Washington Elites Face Reality Gap on Economy

While private sector workers across the country are struggling with abnormally high unemployment rates, federal government employees in Washington are likely to be bewildered by the current economic downturn. In fact, a Politico article released today confirmed that about half of “Washington elites” who live in the D.C. metro area and work in politics or policy fields claim that the country and the economy are headed in the right direction—compared to less than 25 percent of the general population. Since the federal government directly employs roughly one-third of citizens in the D.C. metro area, a large disconnect exists between these Washington elites and the general public. Despite the fact that America remains in a severe economic crisis, federal government employment is booming in the nation’s capital. According  to the Politico article,

The massive expansion of government under President Barack Obama has basically guaranteed a robust job market for policy professionals, regulators and contractors for years to come. The housing market, boosted by the large number of high-income earners in the area, many working in politics and government, is easily outpacing the markets in most of the country.

In President Obama’s 2011 budget, federal employment in the executive branch will be 15 percent higher than it was back in 2007. Recently passed legislation will significantly increase the number of government employees needed to perform duties required by law. The Joint Economic Committee estimates that 16,500 new IRS employees will be hired to enforce ObamaCare. In addition, the recently passed Dodd-Frank financial regulation bill will require 20 federal financial services agencies to hire new government employees in their established Offices of Minority and Women Inclusion. In this fiscal year alone, it is predicted that federal government employment will grow by 153,000.

A recent study by the Cato Institute found that cutting or freezing federal employee salaries is one of the most effective ways to reduce the budget deficit. In fact, the study revealed that federal employees earn an average of $79,197 annually which is twice the amount of the average worker in the private sector. Additionally, this salary does not even factor in the superior benefits that government workers receive including health care, pension plans and retirement savings plans worth an average of $40,785 per year. According to Cato Institute scholar Chris Edwards, we must rein in the overspending on federal employees’ salaries:

With regard to immediate policy reforms, Congress should freeze or cut federal wages and then start overhauling federal benefits to reduce costs. It should, for example, phase-out defined-benefit pension plans, as most private-sector employers have. To deal with today’s large budget deficits, we need to restrain all areas of spending, and so it is reasonable to cut federal pay packages and better align them with private-sector practices.

Since government workers’ salaries are funded by taxpayers or borrowed out of the economy, the trend of overpaying federal employees is unsustainable. While needed federal employees should be paid sensibly, it is hard to justify that taxpayers in the private sector who on average make half as much are forced to foot the outrageous bill.  At a time when private sector workers are constantly facing layoffs and pay cuts, all federal government employees received a 2 percent pay raise in 2010.

It’s no wonder that the “Washington elites” face a reality gap that makes it near impossible to understand the severity of the economic crisis outside of the Beltway. With the federal government so far in debt, one reasonable savings solution isto close the pay gap between federal and private sector workers by cutting lavish federal wages and eliminating wasteful government positions. While federal employees in Washington may remain oblivious to the current economic decline, private sector workers who pay their salaries are likely to know the pain of economic hardship all too well.