Monthly Archives: October 2013
I haven’t blogged about the shutdown, because, well, I haven’t blogged much about anything. Mea culpa.
I haven’t had time because I’m, quite frankly, not personally or professionally affected. Warren Meyer of Coyote Blog, however, is very personally AND professionally affected. Warren operates private concession operations that handle all on-site activities at parks, with a good portion of his business based upon federal parks.
These parks use no federal employees. They don’t require any federal dollars to operate. In fact, they pay rent to the federal government as part of the terms of their lease. So of all things, you’d think that the Feds would want them to remain open. In fact, in all previous shutdowns (including 1995 & 1996), they have remained open.
Not this time. They’ve been ordered to close.
I can’t do justice to all the coverage that already exists for this. While I assume many of my readers are also daily readers at Coyote Blog (and Popehat), I can’t be sure.
All of Warren’s post on this topic can be found here. Check them out, please. You will not be disappointed.
As it pertains to the shutdown, I have little patience for the Republicans here. The Republicans are playing a gambit they can’t win. The Dems are NOT going to defund or delay Obamacare. This is stupid on strategic and tactical levels. You can’t win and you’re going to damage your brand in the process. WTF are you thinking?!
But what I see from the Obama administration is wrong on many more levels. It seems that the administration’s tactic here is to screw as many people as possible, to make this as painful as possible, and then hope the blame rests only on the Republicans for what the administration has done. There is no reason to close these privately-operated parks. There’s no reason to throw people out of their homes because they rest on federal land. There’s no reason to close open-air memorials that don’t require human workers to operate. While I’m not sympathetic to Republican partisans, I have to say that naming the barriers that closed the World War II memorial “Barrycades” is quite smart.
I’m still filled with nothing but disgust for everyone in Washington. Both sides are angling for a “win”. I want to see both sides lose, dammit!
Unfortunately, I know that in Nov. 2014, lawmakers from both parties will probably enjoy >90% re-election rates. And people wonder why I say that democracy doesn’t work?
Well… we knew that the 4th and 5th amendment meant nothing to them… never mind HIPAA… but really?
The policy contains many standard statements about information automatically collected regarding Internet browsers and IP addresses, temporary “cookies” used by the site, and website accessibility. However, at least two conditions may give some users pause before proceeding.
The first is regarding personal information submitted with an application for those users who follow through on the sign up process all the way to the end. The policy states that all information to help in applying for coverage and even for making a payment will be kept strictly confidential and only be used to carry out the function of the marketplace. There is, however, an exception: “[W]e may share information provided in your application with the appropriate authorities for law enforcement and audit activities.” Here is the entire paragraph from the policy the includes the exception [emphasis added]:
Should you decide to apply for health coverage through Maryland Health Connection, the information you supply in your application will be used to determine whether you are eligible for health and dental coverage offered through Maryland Health Connection and for insurance affordability programs. It also may be used to assist you in making a payment for the insurance plan you select, and for related automated reminders or other activities permitted by law. We will preserve the privacy of personal records and protect confidential or privileged information in full accordance with federal and State law. We will not sell your information to others. Any information that you provide to us in your application will be used only to carry out the functions of Maryland Health Connection. The only exception to this policy is that we may share information provided in your application with the appropriate authorities for law enforcement and audit activities.
The site does not specify if “appropriate authorities” refers only to state authorities or if it could include the federal government, as well. Neither is there any detail on what type of law enforcement and/or audit activities would justify the release of the personal information, or who exactly is authorized to make such a determination. An email to the Maryland Health Connection’s media contact seeking clarification has not yet been answered
The second privacy term that may prompt caution by users relates to email communications. The policy reads:
If you send us an e-mail, we use the information you send us to respond to your inquiry. E-mail correspondence may become a public record. As a public record, your correspondence could be disclosed to other parties upon their request in accordance with Maryland’s Public Information Act.
Since emails to the marketplace could conceivably involve private matters regarding finances, health history, and other sensitive issues, the fact that such information could be made part of the “public record” could prevent users from being as free with their information than they might otherwise be. However, as noted, any requests for such emails would still be subject to Maryland’s Public Information Act which contains certain exceptions to the disclosure rules.
