Teacher Firing Prevention Fund?

In his letter to Congress on June 12,  President Obama called for a “Teacher Firing Prevention Fund.” Now, I’m as much in favor of teachers as the next person. My mom was a teacher. I sometimes travel around the country speaking in favor of better funding for early childhood education, which I think is very important.  I run a business, Visible Economy, that combines news and education. Human capital, and especially education, is essential for the U.S. economic future.

But, boy, if Obama wants to make a case for more money for elementary and secondary education, calling it a Teacher Firing Prevention Fund is just not the way to go. Why not a Factory Worker Firing Prevention Fund? Or a Journalist Firing Prevention Fund?   After all, everyone’s pay contributes equally to the macroeconomy–doesn’t everyone’s jobs deserve protection?

The Growing Gap between Govt and Private Sector Benefits

When I was out in Kansas City at the Kauffman Foundation’s Economic Bloggers Forum,  Mish Shedlock of  the blog Global Economic Trend Analysis made a persuasive case that state and local finances were completely broken because gov’t workers were overpaid compared to the private sector. ( See here for one of his posts on the subject).

Mish got me thinking…So I decided to assemble some BLS data on the subject.

Not to mince words, here’s the payoff chart,  that compares the benefits of state and local workers with private sector workers. (These figures are adjusted for inflation, and indexed to 2001I=100).

Yowza! Somewhere in 2004, the world changed, and we didn’t realize it.  Employers in the private sector put a lid on the cost of benefits (which includes healthcare, retirement, vacation, and supplemental pay of all sorts).  Meanwhile the cost of benefits in state and local govt jobs just kept rising, with barely any break, both before and after the financial bust.  This is not good

To put it another way, the benefits gap between the public and private sectors has widened sharply since 2004.

(continues)