Great article on why municipalities will go under...

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

If we understand the simple dynamics of value creation, total compensation costs and the cost-basis of doing business (general overhead), then we understand why employment isn't coming back in the U.S.

Compare that with the typical government job in the U.S. or Europe. It is difficult to measure the true cost of government pension costs, as local governments do their best to mask their pension costs and inflate their pension funds' projected returns. But a back-of-the-envelope calculation yields about a 100% direct labor overhead cost for the typical government job with full healthcare, pension and vacation benefits. So an employee earning $50,000 a year costs $100,000 in total compensation expenses.

Many local government employees on the left and right coasts earn close to $100,000, so their total compensation costs are roughly $200,000 per worker.

How much value must be created by each employee to justify that compensation? Government needn't bother itself with that calculation, as the compensation is not set by market forces and the revenue stream can be increased via higher taxes, junk fees, tuition, licences, permits, etc.
As the legacy costs of healthcare and pensions for retirees become due, local government operating budgets are being gutted to pay these ballooning legacy costs.

As a result, it is now impossible for many local municipalities to fill potholes: it makes no sense to have $100,000/year employees performing low-value work like filling potholes. Put another way, there is a labor shortage in high-overhead government bureaucracies because after paying for legacy pension costs, there is no money left to hire more people at $100,000 a year in total compensation to fill potholes, a job that might be worth $35,000 in total compensation.

The value created by government employees filling potholes is completely out of alignment with the cost of their wages/benefits. If employees cost $100,000 (recall that their annual earnings may be $50,000--we must always use total compensation, not wages as reflected on pay stubs), then in effect all work that generates less than $100,000 in value can no longer be done.

This is why cities and infrastructure are falling apart. Once you raise the cost of compensation far above the value being created by the labor, then most lower-value but nonetheless essential work (e.g. filling potholes) becomes unaffordable to accomplish.

False

When the illegals are granted amnesty, Fairfax will look more like Tijuana than Detroit.

the futurist Wrote:
-------------------------------------------------------
> Great article on why municipalities will go
> under...
>
> Submitted by Charles Hugh-Smith of OfTwoMinds
> blog,
>
> If we understand the simple dynamics of value
> creation, total compensation costs and the
> cost-basis of doing business (general overhead),
> then we understand why employment isn't coming
> back in the U.S.
>
> Compare that with the typical government job in
> the U.S. or Europe. It is difficult to measure the
> true cost of government pension costs, as local
> governments do their best to mask their pension
> costs and inflate their pension funds' projected
> returns. But a back-of-the-envelope calculation
> yields about a 100% direct labor overhead cost for
> the typical government job with full healthcare,
> pension and vacation benefits. So an employee
> earning $50,000 a year costs $100,000 in total
> compensation expenses.
>
> Many local government employees on the left and
> right coasts earn close to $100,000, so their
> total compensation costs are roughly $200,000 per
> worker.
>
> How much value must be created by each employee to
> justify that compensation? Government needn't
> bother itself with that calculation, as the
> compensation is not set by market forces and the
> revenue stream can be increased via higher taxes,
> junk fees, tuition, licences, permits, etc.
> As the legacy costs of healthcare and pensions for
> retirees become due, local government operating
> budgets are being gutted to pay these ballooning
> legacy costs.
>
> As a result, it is now impossible for many local
> municipalities to fill potholes: it makes no sense
> to have $100,000/year employees performing
> low-value work like filling potholes. Put another
> way, there is a labor shortage in high-overhead
> government bureaucracies because after paying for
> legacy pension costs, there is no money left to
> hire more people at $100,000 a year in total
> compensation to fill potholes, a job that might be
> worth $35,000 in total compensation.
>
> The value created by government employees filling
> potholes is completely out of alignment with the
> cost of their wages/benefits. If employees cost
> $100,000 (recall that their annual earnings may be
> $50,000--we must always use total compensation,
> not wages as reflected on pay stubs), then in
> effect all work that generates less than $100,000
> in value can no longer be done.
>
> This is why cities and infrastructure are falling
> apart. Once you raise the cost of compensation far
> above the value being created by the labor, then
> most lower-value but nonetheless essential work
> (e.g. filling potholes) becomes unaffordable to
> accomplish.

You = FAIL.

I should have stopped reading at the "back-of-the-envelope calculation" line. Utterly worthless.

Actually, more like Long Island than Detroit. Detroit's problems are far greater than ours, unless Federal Government spending around here collapses.

But your point is well taken. Fairfax County does have more than its fair share of >$100K employees with generous lifetime pension plans, the waste concentrated mostly in administration, not operations.

TijuanaTaxi Wrote:
-------------------------------------------------------
> When the illegals are granted amnesty, Fairfax
> will look more like Tijuana than Detroit.


It's starting, and that fucking spic train is gaining speed with the throttle stuck in overdrive.

The whole worlds a battlefield..

I love how libby white folks laugh at gun owners "...OOOOh the British are coming hillbilly..." yet they know not the threat in their very back yard.

There are people on the border (or maybe in Herndon) that will cut your throat for your sneakers...nevermind what they might do for a crack at your wifey.

Enjoy the diversity f3gs.

Fairfax Co government is top-heavy in older workers (50+). I recall a median figure of low 50's around 2005. If Enterprise or Hertz were running the DMV, every one of the windows would be manned by a very recent college graduate, each no more than 1-2 years out of school.

Claro Wrote:
-------------------------------------------------------
> The whole worlds a battlefield..
>
> I love how libby white folks laugh at gun owners
> "...OOOOh the British are coming hillbilly..." yet
> they know not the threat in their very back yard.
>
> There are people on the border (or maybe in
> Herndon) that will cut your throat for your
> sneakers...nevermind what they might do for a
> crack at your wifey.
>
> Enjoy the diversity f3gs.


Of the 430,000 hispanic residents of Virginia, only 150,000 are undocumented (estimate, but not off by more than 3%). Your ignorance is idiotic considering most of the people you are talking about has as much right to this country as you do, not to mention the fact that they constitute a whopping 150,000/8 million = 1.9% of the population. OH NO ITS AN EPIDEMIC! There are 3% of society who are violent as well... thats far more alarming.

Let's demand that anyone living here for years who nows wants legal status PROVE they have been paying taxes while they were here.

k there buddy Wrote:
-------------------------------------------------------
> Of the 430,000 hispanic residents of Virginia,
> only 150,000 are undocumented (estimate, but not
> off by more than 3%). Your ignorance is idiotic
> considering most of the people you are talking
> about has as much right to this country as you do,
> not to mention the fact that they constitute a
> whopping 150,000/8 million = 1.9% of the
> population. OH NO ITS AN EPIDEMIC! There are 3% of
> society who are violent as well... thats far more
> alarming.

And for some reason they all seem to have eight kids in public schools, and commit many of the reported violent crimes.

Q: What happens when Prince William county turns convicted illegal immigrants over to ICE?

A: ICE releases them in Fairfax County.

Q: Can PW County obtain statistics from ICE regarding the number of catch-and-release felons?

A: No, by federal policy that information is not provided to state or local governments.

Such bullshit. Detroit is the ultimate toilet, along with other fine cities like Elizabeth, NJ.(Outside of Newark) Fairfax sucks, there's no doubt about that, but due to its economic structure, educated population, schools, etc, that's not going to be happening. Although it does appear to be looking more like San Salvador.

To The Futurist, I think your post was very well thought out and accurate. I don't know if you threw out a timeline, but it will be a little ways off in the future before the sh.t hits the fan. Many more metropolises will collapse before FFX county does.