Immigration Issues Aren’t Going Away

By Mike Koetting June 13, 2019

About 15 months ago, I had a series of posts on immigration. The issue has not gone away. In fact, Trump continues to bang the drum loudly on the all too plausible belief this is an issue that not only animates his core base, but slightly extends it to people who are genuinely concerned about this issue. The truth is that immigration is a real issue for both political parties, but a difficult and complicated one that can not be solved with slogans.

A recent article by David Frum in The Atlantic lays out the terms very clearly. This article is must-reading for anyone who wants to talk about immigration. It is a thoughtful, nuanced set of considerations, but essentially comes down to the question of whether it is possible to maintain a country and a set of national values without having borders and a common definition of citizenship.

Frum’s Arguments Cannot Be Ignored

He starts from the undeniable factual basis that the foreign-born population of the US is today close to its all time high, almost 15%. Countries of Western Europe, whom we think of as peers, are even higher relative to historic markers. He then notes that, while there are huge benefits to this immigration, there are likewise material political and social costs.

As Frum underlines, while economists agree immigrants don’t harm the overall economy, immigrants do change the distribution of costs and benefits. Even with overall growth, there is no evidence that lower income non-immigrants reap those benefits: the benefits are primarily divided between the immigrants themselves and the upper income Americans who are better off with an abundance of workers willing to work for less.

The consequences are jarring to many parts of society and we can’t simply dismiss the issue. Even if expressions on one side or the other are crude and wrong, there is a real issue.

Demagogues don’t rise by talking about irrelevant issues. Demagogues rise by talking about issues that matter to people, and that more conventional leaders appear unwilling or unable to address….Voters get to decide what the country’s problems are. Political elites have to devise solutions to those problems. If difficult issues go unaddressed by responsible leaders, they will be exploited by irresponsible ones.

Frum is very clear that the answer is not to pretend that immigration can be “stopped”. Immigration is both inevitable and desirable for first-world countries. Rather, we need to make a decision about how many immigrants we want each year and under what rules. While he considers a number of rules options, he is fairly prescriptive that unless we reduce the number of immigrants, the issue will continue to roil the body-politic. He may well be right, but that is a proposition that needs a wider discussion.

He is, however, absolutely right that whatever we decide about the number of immigrants, we need subsequent decisions about how to implement and enforce the decisions. He dismisses Trump’s border wall for the foolishness it is, but he also observes that America is in a peculiar limbo where so many of our immigration-related mechanisms are broken, unresolved or misaligned. A systemic fix is necessary but we can’t even talk about it in those terms.

“Prickly City” By Scott Stantis

The Issue Is Not Going Away

The problems raised by immigration are going to be a structural feature of the world for as far as we can see. Ending hostilities in Syria or stabilizing Central America are good things, but will not get this issue off our political agenda. The reality is that some societies are much better places to live than some other places. And everyone knows it.

Source: http://www.gapminder.org

The above chart shows differences in per capita GDP. But this is only one blunt measure. There are many other aspects—the degree of inequality within the country, the barriers to changing one’s status, the extent to which minorities feel threatened, the stability of the society, the threat of adverse climate change, and a host of other factors. But advanced countries come out better on most of these. While emmigration obviously has risks and problems, it is hard to think about the issue without concluding that a material number of people in less developed countries will want to come to more developed countries.

Paradoxically, the largest pressures are not felt from the poorest people wanting to escape. They may want to, but they have fewer means. The bigger pressures are from those who are starting up the ladder—have some education, have enough resources that travel is possible, and the idea of living in a different place is not at all beyond their imagination. Thus, the growth in incomes around the world, while it encourages some people to stay where they are, fuels dreams of still better lives in others.

The number of potential immigrants is eye-glazing. Egypt will add 50 million to its population over the next three decades and one-quarter of young male Egyptians would work abroad if they could. Twenty-six African nations will double their population in the same time period, to a mind-boggling 2.5 billion people—which is roughly the total number of people in the entire world in 1950. Three-quarters of all Nigerians and Ghanaians and more than half of the population of South Africa and Kenya report they want to leave. Pakistan, in 2050, will have almost as many people as the U.S. has now.

The pressure only increases from here.

Is There a Moral Dimension?

Beyond putting some decency boundaries around treatment of current migrants and appropriate policy for people who have been here for a long time and put down roots, Frum doesn’t address the question of what is a just solution.

