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Monday, February 21, 2011

Can strange benefits logic justify wage cuts?

Here are Governor Walker's (TP, Wisconsin) magic numbers:

...require state employees to pay about 5.8% toward their pension (about the private sector national average) and about 12% of their healthcare benefits (about half the private sector national average).

Why does one pay workers and then turn around and collect what you just paid them?

Usually such weirdness is explained by tax distortions, but I don't see one operating, off-hand.

People might look at those numbers and conclude that public employees are getting a good deal versus everyone else. But, if you compare total benefits (salary plus wages), it appears that is not the case.

Put another way, "national average contribution rates" are just arbitrary nonsense, right?

The only thing one can surmise, off hand, is that it is a way to mask wage cuts.