Facts on public sector wages
The National Institute on Retirement Security in the U.S. produces some really excellent reports which should be more widely read, and not just on pensions or retirement income.Â
Last week they published a good report, Out of Balance? Â comparing public and private sector compensation over the past 20 years, written by two professors at the University of Wisconsin.Â
This report found that when adjusted for education levels and other factors that have an impact on wages, state and local government employment typically earn about 11 per cent less than comparable workers in the private sector.Â These calculations are based on regression analysis accounting for different variables and wage differencesÂ related toÂ gender and race are also fairly dramatic.Â Â This report got some good pick-up in the US media, including on CNN.
In contrast, the Canadian media continue to perpetuate some of the misinformation that emanates from the Fraser Institute and the CFIB on this and other issues.Â I usually don’t take the time to respond to all the gross misinformation coming from these sources, as it would be more than a full-time job, but feel compelled to do so on some instances.
In a column in today’s National Post Herb Grubel perpetuates and amplifies the misinformation from the CFIB’s Wage Watch report of last year as evidence for his argument that public sector unions should have their right to strike eliminated.Â He claims that if the incomes of public sector workers were equal to those in the private sector, the deficits of governments would be lowered by $19 billion.
In fact, the CFIB study engaged in a lot of manipulation and distortion of Statscan census data in order to come up with their conclusions that canada’s public sector workers are paid more.Â What is telling about it is that they didn’t report on wages for individual occupations but instead constructed an average after a considerable amount of manipulation of the data.
A number of people have published critiques of the CFIB report, including Sylvain Schetagne at the CLC, myself and David MacDonald for NUPGE, but only a few in the Canadian media have reortedÂ Â on the real facts.
The truth is that overall average levels of payÂ between the public and private sector are very similar.Â There’s much more discrepancy in pay levels within the private sector, with higher paid occupations paid considerably more in the private sector and lower paid occupations, especially those for women, considerably less.Â Â When adjusted for education level, pay in the public sector is often less.
Grubel claims that the pay differentials in the public sector are entirely due to higher levels of unionization in the public sector and somewhat disingenuously calls for efforts to ensure “equal pay for equal work”.
In fact, relatively higher wages at the lower levels are due in large part to pay-equity laws, implicit government policies to provide more equitable pay scales and, yes, union efforts to redress the large income and pay inequalities that exist in our society.
We just don’t all share the same blind faith that private markets always deliver equal pay for work of equal value.