of job security. New Mexico’s bureaucrats earned a whopping 24 percent more than the folks who labor to pay their salaries — far and away the widest gap in our region.

Source: American Enterprise Institute

Bringing government compensation in the Land of Enchantment back down to earth has always been an issue of fairness. But in today’s tough budget climate, it’s absolutely essential, to avoid both economy-hobbling tax hikes and cuts to essential public services.