Is a $100K + salary level appropriate for professionals employed by government? As I wrote yesterday, at the local level activists have confronted the Glendale city council over the large number of city employees receiving over $100,000 and $200,000 in annual compensation.
Government Executive.com’s FedBlog shows that from the inside, some professionals in government believe they are underpaid relative to the private sector!
FiveThirtyEight blogger Nate Silver argues that government regulators should be paid more than the private industry professionals they scrutinize. Silver uses 14 paragraphs and 3 charts in this post to drive home what is essentially plain common sense:
…the laxer the regulatory environment, the more ways there are to try and beat the system — and the more Wall Street is willing to pay for people who can figure out ways to do so. Products like credit default swaps, for instance, are extremely complex and require much skill to arbitrage, far more so than the trading of ordinary stocks and bonds.
..it may not only be that laxer regulation triggers greater compensation, but also that greater compensation triggers laxer regulation.
…That is, the excessive wages paid by Wall Street not only lure talent away from other parts of the private sector, but also from the public sector, where employees are subject to government wage controls. The very people who might be the most capable of enforcing regulations on the banks instead wind up working for them.
Silver makes two important side points on the financial industry’s good old boy network employment practices:
• The highest paid individuals in the financial sector are almost all men, and
• Investment banking has artificially limited its labor supply, thus supporting outrageous compensation levels, because it recruits almost exclusively from within a small number of Ivy League and other prestigious schools.
How much are U.S. Labor Department attorneys paid relative to the private sector?