"If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labor laws are outdated. The labor laws induce sloth, indolence, rather than hard-working. The incentive system is totally out of whack.
Why should, for instance, within [the] euro zone some member's people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard."
When I read another article about U.S. public school teachers and their total compensation relative to what they could earn in the private sector, the above quote by the Chinese investor about welfare and work came to mind.
Public School Teachers Aren't Underpaid says some surprising things about pay levels for public school teachers relative to what they could earn in the private sector:
"In short, combining salaries, fringe benefits and job security, we have calculated that public school teachers receive around 52% more in average compensation than they could earn in the private sector.
The compensation premium is especially relevant today, as states and localities struggle with budget deficits. Restraining the growth of teacher compensation—in particular, pension and retiree health benefits that outstrip what comparable private-sector workers receive—could help balance budgets and perhaps restore school resources lost to rising labor costs. Broader pay reform should give school administrators greater flexibility to reward the best or most-needed teachers with high salaries and benefits, while encouraging the least effective ones to improve or to leave the profession.
Effective reform, however, requires knowing all the facts about teacher pay. Policy makers and the public should not accept at face value that the typical teacher earns far less than he or she would in the private sector. The evidence points to a very different conclusion."
What's important, of course, is that public sector pay should not be higher than that which is available in the private sector. The public sector acts as a monopoly while the private sector engages in market based competition for its work force.
Said another way, the market sets compensation levels in the private sector. Therefore, private sector compensation would be the appropriate benchmark for public employees, including teachers. Not the other way around. And that private sector as the benchmark for pay should include all relevant factors, including direct pay, benefits, time off and job security.
Of course, there is probably some room for debate about the accuracy of the 50% premium associated with public school pay for teachers versus what they could earn in the private sector. Nevertheless, we should all agree that compensation levels in the public sector should not be higher than those in the private sector. The market for workers should be allowed to work its magic.
That pay for public school teachers is 50% higher than what the teachers could earn in the private sector is due to the uncompetitive and monopolistic characteristics of public sector employment, including benefits, time off, job security and such. Public employee unions have been effective, to say the least. But the unions have done considerable harm to the taxpayers as well.
It makes no sense for people who work in the competitive private sector to pay higher taxes than necessary so public sector employees can enjoy pay much greater than they could earn in the private sector. It's simply unfair to taxpayers.
Besides, the effect of inappropriately highly paid public workers is negative on our economy and our private sector labor force's global competitiveness. If the highly paid public sector is the most financially attractive place to work, that's where people will seek employment.
And if the most qualified and best workers seek work in the public sector, the private sector won't perform as well compared to the rest of the world, since the most attractive jobs will be found in the public sector.
Then our downhill slide economically will quicken as U.S. companies become less competitive. Taxes will in turn go down as profitability declines. That will mean less money for public employees, too. And the resulting economic death spiral could unfold rather rapidly.
Greece, Italy and much of the rest of bankrupt and uncompetitive Europe have already brought this about in the public-private sector spheres.
It would be a shame if the U.S. continued to follow these European economic zombies down the path to financial obscurity and a socialistic welfare society.
Thanks. Bob.
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