Labor

Bad Apples

The myth of the highly skilled public-service elite

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If you don't think it's fair for government employees to make substantially more money than people who do the same jobs in the private sector, a burgeoning public relations campaign is here to say you're wrong. During the last two years, with public-sector compensation becoming a bitter political issue, a host of new studies have appeared, arguing that government workers deserve the big bucks, thanks to their extra-special skills and book learnin'.

"Are Wisconsin public employees over-compensated?" asked Jeffrey H. Keefe in a February 2011 briefing paper for the union-backed Economic Policy Institute. They are not, Keefe decided, as long as you use "comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability."

That same month Andrew Cannon of the Iowa Policy Project (a research outfit founded by longtime state politician David Osterberg) issued a report entitled "Apples to Apples: Private-Sector and Public-Sector Compensation in Iowa." Assertions that public employees' wages and benefits exceed the norms of the private sector, Cannon wrote, "neglect the differences in education, work experience and occupation between a public-school teacher and a teen-ager working for the minimum wage at a fast-food restaurant." Cannon's argument echoed March 2010 comments from National Treasury Employees Union President Colleen Kelley, who told USA Today that "apples to oranges" comparisons were useless because public-sector work "has more complexity and requires more skill." 

"So why has the idea gained currency that public workers are overpaid?" demanded journalist Alan Farnham in a February 2011 article at ABC News. Farnham likewise called for an "apples to apples" comparison and chastised hard-number hawks who rely on data from a sketchy outfit called the U.S. Bureau of Labor Statistics (BLS). 

You get no points for guessing that the BLS numbers unambiguously show public-sector workers making more than equivalent private-sector workers. Total employer compensation cost in 2011 averaged $40.76 per hour for state and local workers; for private industry workers it was $28.24 per hour. The disparities are also big for federal workers. A janitor working for Uncle Sam makes $30,110 a year, while his or her private-sector peer makes $24,188. Federal graphic designers, "recreation workers," and even P.R. flacks all make between 50 percent and 100 percent more than their private-sector colleagues. ABC's sources faulted those stats for failing to "take into account workers' level of education." 

Why did the field of government-employee-skill-set studies explode in 2011? It all started in a little Los Angeles County town called Bell. In 2010 the Los Angeles Times revealed that Bell City Manager Robert Rizzo was pulling down $800,000 in straight salary for managing a poor town into bankruptcy. Counting pension and other benefits, Rizzo was making well over $1 million a year.

The Bell scandal gave a face (Rizzo's bloated Dickensian mug) to a growing national uproar over the booty taxpayers are shelling out to government employees. In December 2009, with unemployment at 10 percent, the consumer price index down for the quarter, and private compensation at a standstill, federal workers were treated to a 2 percent cost-of-living pay hike. And in nearly every state the looming $3 trillion wave of unfunded pension liabilities was prompting many Americans to ask why we give DMV drones so much damned money. 

So the narrative of the highly skilled government employee—implausible though it seems to anybody who has helped a public school student with homework—was like manna (or at least a few months of banked vacation time) from heaven. 

Keefe, a Rutgers professor of labor relations, is one of the most energetic pipers of the apples-to-oranges theory, having conjured away embarrassingly high compensation figures for organizations such as the Washington-based Economic Policy Institute ("data analysis in this paper…indicate[s] that public employees, both state and local government, are not overpaid") and the University of California at Berkeley's Center on Wage and Employment Dynamics ("an apples-to-apples comparison…reveals no significant difference in the level of employee compensation costs"). But the bible of the genre is a 2010 study called Out of Balance? from the Center for State & Local Government. (Short answer to the title's question: No.)

These studies are false on several levels. The most basic of the misdirections is that they treat education —rather than the actual work you do—as determinative. Public school teachers are more likely to hold state-approved credentials than private school teachers (and they make 37 percent more, according to the U.S. Department of Education). Would anybody claim they do a better job of teaching children? 

Most of these studies, though not all, also ignore the value of job security: The layoff rate of public workers is about one-third that of private-sector workers. And virtually none of the studies accounts for the easier and lighter schedules of government stiffs: Public workers work 1,825 hours a year vs. 2,050 hours for private workers, according to the Cato Institute's Chris Edwards.