Read the fine print eh?
These are such clear 4th and 5th amendment violations I can’t believe anyone didn’t immediately say “uh guys… we cant actually do this”…
… but as I said, we know that our elected and selected “lords and masters” don’t give a damn about the 4th or 5th amendments (or really any of the others ones any time they become inconvenient).
So while I’m sure they were told they couldn’t do it, I’m sure they said “ahh well the disclaimer and release is enough, we’ll be fine”.
This whole government “shutdown” thing has brought out a lot of talk about federal pay.
A liberal of my acquaintance posted something on facebook a couple days ago:
“A Republican I know said, ‘If you got furloughed because of the shut down, maybe you should get a real job.’
Yeah… about that…”
‘pon which he linked to a story about the cops, border patrol agents, etc… who were not being paid while protecting congress, and our country.
It’s a good point. There are plenty of people doing real, important jobs, who are not being paid… Some of them have gone home, but a LOT of them… actually about 2/3 of the federal non-military workforce, hasn’t. They’re still doing their jobs, they just aren’t getting paid for them.
I don’t have a problem with good people doing as best they can at their job…
The problem I have is… there’s too damn many of them… And they are doing too many things, that they don’t need to be, or shouldn’t be doing.
So, I said something which I think is fairly well known in libertarian circles:
“A good friend of mine is a border guard with ICE… yeah, he’s got a real job.
That said, there IS a point when the most liberal liberal in America has to think ‘why in the hell do we have 50% more federal government payroll than 1998… we’re not getting more than we got then… at least not more good useful stuff….’ That’s just non-military federal staff payroll by the by, not any other spending…”
His commenters didn’t believe me, or just said inflation or homeland security etc…
I clarified, no, federal non-military payroll; meaning the total compensation (wages/ salaries, non-cash compensation and benefits) of full time permanent non-military federal workers, has increased, by at least 50%, in constant dollar terms, from 1998 to today.
Oh and homeland security is only a fairly small portion of that increase (Only 9% of the federal workforce, though it is the single largest federal agency – excluding the civilian employees of the military and veterans affairs – in terms of manpower).
To which he said, quite reasonably “Would you care to source that?“.
Congressional Reporting Service report on trends in the federal workforce:
Congressional Reporting Service report on average wages etc… in the federal workforce:
Several other primary sources in the footnotes of this article, notably from the Bureau of Economic Analysis:
So… let’s break it down shall we?
The CRS reports there was a 17%… actually 16.7% increase in the federal workforce between 2000 and 2010.
I don’t have the numbers from 1998, 1999, 2011, 2012, or 2013, but other sources indicate that it’s probably not much, because there were hiring freezes and reductions that make it pretty much a wash. 17% is probably good for 1998 to 2013.
So, a 17% increase in non-military federal staff from appx. 1.8 million to appx. 2.1 million (excluding the civilian employees of the Army, Navy, Air Force, and Veterans Affairs; currently about 900,000).
Oh and it’s important to note that these numbers do not include contractors. Contractors compensation does not count against federal payroll, and they are not counted as federal workers… which is one of the major reasons there are so many of them…
In 1998 there were approximately 1.8 million federal workers, and only 6.5 million contractors.
Well, as of 2013, there are appx 2.1 or million federal non-military workers… and appx 17 million contractors.
Contractor compensation DWARFS the federal payroll. It’s well over 20 times federal payroll in fact… though we really have no exact idea how much, because it’s buried in hundreds… or possibly thousands… of different budgets, and literally millions of line items (many of which are gray, or black).
So, let’s talk money…
First, let’s talk about total compensation.
Total compensation includes both wages and other cash compensation, and non-cash compensation such as benefits.
Bureau of Economic Analysis reported average total compensation for federal employees went from appx. $67k in 2000 to appx. $115k in 2012.
In constant dollar (that is, adjusted for inflation) terms that is a 29% raise.
Oh but that’s just from 2000-2012 I don’t have the exact numbers here from BEA for ’98,’99, and 2013…
Purely from a trendline analysis, you see a 2.15% annual average constant dollar compensation increase. Extend the trendline from 1998 to 2013, and instead of 29% it’s about 38%.
