The Federal Bureaucracy-Plutocracy
By Robert Higgs • Saturday December 12, 2009 11:02 AM PDT • 24 Comments
According to an analysis of federal payroll data by USA Today, the federal bureaucracy has flourished during the current recession.
Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months—and that’s before overtime pay and bonuses are counted.
Federal workers are enjoying an extraordinary boom time—in pay and hiring—during a recession that has cost 7.3 million jobs in the private sector.
The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.
When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.
The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules.
…
The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.
The report notes that the data analyzed do not include employees of the White House, Congress, the Postal Service, and the intelligence agencies or uniformed members of the armed forces. Adding these employees to the analysis probably would not alter the general outlines of the study’s conclusions.
This development would be remarkable at any time, but it seems even more remarkable when it coincides with a more-than-doubling of the unemployment rate, a 4 percent decline in real GDP, and the evaporation of trillions of dollars of private wealth in the markets for corporate shares, other financial securities, and real estate.
This development also highlights the division of interests at the heart of classical liberal class analysis: the division between those who gain their income from honest production and trade (which Franz Oppenheimer called the “economic means”) and those who gain their income by plundering the producers (which he called the “political means”). Plutocrats are no longer only the Daddy Warbucks types, wearing diamond stickpins and puffing on oversized cigars (although Hank Paulson clearly illustrates that such types have not disappeared). Now they are also the blank-faced bureaucrats, dozing over their desks in nondescript office buildings.
Even Franklin D. Roosevelt made a better showing in this regard, at least at the start of his presidency. Having campaigned against Herbert Hoover’s excessive enlargement of the bureaucracy and his large budget deficits, Roosevelt pushed through the Economy Act of 1933. This statute provided for substantial cuts in federal spending and veterans’ benefits and gave the president authority to eliminate some federal agencies to achieve greater government economy. Subsequent congressional and executive actions overturned most of the act’s provisions, but at least in this regard, Roosevelt’s heart was initially in the right place.
Unfortunately, we cannot say the same for Barack Obama’s heart. From his campaign, to the massive “stimulus” bill enacted in February, to the obscene hypertrophy of the federal bureaucrats’ pay, perks, and power during the past two years, we see all too plainly that while those of us who use the economic means to gain our living are struggling, those who use the political means are enjoying tremendous success in their plunder of the productive class, and that this conjunction has been anything but accidental. Members of the plundering class wanted it, and they have brought it about, owing to the threats of violence that serve as the basis for all of their actions under the state’s banners.
Thus, the current recession cum financial debacle certainly has been a severe misfortune for you and me, but for the federal bureaucracy, it has been a godsend—complete, we might note, with a messiah to lead the way.
Tags: American History, Budget and Tax Policy, Employment, Great Depression, Politics, Presidential Power, The State, Unemployment 
When you say “$150,000 or more,” that “more” is quite big in many cases. In my experience with the military industrial complex, I knew more than one civilian contractor who was making well over that. I doubt the contractors’ salaries are public knowledge. They are hesitant to tell their salaries, but it wouldn’t be wrong to say that some of them make twice or more than $150,000.
I spent some time in Maryland and DC and I was astounded by the striking difference between those areas and the mid-west. Apparently, Federal employees don’t need to shoulder the burdens of bad economics.
Nick | Dec 12, 2009 | Reply
“Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.”
I had to read those numbers twice and even then I thought it had to be a typo. Please tell me that’s a typo – 10,100?
RickC | Dec 12, 2009 | Reply
Well, Rick, if it’s a typo, it’s not mine. I simply cut the statement from the USA Today article and pasted it in my blog post. Like your reaction, however, my first reaction when I read that figure (10,100) was to think, it must be a typo.
Robert Higgs | Dec 13, 2009 | Reply
Perhaps the “salary czar” should be looking in his/her own backyard for forcing cuts in pay. These large increases are certainly not related to any improvement in the operation of government.
Les | Dec 13, 2009 | Reply
Yet they can’t find a lousey 2% increase for Social Security recipents, yet they can increase medicare deductions and cut medicare services at the same time. bad government
W Hunt | Dec 14, 2009 | Reply
I wish the majority of our fellow countrymen could see this problem for what it is. Unfortunately, most Americans have been conditioned to accept bureaucrats as their masters and not their servants via public education. Paying government employees well ensures that they will oppress and steal from the productive with a sense of impunity (or even “duty”). After all, it is “legal” and everyone needs to pay their taxes. I sincerely hope Americans wake up and take control again before the government parasites and their central banking bedfellows bleed us completely to death.
Boothe Gregory | Dec 14, 2009 | Reply
It’s been said that Washington DC didn’t become a “big city” until the Great Depression and World War Two. Since then, the country has been perpetual crisis mode. Yes sir, it’s boomtime in DC. Our shopping malls and fine restaurants are doing a brisk business. I just wanted to send a thank you to all those hapless taxpayers out there in flyover country.