Even the central claim about higher rates of education may be bogus. In January the Congressional Budget Office, comparing the compensation of federal and private-sector employees, found it is actually the least educated public workers who get the biggest pay bump. Public workers with a high school degree or lower make 21 percent more in wages than equivalent private workers; those with less than a bachelor's degree earn 15 percent more; and those with a bachelor's degree receive 2 percent more. Only at the level of master's degrees and higher do private wages outpace public. (Benefits are much higher for public workers at all education levels.) In federal work, it's lower educational attainment that gets rewarded most. 

Kelley, the Treasury employees union president who had propounded the skilled-worker theory, responded to these new facts by reversing her own position, arguing in a February Washington Post op-ed piece that the public pay premium is justified because it goes to the "lowest-paid federal employees, doing unglamorous but critical work around the country." 

She could have saved space by stating the real truth: "Tough luck." Or maybe: "How do you like them apples?"

Tim Cavanaugh is the managing editor of reason online.

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  1. The fact that they are trying to “answer” the question shows that they are idiots that dont understand economics.

    The question cant be answered, because the public sector doesnt hire in a market.

    Private sector firms have a restraining factor that limits what they can pay. Pub sec doesnt.

    Public sector pay will always be arbitrary.

    Its the economic calculation problem all over again.

    1. The question cant be answered, because the public sector doesnt hire in a market.

      Pub sec does hire in the market, but they are not constrained by profit/loss, and this warps the pay structure. That is the argument people are making; that pub sec ee’s make more than their private sec counterparts.

      I agree that it is a economic calculation problem, but disagree on whether they hire in the market or not.

      1. The lack of constraint on their spending makes it not-a-market.

        Thats like saying the military draft is using the market.

        1. Where I say it is a market is that if you hire an accountant, you have a pool of applicants. These folks can work in private or public. They have a choice of where to work. This is the market I am talking about. Draftees are not a market because they have no choice.

          Even after entering either private or public, they can leave one and enter the other, so again there is a market. The problem is that the pub sec is not constrained by profit/loss, so their pay/benefits are not limited, and this warps the market.

        2. Lower the offered wages for government work until you stop getting qualified applicants. There’s your market based wage for government workers. Not perfect, but it is not a completely non-market situation, necessarily.

          1. I agree with this 100%. That is how you would bring the “market” back into balance.

          2. One must be mindful of the fact that the objects of many government jobs are simply impossible and no amount of “qualification” will make a difference.

          3. Is that starting wages or wages ten years later? And as Tim said, job security is part of the appeal.

            I’m fine with leaving the starting wages the same, but not protecting the jobs from mass firings when the elected official the job ultimately reports to gets voted out of office.

  2. Yeah, so I got overly wordy there.

    Four words:

    Economic Calculation Problem, bitches.

    1. Why do you hate our heroes, our guardians of society as we know it who present themselves to us mere citizens as paper pushers who offer no value to anyone?

      1. maybe because they are but paper pushers who offer no value to anyone?

  3. For once, no alt-text is necessary.

    1. Agreed, but realize that there are h&r readers too young to get that reference.

      1. Shorter robc:

        GOML!

        Kisses,

        GM

      2. Unpossible! I thought we were all a bunch of cranky old farts?

  4. They [federal/state workers] are not [overly compensated compared to private workers], Keefe decided, as long as you use “comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability.”

    In other words, when you compare for some of those indicators for which you can get sued in the private sector for making such comparisons.

  5. IT’S TRUE THIS MAN HAS NO DICK

  6. Even the central claim about higher rates of education may be bogus.

    No, it was obviously bogus. If you have what amounts to a secured job with little chance of termination, then there is no incentive for personal education improvement.

    1. Government workers frequently get fake master’s degrees for the automatic pay bumps. I’m guessing that on the whole, that crew is a LOT less educated than they appear to be.

      1. When I was trying to keep my Ohio teaching license current, I took my first Masters-level class. I did 80% of the course work on the final day before it was due and scored a perfect.

        I’m a smart sonofabitch, but a score of 100% after half-assing all the work was a bit much. I could have taken a ‘real’ course, but why spend twice the money and expend 10 times the effort for the same result?

        1. Higher education has become a joke. An above average chimp with $100k could “earn” a B.A. these days. An M.A. is the same, just extra money and extra time. The only degrees worth a damn anymore are in the hard sciences, but even those are watered down compared to 50 years ago.

          I’m sure the availablity of student loans has nothing to do with this trend….