I keep coming to the question of why exactly it is that I get to enjoy the many benefits of being American while other people should not be allowed those same benefits. Because white people took the land from the Indians 250 years ago? Because the evolution of the world was such that they set up a particularly smart government? Because my ancestors came here 150 years ago? These were big and momentous events, but my participation in them is purely happenstance. I can’t come up with a really compelling reason why I should be allowed to enjoy the fruits of these earlier sacrifices indefinitely…while others are prohibited from buying in with their own sacrifices.

Well…Another Fine Mess

So, I argue that social and political realpolitik dictates that we adopt a program of managing immigration and then I throw a bucket of moral cold water on the enterprise. What am I suggesting?

  • I think an argument that says “Throw open the borders and let it work itself out” could be justified. But it’s a bad idea. There would be way too much chaos before we reached a new equilibrium point—if we ever would. I think we need to adopt a new immigration policy (including enforcement) and get on with it.
  • It must follow from a realistic national discussion. There are no easy answers, but, as Frum argues, it can’t be an imposed solution. The issue is too close to the core of any society.
  • Whatever policy we settle on should be generous. I am not saying that will be easy, but it should be shaped In a context of what’s good for the world and workable for America, not what’s best for America and the devil take the rest.
  • We need to spend much more time thinking about the rest of the world. For all the recognition that the world is shrinking, we still want to put our fingers in our ear and sing “Nah-nah-nah-nah.”

Claude Lévi-Strauss once observed that, “for the majority of the human species, and for tens of thousands of years, the idea that humanity includes every human being on the face of the earth does not exist at all. The designation stops at the border of each tribe, or linguistic group or maybe even at a village.” Do we want to get beyond that?

“Prickly City” By Scott Stantis

Jettisoning Rationalist Guilt

By Mike Koetting May 30, 2019

As even occasional readers of this blog know, I think of myself as a reasonable guy who, biases and predilections notwithstanding, tries to see both sides of most policy arguments.

So I am uncomfortable with my growing sense that Republicans have strayed so far from reasoned policy that they no longer deserve much benefit of the doubt. I understand this attitude is potentially bad for democracy. There is something inherently objectionable to me about broadly discounting most of what one of our major parties says. But, and I didn’t get here lightly, I think that is the point I have reached.

This is more than Donald Trump. It is a problem that started when Richard Nixon decided to create a power base for Republicans by wooing those populations left behind when Democrats, belatedly, started to take the position that the situation of blacks was inconsistent with the stated goals of the country.

Don’t rush past this. When Nixon systematically and explicitly worked to capture anti-integration sentiment for the Republican Party, it was more than a party re-alignment over segregationist policies. It was a willingness to tolerate rejection of the tectonic plate shift that happened in American society over the previous 50 years, a fundamental broadening of the terms of the American contract. In this new contract, both segregation and sexism were no longer negotiable. In offering itself up as a haven for objectors to the new contract, Republicans were arguing against the moral arc of the universe toward this broader concept of justice.

This was a winning strategy for Nixon, and, at first, for Republicans. But the country has embraced new realities. Certain attitudes that were once mainstream, are no longer accepted as compatible with a democratic society. When Republicans welcome those attitudes into their party, they push out some people who in the past would have been Republicans. Their departure forces Republicans to mine deeper into the darker veins of the American political psyche to remain competitive. Moreover, as the overall composition of the party shifts, it becomes more and more difficult for them to make compromises or tolerate party diversity.

This is not to say every Republican fits this description or fully embraces this strain of the party. Still, as the country changed, the Republican Party as a whole was forced to rely to ever greater degrees on a group of voters for whom hate was a part of their animus. The electoral consequences for Republicans of drawing a line that said: “No–those ideas are not consistent with the democratic goals of America” became steeper and steeper. Better to turn a blind eye.

All of this goes beyond saying that the country faces increasing polarization. That is true, but it skips over too much. That would establish a moral equivalency between my position and an equally sweeping rejection of Democrats by Republicans who are on the opposite sides of various issues from me. They are not equivalent. There is a qualitative difference because Republicans have been willing to support values that are explicitly anti-democratic. Gerrymandering, voter suppression and overt discrimination are explicitly anti-democratic. Wholesale attacks on the media or the courts are anti-democratic. Courting racists is anti-democratic. Countenancing unlimited economic inequality is anti-democratic. (Failure to allow a reasonable degree of inequality can become anti-democratic as well. But, at this juncture in America, there is absolutely no likelihood or traction for such positions, occasional Republican rhetoric aside.) At some point, quantitative differences became qualitative.