Tim | Dec 14, 2009 | Reply
I don’t wish to appear to scoring partisan points, but the other day in the Washington Times it was revealed that Nancy Pelosi charges the taxpayer a thousand dollars per month on flowers for her office. Chicken feed when compared to hundreds of billions stolen and squandered by our Beltway Mandarins but sometimes it’s the little things that best express the venality and corruption that is Washington DC.
Tim | Dec 14, 2009 | Reply
An even bigger disgrace than government pay is the absolute plundering by Wall Street. The “Too big to fail” parasites were self-selected by their long time control of Treasury and the Fed.
Can you believe Pete Peterson and other yammering billionaires are still saying “Entitlements” have to be cut? These include life-long contributors to Social Security and disabled veteran pensions.
RT Carpenter | Dec 14, 2009 | Reply
Don’t forget the perks; paid medical/dental insurance and pensions. This adds another 20-30% above the salary. Now I know why so many people are looking for government jobs.
Anonymous Patriot | Dec 14, 2009 | Reply
I like that “fly over country,” great analogy.
Dick | Dec 14, 2009 | Reply
This is a terrible misapplication of the term plutocracy. The plutocrats are the superrich, the multi-multi-billionaires. Using it here about people in the civil service making 6 figures is to diminish the spotlight on the greediest of the greedy who own that crony-capitalist system you so love to hate.
Yes, raising all those salaries at this time was stupid. It doesn’t add up to a mole hill compared to the trillions in toxic securities invented by the deregulators though.
Yes, yes, I know. You don’t believe in bailouts and “Too big to fail.” You believe that had they been allowed to fall, the invisible hand would have warned others away from such crazy speculation. I agree, but I don’t agree that, that hand is as wise as you think.
We don’t have to wait around for evolution at Darwin’s pace. We have brains and can decide to leapfrog developments rather than wait around for everyone to realize it’s possible.
I know you all haven’t forgotten that Wall Street and the monopoly banksters funded Obama’s campaign more than anyone else’s campaign. Therefore, stop losing the focus. The little people working for government are not the problem.
The WPA and CCC did good work for its day. We could do better.
Also, the growth didn’t slow until FDR mistakenly put on the brakes after listening to “conservatives.” When he let off the brake and stepped on the gas again, growth started back up.
Even Hitler put millions and millions to work (public jobs), albeit he was a fool to pour the effort into building a war machine and to end up using much slave labor.
I don’t expect much from this site in terms of a reply comment. I’ve never met with real conversation from laissez-faire types. Often, they don’t even allow my comments. Maybe I’ll be pleasantly surprised.
Peace, Tom Usher
Tom Usher | Dec 15, 2009 | Reply
The time for revolution is ....
kdkdo | Dec 15, 2009 | Reply
Appalling is the only apt word for this information, while we all knew this was happening it has gathered great momentum. We continue to watch local public service entities police/fire/public works stump for political clout ... thereby guaranteeing their expanding compensation requests. Tip O’Neill’s Father would be proud, we still line up for the selectman’s daily jobs!
Michael Jones | Dec 15, 2009 | Reply
Is anyone game for Revolution?
Cynthia | Dec 15, 2009 | Reply
BEWARE THE SOCIO/ENVIRONMENTAL COMPLEX!
Jack Kenny | Dec 15, 2009 | Reply
As I read another great article by Dr. Higgs, it reminded me of the telemarketer who called my home the other day. She informed me that if I was interested, a government employee would come to me and rate the energy efficiency of my home and provide me with up to $1500 dollars for energy improvements. Needless to say, I declined her offer.
bill | Dec 16, 2009 | Reply
Bill ... Obviously an air conditioning company was trying to entice you to buy a new A/C system by pointing to the $1,500 income tax credit attached to new energy efficient units. Telemarketing, holding out a carrot, basic capitalism. Yet, “needless to say,” you declined the offer. Why? Do you hate capitalism? Do you hate tax credits overwhelmingly approved by both parties?
Bob | Oct 10, 2011 | Reply
Mr. Higgs ... In your discussion, you should have included mention of the reasons for the increases in average federal pay, as noted in the USA Today article, and you should have noted specifically that those reasons pre-dated Obama’s presidency. The biggest reason was a new pay scheme for the Defense Department, approved by Congress before Obama was elected, implemented 1/1/08. As for raises, Obama recommended the smallest raises for federal employees since 1975. Funny how you fail to mention any of that. Not that I’m suggesting any intentional skewing of facts or misleading of your readers ... nothing of the sort.
Bob | Oct 10, 2011 | Reply