        2. Book learnin’ and a sheepskin doth not a smart man make. The entrance requirement for a college education degree is 800 COMBINED SAT score. And my grandfather (smart man) had an 8th grade education and one summer of Normal School before he became an elementary school teacher, and eventually rose to school principal on that 8th grade sheepskin.
          No correlation.

    2. there is no incentive for personal education improvement.

      Not quite true. The government forces all employees to spend a couple of man-weeks a year on training. In this training, they learn such useful skills as:

      How to not sexually harass others.
      How to not give out your personal information online.
      How to plan for retirement.

      Obviously they get paid to take this training, but it’s worth it if it prevents even one butt from being grabbed.

      1. I can speak to both of these as I acquired a M.S. in Physics and have worked as a federal contractor.

        Indeed higher education has become a joke. Institutions will float you a PhD to get rid of you in the same manner as widely known in K-12.

        Fed ‘training’ (loosely defined) is a humongous waste of time. The above list is only a small sampling. They subject you to an ‘ethics’ module as well. Wow is that interesting. Summation: if you don’t agree with us you are unethical.

  7. Assertions that public employees’ wages and benefits exceed the norms of the private sector, Cannon wrote, “neglect the differences in education, work experience and occupation

    Translation: because government bureaucrats are better than you.

  8. 1. Require a bachelor’s degree for all entry level positions in the bureaucracy (Any B.A. will do! I’m talking to you Gender Studies majors!).

    2. Set up a “continuing education” or “apprenticeship” program as a condition of employment. (Of course these programs do nothing in the way of building useful skills or increasing productivity… and NOBODY EVER FAILS!).

    3. Use this mythical education and skill set as leverage to demand pay increases (I finished my apprenticeship and have taken 20 units of skill building courses, my 30% increase in salary over private employees is justified!).

    Rinse. Repeat.

    1. But think of the social costs of bailing out the over educated pinko technocrats. If they didn’t have their jobs as the flying monkeys of the state. the government would never be able to be repaid their loans. you don’t want to add to the deficit like a Republican do you?

  9. Center for State & Local Government

    Is this like the Center for Science in the Public Interest?

  10. BLS numbers unambiguously show public-sector workers making more than equivalent private-sector workers. Total employer compensation cost in 2011 averaged $40.76 per hour for state and local workers; for private industry workers it was $28.24 per hour.

    And worth every penny, I’m sure. Feh.

  11. “Public school teachers are more likely to hold state-approved credentials than private school teachers (and they make 37 percent more, according to the U.S. Department of Education). Would anybody claim they do a better job of teaching children?”

    Where is MNG to answer?

  12. The thing that really gets me about this stuff is that a lot of people really seem to believe that giving people cushy jobs with great guaranteed pensions is a proper role of government. It goes along with all of the stupid requirements and preferences with government contracts. The point of building a bridge is to have a bridge that people can use, not to give a union crew work for a year or two.

    1. the Canadian gov recently reduced the civil service by 16000, many complained that the gov should create more jobs, not reduce.

      Of course the gov could just hire, well, every unemployed person.

      But who pays? lol….

      1. The 1%!

    2. “The thing that really gets me about this stuff is that a lot of people really seem to believe that giving people cushy jobs with great guaranteed pensions is a proper role of government.”

      It’s similar to an indirect form of venal office (the indirection being that the office itself is not sold, but instead requires an expensive accreditation which is obtained either through state-run or state-allied institutions).

  13. And for a bit of levity…

    http://www.theonion.com/articl…..ness,2534/

    1. He may have been the guy you loved to hate in the eighties, but in the seventies William Atherton was great in a bunch of movies. In some alternate universe, he had Robert Redford’s career and Redford had his.

  14. My wife works for the DOD and it never ceases to amaze me the stories she tells. There are people there that make 6 figures plus and barely work their alloted 40 hours. Generally you have a couple of driven people in each division that do the work of the other 20 people then burn out and hand it on to another sucker.

    After 3 deployments I am wondering when she is going to lose it.

    Where she works you must have a BA with 24 business hours to even get an interview. The vast majority have MBAs. Seems like a massive waste to me.

    1. I worked for the DoD for years. This exactly. They are WAY overpaid. I escaped with some sanity left, but it was a close thing.

