Using government to prop up the economy

I most likely am going to take some flak for this blog from my good friends in the public service. Most of them are credible, highly qualified and competent workers trying to make the world a slightly better place from their actions and I commend them for it.

However, I feel compelled to point out a few facts. I don’t believe that you can solve your economic problems by hiring more government employees and paying them higher wages. Ultimately, government workers are paid for out of the economic activity generated by the private sector so hiring more of them and paying them higher wages will eventually cause significant stress on the economy rather than benefiting it.

For example, not many people realize that there are 80 government employees (employed in Government Service Industries) for every 1,000 workers in the economy as a whole (employed persons as of the 2001 Census). This, of course, doesn’t take into account education, health care and other government-funded industries – just direct employees of government. That compares to only 57 per 1,000 Canada-wide. That means there are 39% more government workers in New Brunswick than Canada as a whole.

Further, government workers in New Brunswick are paid 44% more, on average, than the average annual income of all workers combined. That compares to only 27% more Canada wide. While we are on the subject, elementary and secondary school teachers are paid 14% more, on average, than the average worker in New Brunswick compared to 11% nationally. Translation, New Brunswick teachers are paid more, relative to other workers in New Brunswick, than teachers outside the province (I can think of at least three people that have taken me off their Christmas card list as they read this).

I am not trying to heighten controversy but I do find it a little bizarre that in New Brunswick, a government job is considered ‘hitting the jackpot’. I know of a number of people that would like nothing more than to get a government job.

Contrast that with the United States (always a good benchmark) where government workers are paid less – sometimes significantly less – than the private sector. In fact, I attending a government recruitment seminar while attending university in Virginia and the recruiter started his presentation by saying “You will never make as much working for government as you would in private industry but you will have the satisfaction of working for the public service and making your communities a better place”.

Well, in New Brunswick you get both – better wages and the ability to work for the public.

To finish this thought, I’ll make a couple of closing remarks. The current government’s approach to labour relations has been to talk tough, act belligerent and then basically give a good deal to the workers (I think the Stenos; however, got the shaft). This was documented by someone recently who said that public servants in New Brunswick received the highest increases in wages in the past five years of any province in Canada.

So, Premier Lord, in his savvy, political way (looking tough on unions but giving in at the same time) is practicing a decades old tradition in the province of trying to bolster the economy with government work.

I think government workers should be paid well – in line with the private sector. I think that the ratio of government workers to private sector workers should be way more in line with the national average. Finally, I think government should be more active trying to stimulate private sector job creation than using government jobs as a proxy.

James Foster in the Times and Trash-script this weekend wrote an article supposedly about our high level of taxes but ended up being overtly positive – talking about the increasing disposable income among New Brunswick workers compared to the national average since 1981. I would ask him to back out government workers and see if the rest of us have achieved such growth in disposable income.

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