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Feds Bid Up Labor Costs?

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By Allan Holmes August 30, 2010

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For years, federal managers have complained they lose workers to the private sector mostly because they are not able to pay them as much as the private sector offers. The best and brightest go to companies for more money, as well as a faster track to upper-level management and a more entrepreneurial spirit. At least that's what most former feds have told me. Oh yeah, also because they face a huge college tuition bill for their teenage children, which is much harder to afford on a government salary.

That's not what John Tamny, a columnist at Forbes.com and a senior economist with H.C. Wainwright Economics. He believes the exact opposite holds true. Tamney says it's the private sector that is suffering from the "greedy hand" of Big Government because federal managers bid up the price of talent, robbing the U.S. economy of innovation that creates jobs and wealth creation. Government steals the best and brightest using other people's money to buy labor. Tamney wrote:

The problem now is that with the federal government aggressively hiring at excessive levels of pay, it is necessarily distorting the cost of hiring for private businesses. The "unseen" is what we must consider in this scenario, and there we can only guess how many world-renowned companies of tomorrow will never see the light of day thanks to Washington increasingly snapping up potentially productive workers.

Tamney's right about one thing: "We can only guess." He offers no empirical evidence.

Ask federal managers and they will paint a different picture. Ask smart young talent coming out of universities and they'll tell you the federal government is not their employer of choice - a fact underscored by an annual survey conducted by Universum Communications. The employment research company asks college seniors which organizations are the most ideal employers. In 2007, five federal agencies made the list. By 2010, even after watching the ravages of the Great Recession, not one government agency made the list:

2007

1. Google

2. Walt Disney

3. Apple

4. U.S. State Department

5. Peace Corps

6. CIA

7. PricewaterhouseCoopers

8. Microsoft

9. FBI

10. Teach for America

2010

1. Google

2. Ernst & Young

3. PricewaterhouseCoopers

4. Deloitte

5. Walt Disney

6. KPMG

7. J.P. Morgan

8. Apple

9. Goldman Sachs

10. Nike

Hat tip: FedBlog

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