American commentators, like Michael Barone, are starting to focus on the fact that, while the recession has hurt the private sector, it’s helping the public one. A Rasmussen poll found that 46 percent of government employees say the economy is getting better while just 31 percent say it’s getting worse. In the private sector, those proportions are reversed. While the private sector economy has lost millions of jobs, the public sector one has been stable.
But anything the U.S. can do, Britain, in this context, can do worse. The Sunday Times notes that in 2009, 21.1% of all U.K. labor was employed by the state, and that – measured by hours on the job, rate of wage inflation, or salary – it is almost always better to be paid by the government than by a private employer. Even in the highest paid job, the private sector pays better salaries, but the government offers a much larger pension. Britain has hired over 300,000 new civil servants since September 2007.
Given the state of British finances, that kind of hiring makes about as much sense as the captain of the Titanic deciding that what he really needs is more ice in his drink. But what’s even more curious is what happens when, as has supposedly happened in the Ministry of Defense over the past twelve years, headcount drops. Miraculously, pay keeps right on rising. In Defense, the number of workers in the lowest two pay grades has fallen by about 19,000 since 1997. Since 2004, total employment has fallen by 21%. Yet total civilian pay has risen by 13% over the same period.
This is probably in part because, while it’s been letting office workers go, the Ministry has hired 2,000 additional managers. By contrast, the total strength of the armed forces has fallen by 9%, while pay has increased by 12%, and the officer corps has shrunk in proportion to the forces as a whole. It’s striking that a larger decline in civilian employment generates nothing but a larger increase in pay and more managerial hires.
One possible further explanation for the discrepancy between a declining headcount and a rising wage bill is that the headcount hasn’t really declined. Given the Labour government’s track record of dodgy contracting out arrangements, this explanation is all too plausible. But as the question has not received the attention it deserves from the House of Commons, or – needless to say – the government, it remains a mystery that the next government will have to investigate. True, reducing the top-heaviness of the Ministry, as Shadow Defense Secretary Liam Fox proposes, won’t completely close the funding gap in British defense spending. But it’s an excellent place to start.
New data out from the Centers for Disease Control and Prevention show that some 44.9 million Americans of all ages were uninsured in the quarter of January through March. Roughly 63.5 percent of unemployed adults aged 18 to 64 and 21.5 percent of employed adults in the same age group had been uninsured at some point in the past year. The new report highlights a trend in Census data that private coverage is declining while coverage in public health programs is on the rise.
The numbers also underscore what Stuart Butler has called a “catastrophe of small-business health care coverage in America.” Since the majority of Americans get their health coverage through their workplace, increasing costs have pressured more companies to reduce or drop benefits, with most small businesses opting to not cover employees because of the skyrocketing costs. The result — as shown in the Kaiser Family Foundation’s recently released annual survey on employer-sponsored benefits — is a relentless drop in small business coverage. Moreover, employer-sponsored health insurance rose to an average annual rate of $13,375 for family coverage this year.
However, Butler and other health policy experts argue Congress is going about the wrong way in trying to promote greater health insurance coverage. Measures like employer mandates to provide health care coverage to workers or pay a fine, requirements that all Americans buy insurance or pay a tax, expansions of nearly bankrupt public health programs and greater regulation of health insurance threaten to push premiums even higher and lop more taxes on American families. All of the provisions would exacerbate the decline of private employer coverage.
In particular, the higher taxes that Sen. Max Baucus (D-MT) proposed in the framework of the Senate Finance Committee’s health bill (a full bill has not been released) would make the uninsured problem worse for low-income workers, Butler told a health care forum sponsored by the Alliance for Health Care Reform.
The Congressional Budget Office noted this week that taxes levied on drug companies, medical device manufacturers, health insurers and clinical laboratories as proposed by Baucus’ chairman mark would be passed onto consumers through higher insurance rates.
“This will further squeeze workers’ cash earnings,” Butler said. Instead of pushing through highly contentious health bills, Congress needs to hit the reset button and focus on reform that garners broad support, Butler said. He noted that tax experts across the ideological spectrum have called for changing the tax treatment of health care coverage to make it more equitable for consumers who buy it on their own in the individual insurance market.
“Plus, let’s build up momentum in a different direction when it comes to businesses providing health care benefits. Let’s make it more like retirement savings, where employees often do their paperwork through their employer but own their 401(k) or pension,” Butler said, stressing that a basic reform of the tax treatment of health insurance is necessary to make that happen.