These anti-democratic impulses are not limited to isolated party members but are embraced by the core of the current party leadership as they struggle to maintain power as a minority party. Republican efforts on gerrymandering, for instance, have proceeded under their REDMAP strategy. Wikipedia describes it thusly:

REDMAP (short for Redistricting Majority Project) is a project of the Republican State Leadership Committee of the United States to increase Republican control of Congressional seats as well as state legislators, largely through determination of electoral district boundaries..…The strategy was focused on swing blue states like Pennsylvania, Ohio, Michigan, North Carolina, and Wisconsin where there was a Democratic majority but which they could swing towards Republican with appropriate redistricting. The project was launched in 2010 and estimated to have cost the Republican party around $30 million.

On top of this, there is voter suppression in many states—inconvenient polling places, new laws to restrict access and a variety of other mechanisms. And where voter suppression didn’t work, Republicans in gerrymandered legislatures in Wisconsin, Michigan and North Carolina simply voted to restrict the powers of Democratic governors even though they had been elected by a majority of the state.

The smirking hypocrisy of Mitch McConnell’s position on confirming Supreme Court justices in an election year is another suggestion of Republican’s willingness to change the rules to suit their circumstances.

Donald Trump is the logical result of this. I don’t know enough about the details of American presidencies to pass absolute judgement on whether he is the sleaziest person to ever hold this office. But even many supporters admit he’s in the running. Either way, Donald Trump is as much a symptom of the Republican problem as a cause. The fact the GOP feels unwilling to restrain him reflects how tenuous their position has become. I believe a large part of the party knows that they are facilitating a demagogue with no moral compass. But having already convinced themselves that they were an embattled minority protecting the “true” American values, they don’t see any choice but to double down and support him regardless of how much he flaunts Congressional powers, denigrates people he doesn’t like, or reduces the ability to debate issues on merit.

One can hope that at some point, Republicans would see that their actions have become so extreme that they go beyond creating a hyper-partisan environment to in fact challenging the fundamentals of American democracy. I am not holding my breath. They are very far down the rabbit hole.

If there is a way out, it is for Democrats to simply out vote them and then govern in a fundamentally democratic way. I am not suggesting a “middle of the road” strategy. That may work. But it is not the essential point. As I have argued before, there is no evidence that today’s Republicans are interested in compromise. Rather, the essential point is to govern in a way that explicitly preserves the notions of the basic equality of human beings, individual freedoms and the rule of law. There will be arguments on how each of these is interpreted—one person’s individual freedom is someone else’s dangerous extremism—but if the disagreements can be carried out in a framework that is obviously pro-democratic, we may be able to reclaim our political system.

I know Republicans will argue that the founding fathers were very concerned that the majority might trample on the rights of the minority. From their perspective, whatever steps they take to preserve their minority rule are protecting their freedoms from an “over-reaching” majority. What they miss is that minority rights, like majority rights, are not absolute. Democracy requires a balancing of these two rights. Subverting the very mechanisms of that balancing is anti-democratic, no matter how dressed up.

In the end, as uncomfortable as it makes me, it seems necessary to face that the current Republican Party, as a party, is no longer a good faith participant in the American Democracy.

I find this worrisome because I do believe in democracy—with all its craziness. I know the commonweal is better represented when there is an appropriate give-and-take among different points of view. As partial compensation, I am going out of my way—and recommend you do the same—to consider ideas on a range of policies from those conservatives who are also committed to democracy. Even if I disagree with them on specifics, I recognize it as a disagreement among people who share the same basic commitment to our system of government.

But not only am I done with the Republican Party until it re-earns my trust, I’m done feeling guilty about it.

Political Labels

By Mike Koetting May 16, 2019

Political labels are shortcuts designating a more complex set of thoughts. But when there is no agreement on what the terms mean, discourse is difficult.

Exhibit One:  Socialism

Socialism has a specific definition:  where the means of production are owned by the people as a whole, which is to say, the state. Today there are a number of people who proudly accept the label, ranging from Bernie Sanders through Alexandria Ocasio-Cortez to the six Chicago City Council members who call themselves “democratic socialists”. However, it doesn’t take a fine reading of the policies they are actually advocating to realize their policies differ fundamentally from this formal definition of socialism. They are not advocating literal ownership of the means of production; rather they are arguing that the economy should be regulated with a much greater eye to the common good. Their policy proposals, while clearly “liberal”, are in fact well within the mainstream context of American political thought.

While it may be reasonable to redefine a term to reflect evolving views, the question of its impact on discourse remains. There are reasons they may seek to distinguish themselves from other elements in the Democratic Party who they believe are too beholden to the current ownership of the means of production. Whether this label is politically effective or causes more confusion is an empirical question that will get settled in elections over the next 18 months.

