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.