Am I overpaid?

Andrew G. Biggs and Jason Richwine penned a column in the April 11th Wall Street Journal arguing that, when pensions are included, public sector employees are overpaid. Considering that one can retire from the Army after 20 years of service with a 50%-of-base-pay pension, their premise is hard to argue against.

"Public pensions calculate annual contributions on assumed returns of around 8 percent," they wrote. "...private sector workers with 401(k) plans receive a yield of only 2 to 3 percent." Add in our generous medical coverage that doesn't even ask for a copayment and it's quite convincing.

[Picture source: http://www.wikipedia.org/]

Yet the comparison can only go so far. Toward the end of the article, the authors state that "Basic fairness requires that public employees be paid for their skills at the same market rates as the taxpayers who fund their salaries and benefits." Though they had targeted state and local government employees who make more than their private-sector compatriots, I'd like to discuss that statement as it applies to the military.

The closest thing to a private sector equivalent would be a private security contractor of the kind that are employed in Iraq or Afghanistan. According to a 2007 article, their average salary of about $600 per tops even that of General David Petraeus. [Source]

The biggest difference, though, is that most public sector government employees are represented by a union. Too bad the military can't form one -- if the government had to pay a market wage for us, you can bet we'd be costing the taxpayer a good bit more than we are now.