What is relatively certain is that in the short run, embrace of that term by material elements within the Democratic party creates major opportunities for those on the right to use the term as shorthand for yet a different meaning of the term, namely socialism as fundamentally opposed to an American concept of human rights and democracy. The basis of this use of the term is the conflation of socialism with Stalin’s Communism. Russian Communism was in fact a nightmare, but, as Kurt Vonnegut puts it, Stalin is to socialism as the Inquisition is to Christianity.

Exhibit Two: Capitalism

Prior to the Cold War, the term “capitalism” was used almost entirely as a pejorative political term, shorthand  for “Bosses exploiting workers.” Then language changed, particularly when looking for the antonym for “socialism”. And thus capitalism came to be seen as the only “correct” form of organizing society. The collapse of the Communist states in the 80’s cemented that notion.

Until, of course, rising income inequality caused the old, pejorative nature of the term to creep back into use. Pankrai Mishra in a Bloomburg Opinion post reviews two new books on capitalism under the headline:

Ideas once dismissed as the ravings of the loony left are breaking into the mainstream of economic and intellectual debate. 

If this weren’t confusing enough, Joseph Stiglitz’ new book promotes itself as “Progressive Capitalism” with a set of policy ideas that are virtually identical to what the so-called Democratic Socialists are proposing.

Now we have a situation where a meaningful percent of the country say they prefer socialism to capitalism, but it’s hard to know what the heck they actually mean because the important ideas in each of these terms has become total mud. (Indeed, a recent Gallup poll shows that most Americans don’t know what either socialism or capitalism means.)

Exhibit Three:  Inalienable Rights

This term is interesting because, while there tends to be some agreement on the basic words that define “inalienable rights”, the conclusions people draw from those are so different as to make one wonder how people understand these words.

For instance, a post in The Library of Economics and Liberty argues that socialism is a contradiction of the idea of inalienable rights because it vests ultimate decision rights in the state rather than individuals. But others argue that inalienable rights mean that everyone has the right to a fair shake in society and that an economy that puts the most important economic decisions in the hands of individual capitalists without concern for the broader social welfare is inherently undemocratic.

And so….

What does one make of this sematic marsh?

First, the terms “socialism” and “capitalism” cause more trouble than they shed light. Sure, it’s true that all societies feel tension between individual freedom and collective goals. And differences among societies are frequently reflected in the way they construct their economic markets. But given the porousness of the terms “capitalism” and “socialism”, it seems to me that these terms get used as much as a matter of political expediency as a useful description of what’s going on

The qualitative differences in societies are not around the label they give their economies but how they arrange themselves around other values—respect for the fundamental equality of humans, individual freedoms, and a democratic rule of law. It is not easy to agree on policies around each of these, individually and collectively. But discussions framed around these issues have a better chance of being useful than using the mush-labels of “capitalism” and “socialism”.

If one must have some label to dichotomize, looking at these three values suggests something like “democratic” versus “authoritarian”. That is the distinction that Robert Kagan makes in his extremely important article “The Strongmen Strike Back”. (He actually uses the term “liberal democratic”—liberal in its historical meaning—to distinguish from countries that have the form of democracy but are underneath authoritarian.)

Kagan also raises the question of why there should be so many non-liberal regimes now. Some argue this is largely a reaction to growing world inequality. While there is a well-documented connection between liberal orientations and good economic times, I don’t find growing economic inequality a fully persuasive explanation. If the problem is perceived as simply economic inequality, why don’t people use the democratic alternatives available to change the economic order? In fact, they often seem willing to vote against their own economic interests. Kagan suggests it is because there are values that that the individualism of liberal democracy not only does not address, but actually attenuates. He describes these as family, tribe, race and culture. In my words, fear of the outsider, a trait that one easily imagines is buried deep in the communal psyche of mankind as it has evolved over the millennia.

This is one of the conundrums of democracy. While all humans might be endowed with certain rights, they also carry a recessive political gene that is intrinsically anti-democratic. It potentially elevates fear of the outsider over other impulses and lead people to believe the outsider is less human, their rights less justified and the rule of law less applicable because the outsider threatens something intrinsic to their own identify. In well-functioning democracies, this gene fades into the background. But when things start to go south, this gene gains potency, particularly when there is an individual with some talent at stoking that fear.

We should not get too focused on the individual authoritarian figure and fail to recognize the challenge is fundamental to democracy. Democracy requires us to give “the outsider” the same rights as our family, our tribe, our culture–to treat the outsider as we ourselves want to be treated. Some members of the democracy are not up to that challenge, particularly people who find life otherwise challenging.