  15. They have the additional skill of navigating the voluminous and arcane rules of the bureaucracy, which takes many years of study and practice to achieve and cannot be learned anywhere else.

    1. This is an infrequently-discussed point of government work. While there’s little to no actual work product and both the immediate and deferred compensation packages are lavish, it can still be pretty meager and miserable just through the awesome obstructive strength of government.

      Think of the life-and-death struggle to maintain the Senate Candy Desk in the face of ever more restrictive gift and ethics rules. They waste trillions of dollars every quarter, but they can’t even get free candy. And that’s supposed to make for better government.

      Government employee compensation is the kind of solution only the state could produce: overpriced and measly at the same time.

    2. Ditto this, triple very good…

    3. Are you sure they don’t just do whatever the hell they want? I mean, how can you tell if someone is doing their job properly when they are the only ones who know what their job is?

  16. “. . .ABC’s sources faulted those stats for failing to “take into account workers’ level of education.”

    They use level of education as a reason to bump up a salary. How does having a degree help you drive a forklift, or clean a building, or shuffle paper better?

  17. They [federal/state workers] are not [overly compensated compared to private workers], Keefe decided, as long as you use “comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability.”

    Anybody see the word “productivity” included in here?

  18. For the subset of government employees that are skilled engineers, scientists, etc, this is true. They are on par to slightly lower paid than the private sector, depending how you want to price intangibles like job security.

    The problem is the non-skilled workers and administrative office workers who are vastly overcompensated, and make up a much larger portion of the workforce.

  19. “In January the Congressional Budget Office, comparing the compensation of federal and private-sector employees, found it is actually the least educated public workers who get the biggest pay bump.”

    This is the dirty secret everyone who works in and around Federal government knows but won’t break the PC taboo to say: the jobs at GS-7 and below are vastly overpaid compared to work with comparable qualifications in the private sector, and the entire thing is one gigantic affirmative action boondoggle, while jobs at GS-12 and above with identifiable professional quals (engineers, biologists, statisticians, economists, etc) are underpaid compared to the private market, and so tend to attract people for whom the non-cash benefits such as job security count more heavily in their preference functions. The comment about setting wages until the market clears is quite right, and at least in the DC market, at current GS pay scales, filling vacancies for a position that requires, say, an MS in statistics or an MPH with a quant background is getting pretty difficult.

    1. “the entire thing is one gigantic affirmative action boondoggle”

      Been saying this for years.

  20. The studies which purport to factor in education, experience, and other variables to determine whether public employees are overpaid compared to their public-sector counterparts are fundamentally flawed because they ignore the easily observed behavior of individuals in favor of unnecessary complexity. And the reason that so many of these studies are complex is that it gets easier to torture the data the more you selectively choose variables.

    The only question that you need to ask is “do public employees act like they’re overpaid?” And the answer to that is “hell yes.”

    A job is a simple transaction: you provide labor, and you get benefits in return. The “benefits” side of the equation is relatively easy to define: cash plus benefits. It’s orders of magnitude harder to determine what labor the workers are providing.

    For example, is a public teaching job equivalent to a private? How do we possibly account for the unquantifiable things that employees care about, such as the difficulty of the job, stress encountered, boredom, having an asshole boss, comfort of office chair, personal phone call policy, etc.? All of us can imagine scenarios in which we give up a little money for a better working environment, or toil harder than we want to because the pay is really good.

    1. So what we should be looking at is the comparative turnover rate in the public and private sector. If the person who is actually doing the job and personally experiencing the stress, the asshole boss, the lousy break room coffee, etc., stays at his job, that means that his benefits package is enough to compensate him for putting up with that crap. If it’s not enough, he leaves.

      Well, it turns out that there’s more turnover in the private sector than in the public. Public employees might take home less money than their private sector counterparts, but it doesn’t seem to bother them enough to leave. Whatever it is we’re paying them, and whatever it is we’re asking them to do, public employees act like they’re satisfied with their jobs. So yes, public sector employees will be overpaid until their salaries are reduced to the point that the public and private turnover rates are the same.

  21. Really these arguments about public sector compensation not being too high fall apart when you actually start to look at these contracts up close (http://bit.ly/IZGk3n). Really it’s not that hard to see what the problem is when you have unions negotiating directly with the officials they help put into office. It’s a huge conflict of interest that essentially kills any chance of fair bargaining (http://bit.ly/o2vxdp).

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