The Sector with the Sticky-Wage Problem
As Josh Barro points out, it is the public sector.
San Jose spends $142,000 per FTE on wages and benefits, up 85 percent from 10 years ago. As a result, the city shed 28 percent of its workforce over that period, even as its population was rising.
Read the whole thing. I have been arguing for cuts in public-sector pay as a recession-fighting tool for quite some time now.