Budget Fight: What Public Employees Really Cost

Are they coddled, exploited or just misunderstood?

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Greg Miller for TIME

Every state is different. In North Carolina, firefighters have a stable, well-funded pension, proof that fiscal discipline is possible

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So what do these 19 million people do all day? Almost half work in education, which rivals health care for the most wasteful sector in America. The rest are mostly police officers, firefighters, social workers, nurses and prison guards. In other words, they have the jobs that have always been politically sacrosanct, which may explain why they are the last to join the 21st century.

Are they overpaid? Researchers have had many boring fights over this question, partly because it is impossible to answer with precision. (New Jersey, for example, has 600 school disctricts, each with its own rules. Pennsylvania has more than 3,000 pension plans.) But the studies comparing government and private-sector workers with similar levels of education, age and experience usually find that government workers earn less in salary.

But money isn't everything. The biggest difference between public and private workers is how they get paid. Government workers get more of their total compensation in the form of benefits — especially health care and retirement funds. Some studies have tried to compare all-in compensation, which is really the only sensible thing to do. Those studies have generally still concluded that public workers make slightly less, all things considered.

Except that those studies are not truly considering all things. The data about health and pension benefits for government workers is badly flawed at the moment. It's missing billions of dollars that have not been paid by many local and state governments to fulfill their legal obligations. So most studies cite figures for what governments and their workers are putting into the system — not what may actually be paid out in the future.

Now we're getting to the heart of the matter. In many states, we simply don't know how much public workers will make in total. We just know that the amount will swing between outrageous and reasonable depending on the job and town. In some California locales, under increases passed by elected officials during the Internet boom, public-safety workers can pull down truly swank livings, given their salaries, health benefits and guaranteed pension payouts. At least on paper, some firefighters are the dotcom millionaires you never heard about.

That said, the typical career public employee who put in at least 30 years of service in California and retired two years ago is collecting about $67,000 a year in pension payouts. That's a healthy figure, but remember that about half of California's public workers (like 25% of government workers nationwide) aren't allowed to collect (or pay into) Social Security, due to an old legal fight about the federal government's right to tax state workers. Recently, lawmakers lowered benefits for future state hires and raised contribution rates for some current and future workers. But as in other states, case law generally considers the benefits for current and past employees untouchable as a contractual matter, so changing those dotcom payouts will require a brutal fight.

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