I would expect that pay and benefits should be pegged to the private sector. In some cases they could make more and some cases they could make less. But overall it should come close to private sector pay.
Average Compensation (2009)
Federal (123,049) State & Local (69,913) Private (61,051)
http://www.usatoday.com/money/economy/income/2010-08-10-1Afe...
I'm not a big fan of public unions. It seems like there is nobody at the bargaining table on the side of the tax payer. Also, if people don't like the benefits that come with serving the public, they should not take the job. Like I said, it should take a special kind of person.
Here is a nice article on public unions
The Beholden State How public-sector unions broke California http://city-journal.org/2010/20_2_california-unions.html
Questioning it doesn't mean the NPV is negative. After all, private employers do this all the time. They decide a line of business provides an insufficient return on capital or doesn't fit the core, and they shut it down. Other times they find the NPV is awesome and pour on the investment. Since taxpayers are "the boss," this is completely appropriate.
If anything, the pernicious assumption runs precisely the opposite direction: that anyone who dare question the value to cost ratio of our bureaucratic overlords be attacked.