A 17% workforce increase and a 38% raise, is a 60% increase in total payroll…
Now… even if you just take cash compensation, BEA reports an increase from $56k to $82k; a constant dollar increase of 16%.
That’s much lower than the increase in total compensation, but still quite respectable… And remember, this is in constant dollar terms, so that’s over and above inflation and cost of living increases.
Again, thats 2000-2012. Extending the trendline from 1998 to 2013 and you get 21%.
21% raise times a 17% workforce increase, is a 41% total increase in constant dollar terms; for just cash compensation.
Now… those are BEA numbers, what about CRS numbers?
Hmm… I don’t have the exact numbers on total comp increases from those years… But I do have their percentages… in fact I have every percentage increase, and the inflation percentage, for every year since 1969…
Federal Average salary and wage increases year over year, 1999-2013 (1998 would reflect increases from 1997):
1999: 3.4% over inflation
2000: 2% over inflation
2001: 0.3% under inflation
2002: 0.4% under inflation
2003: 0.2% over inflation
2004: 2.0% over inflation
2005: 0.2% over inflation
2006: 1.4% over inflation
2007: 1.6% over inflation
2008: 1.8% under inflation
2009: 1.6% over inflation
2010: 1.9% over inflation
2011: 1.8% over inflation
2012: 1.8% over inflation
2013: 1.8% over inflation
Official numbers have not been released for 2011, 2012, and 2013; the 1.8% is from news reports and other websites stating that though federal salaries have been in a base rate freeze, the average salary has increased 1.8% over inflation in each of the last 3 years. This is consistent with previous increases.
So, from purely federal internal sources, we have an average wage/salary only, increase of 24.8%. Times a workforce increase of 16.7% (also from the CRS), we have a 45.6% increase.
So… there’s the CRS’s own estimate, of average wage and salary alone.
Unfortunately, the CRS doesn’t estimate total compensation, but if we assume the BEA numbers are reliable, non-cash compensation has increased from appx 22% of cash compensation in 1998 to approximately 40% of cash compensation in 2012.
This estimate is not out of line with other trends and percentages well known in HR (noncash compensation, particularly benefit costs, have doubled or more in the last 15 years)… so I think it’s a good and reasonable approximation.
Oh… might be useful to summarize here.
I’ve got two different sets of numbers, which are different enough to be noticeable, but not enough to completely contradict each other.
Note: The difference between the BEA and CRS may include slight differences in the way they calculate compensation; and they definitely include differences in the way inflation is calculated. The BEA numbers used BLS inflation adjustment. CRS uses CPI based inflation adjustment (CPI is a component of the BLS inflation adjustment, but there are other elements included as well).
Workforce increase 16.7%
BEA: cash compensation increase 21% total comp increase 38%
CRS: cash compensation increase 24.8% total comp increase 42.8%
Total payroll increase cash/comp
So… no matter which numbers you believe, total comp increase is WELL over 50% in 15 years, and according to the CRS cash comp is up nearly 50%; and the lowest estimate is 41%…
Over and above inflation…
Yeah… don’t you wish your job had raises like that?
Oh and one more thing…
From the late 1960s, through the 80s and into the early 90s, federal workers as a whole were actually paid quite poorly, as compared to comparable private sector jobs. Their wage scales were originally set at bottom of market to begin with (generally though of as a tradeoff for their better job security and benefits), and the unusually high inflation from 1968 to 1984 had private sector wages rapidly increasing, while federal cost of living adjustments were significantly under the rate of inflation.
This left a population of workers who were dramatically underpaid in comparison to the private sector, all the way through the early 1990s.
Many still are. Those in the bottom 2/3 of the federal pay scale are generally still significantly UNDERPAID, not overpaid as compared to private sector; sometimes dramatically so (permanent non-contractor federal IT staff make less than half industry comparable salary for example).
Those in the top 1/3 though make quite a lot more than comparable private sector jobs.