We would like to think that democracy is universally desired by people and if autocrats are removed, democracy will replace them. But we also recognize that the people of Russia seem to prefer Putin, that the population of the Philippines actually supports Duarte, and that even in countries with strong democratic traditions, there is a substantial portion of the population who are anti-democratic and for whom the values of liberal democracy are threatening. Jefferson notwithstanding, democracy is not the natural state of things. It is something achieved relatively recently and tenuously protected over time.

All of this suggests the right label to get behind  is “democracy.” It is at the heart of the crisis facing America today. But, at least in regard to this country, I fear it so overused, it would simply become another confusing label with fuzzy antecedents.

Maybe the moral is that political labels just aren’t that helpful.

High Expertise Government Jobs

By Mike Koetting May 1, 2019

This is the final post in my series on government workers. The last two posts have addressed government jobs, particularly federal jobs, in general. This post will focus more on government jobs at the higher end of the education spectrum. Generally speaking, these jobs require some specific expertise, are leadership/management positions, or both. As a society, we focus a lot of attention on political jobs, but we don’t pay much attention to jobs at the top range of the bureaucracy. Failing to get the appropriate people in these positions is as potentially dangerous as electing the wrong politicians. (See Michael Lewis’ new book, The Fifth Risk.)

My views on this matter are heavily influenced by two stints in Illinois state government. It appears to me that the issues in Illinois, and probably other state governments, are a bit more extreme than the issues facing the federal government. But the same general problems are facing all government organizations.

Salary Differentials Drive Out Experienced Managers

As noted in previous posts, federal jobs for people with advanced education pay less than the private sector. The differences are even starker at state and local levels. Government salaries have always been lower but relied on people’s interest in working for government. However, at some point, the differences become so large they surely impact. I noticed the change in Illinois. At the end of my first time in state government in the late-seventies and early eighties, I was a deputy director of an agency. When I did move to the private sector my salary went up, but as I recollect by less than 10%. Twenty-eight years later, when I returned to government from the private sector at approximately the same bureaucratic level, my compensation declined by more than half.  People who moved to the private sector at senior levels often received salaries that were multiples of their state salary.

A recent paper published by the Milbank Memorial Fund suggests that this problem isn’t limited to Illinois. In most states the Medicaid agencies offer insufficient salaries to attract and retain people with the right skills and expertise to run Medicaid, which is typically a multi-billion dollar enterprise. Among other things, this leads to agencies controlled by the healthcare industry and beholden to private firms with whom it contracts, which don’t have the same agenda as the agency itself.

My knowledge base mostly involves state level healthcare functions; however, I have every reason to assume that the issues are much the same in the other difficult subject areas addressed by government at various levels.

This gets reflected in salary increases as well as base salaries. In Illinois, salaries of senior agency officials and other non-union positions (e.g. legal staff) were frozen for 10 years. During the five years of my second stint in state government, neither I nor any of the other senior administrators received any salary increase. One can only guess this reflects a sense in the broader society that investment in government is not a good investment. Attitudes range from skepticism that government is an effective tool to downright hostility to government as an evil “deep state.” Nevertheless, pretending government jobs are immune to the laws of the market is a bad strategy. Government work is an honor, but honor only goes so far.

It is no surprise, therefore, that people at senior levels or with special expertise are leaving government in the face of the shutdown and other difficulties. A Washington Post article from January says:

An upcoming job fair for workers with security clearances has seen a 20 percent jump in registrations over last year’s, said Rob Riggins of Cleared Jobs, which is organizing the Jan. 31 event in Tysons, Va. He attributed the increase to the shutdown.

Even before the shutdown, there was a drift away from government service. In the first six months of the Trump administration, 71,000 career employees quite or retired, compared with 50,000 in the first six months of the Obama administration. In Cook County, in the face of stagnant salaries, 40% of the civil litigators have left the State’s Attorney’s Office over the last year This slows down all the County’s business and increases the risks to many basic functions.

Salaries are by no means the only issue. Research shows people in government jobs, particularly senior positions, are motivated by a desire to provide public service. They care deeply about the mission of their agency and their role in serving the public. When these missions are attacked or denigrated, when the hierarchy of their agencies are filled with people who disagree with the fundamental purpose of the agency, some people who are doing good and important work are more likely to take advantage of non-government options than when their work is being celebrated.

Not Getting Young People

There is also a problem at the other end. As noted earlier, there are disproportionately many older employees in government and disproportionately fewer young people in the federal civil service, a pattern seen in many states as well.

