U.S. salary levels closer to developing world

Not too long ago, if you were looking for employment, you would rather work in the private sector not only because your salary would be higher but the benefits were abundant.

Much has changed in the last, say, 20 years.

Today, the public sector often “steals” the good workers from the private sector, enticed by salary levels as well as great benefits.

In a simplistic view of things, I believe two things have happened at the same time:

1. With so much partisan entanglement in the nation, the public employee has sought to secure his or her job from the whims of such a political environment through their unions. Tempted by this de facto tenure, the public sector has been able to hire the brightest and the best of the professional world, which in turned responded to the increasing demand for good customer service from the small municipality to the more complex federal agency. And of course, these well-paid employees were not likely to accept bribes in order to compensate for low pay.

2. The economic downturn over the last few years has forced the private sector to keep salaries stagnant and eliminate benefits such as retirement pensions paid for entirely by the company. Instead, they have shifted to providing benefits through 401(k) saving plans or similar systems where the employee must contribute.

Also, the workplace has been getting tighter, to the employer’s advantage. The tight job market makes it difficult to negotiate a better wage. In a job market like today where there is a big pool of applicants and a small number of openings, companies are able to leverage the pay and benefits on their terms. Ironically, workers have not been able to benefit from an increased level of productivity (read exploitation).

The current cry of several state governors around the nation to cut the states’ pension programs is just an effort to lower salary and benefit levels in order get closer to the private sector’s remuneration levels.

However, this might be dangerous in the long run.

Decreasing salary levels around the nation may result in households not able to keep up with the cost of living. Then, the decline in consumer spending could prolong the economic recovery.

What we ought to do is increase the level pay in the private sector with the creation of industry in the U.S. that would offer meaningful employment to Americans instead of having the public sector absorb the professional pool.

On the other hand, U.S. salary levels might be at last getting closer to those of the under developed world. Then, we can bring back the manufacturing that other counties have stolen from us with cheap wages.