Two Americas

Two Americas:  Those who use the coersive power of the government to take money for themselves, and those who have to earn it by giving value for money in non-coerced , arms-length transactions.

Via Carpe Diem, which has more thoughts on the trend

Note:  I have seen folks defend this type of chart by saying it is just the function of  the inflection point of a normal distribution creeping by inflation across a dividing line.  But look the $180K+ in 2010 vs. the $150K+ in 2005.  By inflation, a $150,000 salary should not have increased to more than $165,000, but we see more than twice as many people making $180K plus today than made $150K plus five years ago.


  1. Mark:

    How is that type of increase even possible?

  2. Mark:

    Also, do we have the data for 2006, 2007, 2008, and 2009? That would be interesting. Did this happen stepwise, or was there a huge jump with the turnover in administration.

    If it is the latter, then the taxpayers should be calling for impeachment.

  3. Doug:

    Impeach The One? Haven't you heard? He's for The Little Guy!

  4. caseyboy:

    And the progressive media presses Paul Ryan or John Boehner on how they'll actually be able to cut spending. Da, maybe they can cut government workers and and roll back wages for those that remain. A while back I heard an academic attempt to rationalize this growing disparity. He said something about the size and nature of national problems required top notch people to solve them. You have pay to get top talent. So the government not only pulls capital out of the markets, it also pulls talent. Although I'm not so sure we have the best and brightest walking the halls of government.

  5. Brad Warbiany:

    "I have seen folks defend this type of chart by saying it is just the function of the inflection point of a normal distribution creeping by inflation across a dividing line."

    Those wouldn't happen to be the same folks on the left who are advocating government spending and quantitative easing to fend off deflation right now, would they?

    If so, they're like the white queen who can believe as many as six impossible things before breakfast!

  6. Dr. T:

    A Story about Federal Pay: The Veterans Health Administration has long had difficulties retaining fulltime physicians because the pay is so low compared to what physicians make in private practice or even academic medicine. The gap between VA and private pay is huge for some specialists. Many VA patients are admitted to private hospitals and are attended by private physicians at great costs to the VHA due to a lack of salaried specialists.

    A few years ago, Congress passed a law to increase the salaries of VA physicians. The law required sorting physicians into tiers based on their specialties and typical incomes for private practitioners in those specialties. There were six tiers. One would expect that the highest paid specialists (neurosurgeons, transplant surgeons, cardiothoracic surgeons, radiation oncologists, etc.) would be in that top tier. One would be wrong. The top tier was for administrative VHA physicians in Washington, DC and in the 22 regional VHA offices. The bureaucrats and politicians take care of themselves above all others.

    The program has failed for two reasons: the bureaucratic manipulation already mentioned and because Congress neglected to provide advance funding for better physician pay. (Advance funding was needed because it would take at least two years to hire physicians and get savings from decreased private hospital admissions.)

  7. Foxfier:

    This blog says USA today says that the number of those being paid over $150k in gov't has doubled since Obama took office.

  8. ParatrooperJJ:

    Mark - One of the major reasons is grade creep. For example a Border Patrol Agent in the late 90s had a journeyman grade of 9. In the early 2000s that increased to grade 11. As of October it changed to grade 12. That jumped the salary from $50,000, to $60,000, to $70,000 using the current figures.

  9. Matt:

    Much as I hate to see the way federal payrolls are bloating, it's also worth remembering that this isn't actually a comparison of _salary_ but of _total compensation_, and there's a credible argument that most of what appears to be an enormous increase is actually due to a dramatic rise in the cost of funding federal pensions (which is itself due to unrealistic assumptions about future economic growth, back in 2005).

    The workers aren't necessarily taking home significantly more money. The accountants have just been cured of some of their delusions, and have to make up for it.

    Make no mistake...I want fewer expensive government employees. I also want fewer _inexpensive_ government employees. But for most of them, I'd want them out of their jobs even if they were willing to do those jobs for free, because the cost of paying their salary and benefits and pension pales in comparison to the cost of coping with the torrent of paper and rules they produce.

  10. Mark:

    Thanks paratrooper. To really understand the problem we need to know the mechanisms that are driving the numbers. Each mechanism has its own issues.

    Using the example you have given for "Border Patrol Agent", is there justification for the grade creep? My instincts tell me that there isn't and that with the tens of thousands of Iraq war veterans that the supply of qualified people for these types of jobs would most likely excede the demand.

    THe other obvious problem with skyrocketing government wages (including state and local) is the overtime issues. The workings of union contracts create tremendous opportunities to game the system to get multiples of salaries being paid as overtime. A private company would never pay the levels of overtime that the government does because if it had a real, long term demand for more labor it would simply hire more labor and dispense the overtime. But government seems to be captive of its employees who are allowed to do what benefits them to the determent of the public for whom they are to serve.

    My guess is that the "grade creep" would also not be justified when looking at real labor market demands.

  11. Hail:

    1.) What is the median compensation for USA federal workers,
    2.) What is the median compensation for the avg. white-collar workers in the USA,
    3.) How does the ratio between the two compare with other countries.

    There are any number of explanations for this, but the above three figures are iron-clad.