Part of this is distrust of the current administration and part is the accumulated damage of 40 years attacking government. But a big part is the fact that government sclerosis makes hiring and retaining young people difficult. At the federal level the inefficiency of the hiring process is noted in virtually every report on the status of the federal workforce. The current process makes it hard to find out about relevant jobs, takes roughly forever to crank out an actual job offer, and then often puts people into a rigid bureaucracy which is particularly unattractive for young people.

The same problems impact state and local governments. In fact, their structural problems may be even more acute. The number of state and local government jobs has decreased by 3% (11% per-capita) in the last 10 years. This widespread downward pressure on the number of jobs means fewer job openings. Further, in many places well-intentioned provisions designed to root out political influence from hiring, have made it almost impossible to bring talented young people into government service, or, indeed, bring in anyone who is not already working in state government. During my first stint in state government, there was a flow of talented young people into state government who provided yeoman’s services and, in many cases, rose to form the backbone of Illinois government for the following decade. During my second stint, the entire department was only able to hire a handful of young people in five years. At the bureaucratic leadership level, we were aghast at the consequences. We were not getting new blood into the agency and many of our systems were being held together by retirement-eligible workers who were the only ones who knew how the systems really worked.

This need not be the case. Despite skepticism about government, many young people are strongly altruistic and could be attracted to government with approaches and opportunities that speak to them. For instance, the UK has nearly double the US’ share of people under 30 in its civil service, thanks in large part to its Civil Service Fast Stream, a development program for new graduates who want to work in government. The program is highly competitive (fewer than 1 in 25 applicants is accepted) and attracts some of the best talent in the UK. The federal government has tried a number of programs that adopt some of these elements but, according to the Volker Alliance, a non-profit group founded by Paul Volker to strengthen government service, none of them has been consistent or comprehensive enough to really have the desired outcome.

All of this leads the Volker Alliance to conclude:

Simply put, too many of the best of the nation’s senior executives are ready to leave government, and not enough of its most talented young people are willing to join. This erosion in the attractiveness of public service at all levels—most specifically in the federal civil service—undermines the ability of government to respond effectively to the needs and aspirations of the American people, and ultimately damages the democratic process itself.

We are inflicting serious damage on ourselves.

Private Sector Versus Government Workers

By Mike Koetting April 19, 2019

You don’t have to work very hard to find someone willing to criticize government workers, for instance this investors’ newsletter dismissing the hardship of government workers during the shutdown:

Let’s remember who we are talking about here. While there are certainly plenty of hardworking, dedicated federal workers, they are, for the most part, incredibly pampered. They get better pay and more generous benefits than private sector workers doing the same things.

Complaints about government worker pensions are ubiquitous, particularly here in Illinois where the pension system has been horribly mismanaged.

But I think there is a shortage of clear thinking on the topic. I would make two fundamental points:

  • Maybe the problem is not in the government sector, but in the private sector.
  • The net impact of moving good jobs to the contracting sector contributes to other problematic trends.

Whose Problem Anyway?

The issue of how government salaries relate to private sector jobs has been hotly debated. But I suspect the below chart, prepared by the Congressional Budget Office (CBO) a few years ago, is as good an indicator as anything.

It shows that with less than a college degree, government salaries are higher, that with a college degree it’s basically a wash, and with an advanced degree, government salaries are lower. Government workers are typically better educated, with 60% of federal employees having a bachelors or more advanced degree, compared to 35% in the private sector. For federal workers, 29% have advanced degrees compared to 11% in the private sector, which is in itself an important consideration for thinking about the work done by government workers.

This is interesting in that traditionally government salaries, across the board, were lower than private sector salaries. But private sector salaries at the lower end of the salary range have stopped growing while government salaries kept growing at a reasonable, but continuous rate, yielding the above graph.

Consistent with historic trends, government benefits are materially greater at all but the highest levels, where they are roughly equal. The CBO notes that most of the differences in benefits have to do with differences in retirement benefits. As the private sector has replaced pensions with 401(K)s—if lucky—the difference between the two have increased. The retreat of private sector from providing robust healthcare benefits has also contributed.

Focusing on the differences between government and private sector compensation misses the more important question: What kind of employers make the country stronger? Providing wages that track inflation, good health insurance, holidays and sick days and provisions for retirement with dignity are things we should expect from all employers. To be sure, there are tweaks needed to some of the wage-benefit structures in government. In Illinois, for instance, there are numerous anomalies that desperately need fixing. But marginal issues notwithstanding, we should not be seduced by the private sector’s race to the bottom. Other workers should not resent government workers for getting paid fairly, but should be demanding the same thing for themselves. And government should do more to insure they get them.

