RALEIGH – I think many North Carolina’s state employees have been poorly treated in recent years and deserve a substantial pay raise. That’s one reason why the John Locke Foundation’s alternative state budget contained a proposed average pay hike of 4 percent for 2005-06, far above the 2 percent to 2.5 percent offered by Gov. Mike Easley and legislators in their competing budget plans (and their final raise may end up lower still).

Whenever I advocate higher pay for state employees, I get one of two stock reactions. Some fiscal conservatives react with horror. Those government bureaucrats shouldn’t get one penny more of my money, they snort. From the Left, the reaction is more akin to dismissive disbelief. You can’t possibly be serious, they say, because you hate government.

Neither response is productive. Unless one is an anarchist – and not only am I not one but I don’t believe anarchy is even logically or empirically comprehensible – one must grant that governments will exist, that they will perform certain valuable functions that people cannot do for themselves, that they will pay for these functions with coercive taxation, and that they should employ motivated, talented people to perform these functions.

In theory, an advocate of limited government should have no objection to providing good jobs at good wages to good public employees. In practice, things get a little trickier. For reasons that have been carefully studied by scholars and taken to heart by wise politicians, governments often end up spending too much on employees that don’t serve the public interest.

In my mind, however, while some government employees are clearly overpaid, the bigger problem is that there are simply too many government employees. Our best workers end up getting the same, relatively paltry pay increases as the marginal ones do. This leads to lower morale and retention problems. The mediocre employees, of course, are precisely those unlikely to leave government employment even when pay raises are slight, since they value the security and lack of competition that government jobs frequently offer.

I think it is clear that North Carolina has too many public employees, even given the need to perform the (overly broad) range of services that most states have come to provide. The 2005 data from the U.S. Bureau of Labor Statistics illustrate this fact. Combining state and local workers together – which you have to do for apples-to-apples comparisons across states – North Carolina has an estimated 710 workers per 10,000 in population. That is the highest rate of government employment in the Southeast. It is also the highest ratio among the states with a similar population (within two million plus or minus of North Carolina’s 8.5 million), including Virginia, Georgia, Michigan, Massachusetts, and New Jersey.

That’s right: we have a bigger government workforce than either Massachusetts or New Jersey.

So it is entirely consistent to advocate substantial average raises for state employees and smaller state government. What we need to do is eliminate low-priority functions and programs, and the positions that go along with them, so as to compensate our needed state workers through means such as performance pay and competitive contracting that ensure that the investment will serve the interests of taxpayers.

Hood is president of the John Locke Foundation.