…Well, that is, until you get to the “senior executive” level, where, once again, they make 1/2 or less what they would in the private sector ($190k a year is the top out. Private sector workers at those levels of education, experience, responsibility etc… typically make anywhere from $200k to over a million, with $400k+ not uncommon).
It is only from the mid 90s that the federal payroll, and specifically average pay (skewed by the top 1/3), began to dramatically outpace private sector pay.
The bottom 2/3 of the federal workforce didn’t get very much of that increase.
The top 1/3 of the federal workforce got much larger increases.
Also, there are far more workers in the top 1/3 of the pay scale than there were in 1998. Far more making more than $100k a year, and far more making more than $150k a year.
The middle 1/3 shrank significantly.
So there’s more low end, more high end, and less middle…
Not exactly shocking…
So, once again, telling people the truth about Social Security produces indignation, and the expression of common misconceptions… to wit:
“Hey wait a second. I paid into Social Security for 47 years. I’m just getting out that I paid in, and the return on my investment. It’s not my fault congress didn’t do what it was supposed to, and raided the trust fund”.
Actually, no, you’re not. Not even close.
The first thing is, as noted in the pieces “The Greatest Fraud in the History of the Human Race“, and “It isn’t, wasn’t, aint ever gonna be…“; there is no investment, no insurance, no pension, no annuity, and no “trust fund”.
The payments to current retirees are entirely and exclusively paid out of the taxes of current productive workers. Nothing else.
Further, retirees actually get far more out than they put in.
As of 2010, the average retired worker received $1180 per month, or $14,160 per year. This is, in theory properly inflation adjusted etc… So can be dealt with in constant dollar terms.
In constant dollars, the average individual salary has almost doubled over the working life of the current retiree, from somewhere around $13,000 (constant dollars remember) in 1963 to around $25,000 in 2010.
The FICA tax rate is currently 12.4%, currently split equally between the worker, and the employer. Meaning that the average annual FICA contribution is currently about $3100, $1550 by the employer, $1550 by the employee
That’s about 1/5th the amount paid out to the average retiree…
If we assume a 47 year working life (actually, the average is 39 years for women who work, and 44 years for men who work, with a national average of 37 years – including non-workers – but we’ll be generous), that would, presuming constant wages in constant dollars, mean a total contribution of about $146,000.
Against an 11 year average retirement, that would be about $13,200 a year… Only the average is actually $14,160, a difference of about $1000, or about 7%.
However, because constant dollar wages have actually almost doubled over the life of the average retiree (meaning that their FICA taxes were much lower for much of their working life; particularly prior to 1984) and because the average working life is approximately 44 years, not 47 years (for men who work… we’ll exclude women, as they didn’t make up a major percentage of the full time workforce until the 1980s), the actual numbers are much worse…
In constant dollar terms, given inflation (particularly the inflation that occurred from 1968-1984), and the current average lifespan after taking retirement of 11 years; the average social security recipient actually receives 2.7 times in benefits as they paid in (this is the SSA’s estimate).
This is primarily the result of inflation, and dramatically increased lifespan. Unfortunately, as no actual return earning investments have been made, it takes the increasing contributions from new and more productive workers, to keep paying down the current payments.
This tells the tale:
Total benefits paid, by year
Year – Beneficiaries – Dollars
1937 – 53,236 – $1,278,000
1938 – 213,670 – $10,478,000
1939 – 174,839 – $13,896,000
1940 – 222,488 – $35,000,000
1950 – 3,477,243 – $961,000,000
1960 – 14,844,589 – $11,245,000,000
1970 – 26,228,629 – $31,863,000,000
1980 – 35,584,955 – $120,511,000,000
1990 – 39,832,125 – $247,796,000,000
1995 – 43,387,259 – $332,553,000,000
1996 – 43,736,836 – $347,088,000,000
1997 – 43,971,086 – $361,970,000,000
1998 – 44,245,731 – $374,990,000,000
1999 – 44,595,624 – $385,768,000,000
2000 – 45,414,794 – $407,644,000,000
2001 – 45,877,506 – $431,949,000,000
2002 – 46,444,317 – $453,746,000,000
2003 – 47,038,486 – $470,778,000,000
2004 – 47,687,693 – $493,263,000,000
2005 – 48,434,436 – $520,748,000,000
2006 – 49,122,624 – $546,238,000,000
2007 – 49,864,838 – $584,939,000,000
2008 – 50,898,244 – $615,344,000,000
You can see that:
from 1950 to 1960, beneficiaries increased by a factor of 4.5, payments increased by a factor of 12
from 1960 to 1970, beneficiaries doubled, payments tripled
from 1970 to 1980, beneficiaries only increased by 30%, while payments increased by 400%
from 1980 to 1990, beneficiaries only increased by 11% while payments more than doubled.