I have a friend who mentioned to me how relieved she was that her nephew got a job with the Postal Service. She said he definitely wasn’t suited for college, but this would provide a stable job with a reasonable salary and benefits that didn’t keep disappearing. Letting these jobs slip away is not really in the national interest.

I note that in the short term, a political problem has been created because many workers, whose salaries have not kept track with inflation and whose benefits have shrunk, feel doubly aggrieved by also having to pay for government workers getting better benefits. But we still need to be clear that reducing everyone is a losing strategy in the long run.

One of the reasons government salaries and benefits have stayed healthy is, of course, that public employees have unions. Unions protect workers. It is as simple as that. Note, for instance, that when the shutdown was finally over, civil service workers received back pay. Contracted employees did not. Many of the lowest paid “government” jobs are the cooks, guards, and janitors and others whose jobs have been contracted out. Their salaries are between $450 and $650 a week, which makes it very hard to absorb the loss of a full month’s pay. Losses were greater for contracted employees who had higher salaries, but they also had more resources to fall back upon.  (On the other hand, that may undermine their long-run enthusiasm for governmental contract work.) The loss of union jobs in the private sector is part of the race to the bottom that has been allowed, even encouraged, over the last 40 years.

Another observation here: government benefits increase with salary but the benefits discrepancy between the highest and lowest paid government employees is enormously lower than in the private sector. The same is true of wages, but the difference is not quite as great. Government employment is fundamentally more equitable.

Net Impact

The net impact of moving more workers from civil service positions to contracting is another, substantial, contribution to the growing inequality of American society. As noted in my previous post, salaries of contracted workers are substantially lower than of regular federal employees. But the overall cost of contracted workers is, typically, greater. The difference goes to corporate overhead and profit returned to investors. In short, it moves taxpayer money from the people actually doing the work to corporate overhead and profits. This is a specific policy that widens the gap among workers and investors. Is this the best use of tax dollars?

This is particularly problematic for minority groups. As the New York Times reports:

For millions of black families, working for the government has long provided a dependable pathway to the middle class and a measure of security harder to find in the private sector, particularly for those without college degrees.

Blacks are about 30 percent more likely to have a public sector job (including state and local government) than non-Hispanic whites, and twice as likely as Hispanics. The 2007 recession was particularly hard on public sector jobs and they have not rebounded as quickly as the private sector—in part because formerly public sector jobs are being moved into the private sector at lower wages. So this trend not only adds to overall inequality, it disproportionately impacts minorities.

In short, we need to pay more attention to what happens when public sector jobs get reduced, especially when they result in contracting jobs out to private agencies.

Errata

My brother called to my attention that in my last post I referred to Post Office employees. He noted that the Post Office has not existed since 1971, at which time it became the Postal Service. When I suggested he was being bureaucratic, he retorted that you couldn’t always go by the old adage: “Good enough for private sector work—like Boeing, Wells Fargo, Experian or Deepwater Horizon.”

The State of Government Workers

By Mike Koetting April 4, 2019

The recent shutdown of the federal government got me thinking again about something that has been on and off my mind for about 20 years, the state of government workers.

I started thinking about this one day in a class I was teaching and it dawned on me that the students sitting in front of me had never been alive when attacking government wasn’t the predominate mode. They were raised in an era, as Ronald Reagan put it, not only was government not the answer, but it was the problem. While it is possible that they grew up in houses that offered a broader view, it is impossible to escape the society-wide attitude that, even at its best, there is something suspect about government. (My niece recounts a classmate at the Kennedy School saying in class: “Private industry is always more efficient than government. Everybody knows that.”)

The government shutdown got me thinking again about the longer-term problems of this attitude. This is the first of three posts on the topic of government workers and the broader society.

I was struck that, particularly for the first weeks of the shutdown, coverage of the shutdown focused almost exclusively on the hardships that it placed on federal workers, and, belatedly, the contractors who depend on the federal government. I understand the focus on the human suffering of the workers and their families. But, by the same token, I wanted the coverage to give equal focus to the fact that this was not simply the loss of income for federal workers, but it was also a loss to the American people because important jobs weren’t getting done.

