Is public sector compensation too high? What are the risks due to current govennment accounting and reporting practices?

88,000 institutions in the United State make up the "public sector". Collectively, these institutions employ approximately over 20 million workers. In 2008, wages and benefits of $1.1 trillion accounted for half of total state and local government spending.
 
According to a Cato Institute Bulletin, public sector pay averages 45% higher that the private sector average. Public sector workers also have a large advantage in health insurance, pension plans and paid leave.
 
Another issue with benefits are that these plans are overpromised and underfunded.  The Cato report estimates that state and local pensions are underfunded by $3.2 trillion (three times more than the officially reported amount).

Also, public sector workers enjoy very high job security... "layoffs and discharges" in the public sector occur at just one-third the rate of the private sector.

Why do public sector workers get better compensation? WSJ answer: Governments use other people's money. 

"Corporations play with their own money. They are wealth-creating machines in which various people (investors, managers and labor) come together under a defined set of rules in hopes of creating more wealth collectively than they can create separately. So a labor negotiation in a corporation is a negotiation over how to divide the wealth that is created between stockholders and workers. Each side knows that if they drive too hard a bargain they risk killing the goose that lays golden eggs for both sides. Just ask General Motors and the United Auto Workers.

But when, say, a school board sits down to negotiate with a teachers union or decide how many administrators are needed, the goose is the taxpayer. That's why public-service employees now often have much more generous benefits than their private-sector counterparts. And that's why the New York City public school system had an administrator-to-student ratio 10 times as high as the city's Catholic school system, at least until Mayor Michael Bloomberg (a more than competent businessman before he entered politics) took charge of the system." (Quote from WSJ)

Want to get involved?
Visit a new web site, YouCut ...you can vote for a cut and the Republicans promise to introduce legislation to get a up or down vote in congress.  Sounds like a good idea.

Here is an example of an expense to "Cut" - Taxpayer Subsidized Union Activities - $600 million in savings ...According to YouCut, currently, some federal employees spend up to 100% of their workweek, paid by taxpayers, doing work for their union. Federal employees unions collect millions in revenue each year and spend significant amounts on political activities and lobbying, should they also be subsidized by the taxpayer for their official functions? In 2008 the Federal government spent $120 million paying employees for their time spent working on union activities (over five years this would total a minimum of $600 million.)

References:

Why Government Can't Run a Business - May 21, 2009 - WSJ

Position Paper "The Hidden Costs of Government - Jan 15, 2010 - The Free Enterprise Nation

Employee Compensation in State and Local Governments
Cata Institute Tax & Budget Bulletin - No. 59 - January 2010