This week brings a surge of new data affirming that city and state employees are compensated less than comparable private sector workers. New studies, conducted by researchers at the Political Economy Research Institute at the University of Massachusetts, Amherst, the Center for Economic and Policy Research, Rutgers University, and the Economic Policy Institute delve into the specifics of public employee compensation in New England and nationwide. Their findings broadly confirm existing research indicating that when relevant workforce factors like education and experience are taken into account, public workers earn lower pay and benefits than those working in the private sector. The Economic Policy Institute's new national study, for example, finds that full-time state and local employees make 3.7% less (accounting for pay, benefits and work hours) than similar private sector employees, on average. Looking just at the New England area, the PERI/CEPR economists find a 3% pay shortfall for public workers.
The data is strong and substantiated: the question is how much of an impact it will have on a public debate dominated by entrenched misperceptions about our public institutions and the people who work to clean our streets, keep us safe, and educate our children.
Simply put, the right wing has created such a powerful narrative demonizing "big government" and "big unions" that facts to the contrary will have great difficulty penetrating. Consider the online comments in reaction to a recent article about public workers by my colleague Dan Morris: his evidence-based statements are dismissed as outright lies because people "know" that government workers make twice as much as the rest of us. Like the conviction that undocumented immigrants somehow have access to generous welfare benefits, a belief that most public employees are paid far more than they're worth -- and therefore that public wages and pensions can be slashed dramatically without harming the quality of public services or the workforce more broadly -- may prove durable despite mountains of evidence to the contrary.
Anonymous online comments are one thing: the real problem is that statements from major media figures and prominent politicians that fail to rise above their level. The political benefits of perpetuating the falsehood are high: Republicans can act as if city and state budget problems could be easily solved if only public unions (needless to say, a traditionally Democratic constituency) would give up their "unwarranted privileges" and compromise their members "lavish" benefits. Democrats, meanwhile, have the opportunity to appear especially tough-minded by attacking a weakened segment of their own base. By insisting that pay freezes, furloughs, and benefit cuts for sanitation workers and librarians will be painless and justified (since the conventional wisdom insists they never deserved their pensions anyway) both parties can deflect calls for greater public contributions from the wealthy individuals and profitable corporations that contribute most to their campaigns.
In reality, there is no pampered public sector elite to blame for public budget woes: elected officials should face the facts and admit to the sacrifices they're asking working people to make.
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When public sector unions are part of the equation no mechanism can exist to reevaluate salaries and benefits to make ends meet. As a result, the burden of tightening budgets is not being shared equally. Taxpayers working in the private sector are expected to keep public employees in the same lifestyle even as their own wages, benefits, pensions and job security take a beating. It's simply not fair.
Public sector employment is unique in that it requires the public entity to invest huge sums of money in training the employee then asks them to voluntarily either get shot at or run into a burning building.
Public entities that tried the DC model, found it creates huge problems recruiting and retaining workers.
Additionally, unlike the private sector, the state is still on the hook if someone doesn't have enough money in retirement. If an IBM employee doesn't have enough money to survive on in retirement, it's not IBM's problem. If, however, an employee of the state of West Virginia doesn't have enough money to retire on, then it's still West Virginia's problem. And, unlike pensions, the support provided through welfare, etc. can't be prefunded so there are no investment gains to offset costs.
One state (I think it was West Virginia) recently converted their teachers back to a DB plan after a 15 year experiment with a DC plan, because it turned out that too many of the teachers were retiring and going on welfare--costing the state more then if it had prefunded pensions.
So, the talk about public pensions not being "affordable" is pure BS.
If pensions are going to continue for public employees, and I think they should be phased out, then at least make the public employee wait until they're 65 until they start collecting.
See this chart for an occupation by occupation breakdown:
http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm#chart
What you do not say in your article is that public employees do earn more absolute dollars, but fewer relative dollars. That is slightly dishonest.
In addition, both the studies quoted assume defined benefit pensions are fully funded by current contributions. The problem is most are still using very high discount rates (my county fund assumes the investments will earn 7.8% on average into perpetuity) even though they expect behavior like a US Treasury bond, no chance of default. I would gladly pay into the local fund as earn the same guaranteed return, but obviously, no one would let me because it would create an unfunded liability on day one.
Why is turnover in public employment lower than private? Could it be that they know they are paid "more than they are worth" and don't want to leave?
Why is it that public employee unions are allowed to donate money to the vary elected officials that set their pay and benefits? Does that not seem like a conflict of interest? In fact if an employee of a private company did the same it would be a felony, "bribery".
The issue is that the current employees are fighting against retired employees and their future retirement. It is going to get ugly.