As the shutdown dragged on, the media did start to get clearer about things that weren’t getting done. A partial list included Federal Aviation Inspectors, IRS services and reporting, processing of requests for agricultural subsidies, wildlife refuges, FDA inspections, EPA inspections,, immigration hearings, Homeland Security e-verify for employers, requests for HUD housing vouchers, data kept by US agencies—including reports used by businesses and investors, Federal Trade Commission services–including its consumer identify theft reporting system, certain services relevant to weather reports, the FEMA office that sells flood insurance, virtually all civil cases in federal courts delayed, National Transportation Safety Board review of fatal accidents, preparation and training for the coming wildfire season. In short, life as we know it would be difficult to proceed without the services of the federal government. And, remember, the above list is only what wasn’t happening because of furloughed federal employees….and does not include all kinds of government workers at state and local levels.  

So, maybe people will admit that the government work force serves important roles. At the same time, I am willing to guess that the preconceptions many people have about the government work force are inaccurate.

Take for instance size. Between 1970 and 2018, the federal non-military workforce has declined by about 2%, virtually all in the Post Office. The number of other, non-military, federal employees has been level. During that time, the US population has increased by 70%, Congressionally mandated rules and regulations almost doubled, and Federal spending increased exponentially. So, in one sense, the size of government isn’t growing, in fact is shrinking relative to what needs doing.

On the other hand, the size of the federal service has been kept stable by shifting a large amount of government work to contractors. The magnitude of this escaped my attention until the shut-down got me curious. Turns out, the contracted federal work force is about 80% larger than the civil service workforce.

Moreover, while it may come as a surprise to many, this contracting apparently makes government more expensive. It is true that average salaries among contractual workers are typically lower than federal salaries, sometimes much lower. [I will address the issue of government salaries in subsequent posts.] But, on balance, once overhead and other expenses, including returns to shareholders, are added in to contractors costs, best guesses are that contracted work is materially more expensive. One investigator recounts a series of head-to-head competitions run by the Bush administration:

These competitions were used…to test its theory that any job listed in the “Yellow Pages” phone directory can be done at lower cost by contract employees. Federal employees won 83 percent of the tests, suggesting that they could do the jobs for less when given the opportunity to build a most-efficient organization.

This large amount of outsourcing combines with other trends to raise some concerns about the future of the government workforce, particularly at the federal level.

To start with, it has changed the shape of the distribution of work done by career civil servants. More and more lower and mid-level jobs have been outsourced. This has resulted in the creation of a “top heavy” civil service—that is to say, a disproportionate share of its positions are upper mid-level and higher. That in itself is not necessarily problematic, but it is corresponding to another problem—the aging of the civil service.

A report by the Volker Alliance, a non-profit group established by Paul Volker and others to advance the effective management of government, suggests the federal government is edging toward what experts have described as a “retirement tsunami”–54% of all federal employees are aged greater than 45, as opposed 38% in the private sector. At the other end of the age spectrum, only 16% of all federal employees are under 35, as opposed to 40% in the private sector. At some point in the relatively near future, there will be a severe shortage of civil servants who have the experience to successfully manage the much larger number of contractors.

What will happen then? There will be pressure to use contractors to fill gaps because we don’t have enough people coming through the ranks to effectively manage. At some point having so much of the federal workforce working not as civil servants, but for companies that have at least somewhat different agendas becomes a problem. This, again according to the Volker Alliance:

…weakens the chain of command and produces government failures, such as the failure to connect the dots that led to the 9/11 attacks and the sluggish response to Hurricane Katrina. It also encourages the use of contract and grant employees to backfill vacated posts.

In short, the use of contracting has become so pervasive, the difficulty of getting an actual civil service job so great and the disincentives from the relentless pounding on government have gotten us to a point where more reliance on contracting can become self-fulfilling.

It is also the case that the privatization of large portions of the federal workforce has adverse consequences for the workers themselves. This is also true at state and local levels, although the diversity of approaches in these locales makes generalizations more risky. More in the next post.

Centrists: Chill Out

By Mike Koetting March 20, 2019

Inevitably, people are starting to talk about 2020.

Prickly City by Scott Stantis

Many people I know—which is to say older people who will under absolutely no circumstances vote for Trump—are worrying that the Democrats are tending too far left. My advice: “Chill out!’ And It’s not just that this is all ridiculously far-way—although it is. Unless the Democrats lose their collective mind, I am not worried by this.

I consider myself progressive, but more of a gradualist. I supported Clinton over Sanders. I have many concerns about the policies proposed by those further to the left. But so what? As economist Brad DeLong points out (in a fabulous Vox interview by Zack Beauchamp, strongly recommended): “The baton rightly passes to our colleagues on our left. We are still here, but it is not our time to lead.”

Continue reading “Centrists: Chill Out”