from 1990 to 2000, beneficiaries increased by about 11%, payments increased by about 50%
from 2000 to 2010, beneficiaries increased by about 11%, payments increased by about 50%
These are reflective of the huge jump in expected lifespan between 1950 and 1990, and the massive inflation from 1968 to 1984.
We are about to hit another inflection point however. Or rather, we already have, it’s just not reflected in the numbers yet. In the 2000s, beneficiary growth slowed down, because the 1940s were a relatively low birth rate period for the U.S.
In 2007, the baby boomers started hitting minimum retirement age of 62. In 2010, they started hitting 65. The peak of the baby boom was from 1946 to 1959, where we maintained, on average, more than double our previous normal population growth year over year. This is combined with an expected increase in lifespan over previous generational co-horts of 3-7 years; and an increase in real income of almost 30% to 50% over previous cohorts.
So, the REAL fun, is the 10 years from 2010 to 2020… when instead of the typical 1 million or so additional beneficiaries, and 30 billion additional dollars in payments per year, we are expecting 2.5 million additional beneficiaries, and over 100 billion additional dollars in payments per year.
Then from 2020 to 2025, the increased slow down, to just 1.75 million additional beneficiaries… but still over 100 billion additional payouts.
Basically, we’re looking at increasing the beneficiary population by about 50%, and about tripling the annual payments, in the next 12 years.
This is happening, just as the earners in peak earning years fall off precipitously. From 1964 to 1975 the birth rate dropped by 30%, and has pretty stayed there ever since.
By 2025, we’re looking something like 75 million beneficiaries, and 2 trillion a year in payouts; against probably 125 million productive workers (this is accounting for population growth, as well as retirement growth).
That’s $16,000 per year, per productive worker.
Presuming todays average salary per productive worker of appx $25k with a real dollar increase of 3% annualized (the average over the past 100 years) over 12 years, you get appx $37k.
It would require a 45% payroll tax rate to cover that… Which is about 4 times what it currently is.
That’s JUST for social security, never mind all other taxes… and that’s a fairly optimistic growth rate for both worker population, and worker wages.
… and its obviously completely impossible.
We literally cannot tax our way out of this… We’d have to increase taxes to 100% of income… and then expect to actually get it (which we won’t. We’ve never been able to extract more than 22% of gdp for more than a few years even in WW2, and never more than 19% average over any rolling 10 year period); and it isn’t going to fixed by “modest reform”.
We are going to have to cut social security dramatically AND raise taxes dramatically… there is literally no other possibility.
Oh… and it gets worse for the following 11 years… well, that’s based on todays average survival after retirement… it’s estimated that average goes up by 4 years over the same time period… before it starts to get any better… and it’s not for 15 years after that, that retirements actually slow below the rate of worker increase…
… and then another 15… or given increasing lifespans probably 20 years at that point… before wages actually increase at a rate higher than retirement payouts.
Oh and the “trust fund”? Yeah, even if it actually existed, it would only be about 2.7 trillion… which is only about 4 years payments at current levels, and 2 years payments at expected future levels. So, even if the “trust fund’ hadn’t ever been raided, we’d STILL be in this situation.
So… it’s 2013… We’re already below zero, and if we don’t do anything to fix it, we’re basically hosed until about 2070.
And it isn’t because “you’re getting your fair share of what you put in”… You’re actually getting 2-3 times what you put in.
Well… for now anyway…
We’ve already run out of money… The question now is, what happens when we run out of debt, and excuses.