Brad DeLong catches The Wall Street Journal editorial page in some hilariously bad math.
Here’s Stephen Moore:
Federal workers on balance still receive much better benefits and pay packages than comparable private sector workers, the Congressional Budget Office reports. The report says that on average the compensation paid to federal workers is nearly 50% higher than in the private sector, though even that figure understates the premium paid to federal bureaucrats.
CBO found that federal salaries were slightly higher (2%) on average, while benefits — including health insurance, retirement and paid vacation — are much more generous (48% higher) than what same-skilled private sector workers get.
Yikes.
Two apples plus forty-eight grapes does not equal fifty apple-sized fruits. You can’t add percentage increases from different sets together to figure out a combined percentage increase.
Since salaries represent the vast majority of total compensation, that two percent matters more than that 48 percent. In reality, the CBO found that on average, federal employees make 16 percent more than private-sector counterparts: $52.50 an hour in total comp on average versus $45.40.
Not one of the subgroups measured by the CBO makes 50 percent more. High-school-educated workers make 36 percent more than similar private-sector workers, while federal workers with a professional degree make 18 percent less than their counterparts.
The Journal’s own commenters have had a field day with this, and it’s been ridiculed in the past two days by DeLong and Paul Krugman. DeLong wrote this:
We will see if anybody at the Wall Street Journal is honorable enough to run a retraction and a correction.
Don’t hold your breath. Two days later, it’s still uncorrected.
Meantime, it’s certainly legitimate question to ask whether federal government workers should be paid 16 percent more than private-sector workers with similar qualifications in similar jobs, but I’d love to see some trendlines on this disparity. How has that number changed over the years? I suspect that wage stagnation in the private-sector, which has allocated most of the economy’s gains to the top 1 percent of earners over the last few decades, is responsible for most of the current disparity.
Meantime, it’s worth noting another chart in the CBO’s report. Most federal employees work for the military and defense agencies like Homeland Security and The Wall Street Journal editorial page is very much pro Big Military:
Let somebody criticize the Gubmint's minions and out come the Chittum 5000 Black Helicopters.
Like clockwork.
So what if the honest and hard working Gubmint employees make a measly 16 percent more than the little people who pay their salaries?
Nothing to see here, people...
Move on....
#1 Posted by padikiller, CJR on Mon 6 Feb 2012 at 10:56 PM
To Ryan's credit, he points out an important detail in the CBO study...
The less educated a Gubmint worker is, the more money the Gubmint pays him, in comparison to the wages paid in the private sector.
Your tax dollars at work! The stupider you are, the more Gubmint money you get!
Yeah... There's noting but Utopia in future of this kind of "capital allocation". What could go wrong?
#2 Posted by padikiller, CJR on Mon 6 Feb 2012 at 11:22 PM
Yeah there should be more meritocracy like they have on the wall street journal editorial page, where only the very best idiots get paid top dollar.
#3 Posted by Thimbles, CJR on Tue 7 Feb 2012 at 11:46 AM
At the risk of attracting Ryan's customary pose of amused condescension, I would bet that any study he or anyone else can produce would show public workers, and especially federal workers, doing much better in terms of compensation over their working lifetimes than private workers on average.
After all, as Moore mentions, (and Ryan fails to mention, as a factor), public workers have civil service protections - and thus job security - not available to private workers. So you take that CBO '52.50' an hour - that almost never goes down or goes away over a public employee's lifetime. The '45.40 an hour' snapshot, is subject to a lot more interruption or even lowering, over the course of a private worker's life. Those 'retirement' benefits dismissed by Ryan are the benefits that are killing state and local economies, as are the health insurance benefits - my municipal officials spend a lot more time negotiating those than they spend negotiating salaries.
#4 Posted by Mark Richard, CJR on Tue 7 Feb 2012 at 12:53 PM
Other studies show state, county and municipal ee's are compensated less than their private sector counterparts:
http://money.cnn.com/2010/04/28/news/economy/public_workers_earn_less/index.htm
http://www.epi.org/publications/entry/6759
#5 Posted by Petenow, CJR on Tue 7 Feb 2012 at 12:58 PM
Mark,
I'm not sure why you think I "dismissed" retirement benefits. I didn't. I think it's nuts that in NYC, for instance, cops can retire after 20 years and teachers at 55. But that's part of the pay package they negotiated with politicians who didn't have money to give them and so put off spending to future politicians. And it's not their fault that the politicians haven't accounted for it.
#6 Posted by Ryan Chittum, CJR on Tue 7 Feb 2012 at 01:41 PM
@Ryan,
First of all, you have misstated the retirement plan for NYC teachers. Their final pension is determined by a matrix of age X years of service. I advise you to eschew the misleading head-line mongering and do your own careful research on various pension plans before rendering ill-informed judgments as "nuts."
In the case of the retirement benefits of police officers, fire fighters, and other public safety employees, let me observe the following:
1) Just as in a football or basketball career, physically dangerous and demanding work in public safety careers have a more limited useful life than someone who sits behind a computer all day or stands in front of a classroom of students. Just as Michael Jordan and Magic Johnson had limited careers on the basketball court, and then became less useful as a basketball player because of the ravages of age, so it is that police officers become less able to chase bad guys and dodge bullets, firefighters become less able to climb ladders with fire victims on their backs and run up 80 flights of stairs with a 50 pounds of gear on their back after the age of 50. Okay? With me there? That's one reason for the "nutty" (as you put it) 25-years-and-out for public safety retirement. There are only so many desk jobs to go around.
2) Cops and firefighters actually don't make that much money for the level of physical danger and hard work required of the job. They make a middle class salary, and earn every dime, in my opinion. It's difficult to recruit people willing to wrestle criminals and be shot at, run into burning buildings and dive into icy rivers to rescue people, without some kind of attractive inducement. That's another reason for an attractive pension: it helps in recruiting talented and motivated people, free of criminal backgrounds.
If you think about it, it really isn't "nuts." But then, you and your colleagues probably are too young, and have an easy, non-physical job, so you can't really understand at this point what hard physical work does to a human being after 25-30 years. But you will, my friend, trust me, you will.
#7 Posted by James, CJR on Tue 7 Feb 2012 at 03:35 PM
@Mark Richards
I would like to disagree with your comment about the stability of public workers, that their pay and compensation "almost never goes down or goes away over a public employee's lifetime". I am very glad you said almost, thank you. The wages do go down, or at least remain stagnant though. I am certain you have heard of Wisconsin's fight over public workers wages and benefits...and Ohio, and Indiana, and...
Anyway, the flip side of that stability coin, is that when things are good we don't see the same wage increases that private sector employees do. And we are subject to the same decreases when the economy is bad. I have worked for the state of Wisconsin for 3 1/2 years and EVERY year have seen a decrease in my net pay and a cooresponding decrease in taxable earnings (My base pay has remianed unchanged but I have had furloughs (unpaid days) and increases in contributions). I haven't gotten a raise yet. I do not expect one until June, 2013, at the earliest...and then it will only be a COLA raise, at most. By June 2013 (5 years after I started my job), my wages will have fallen relative to cost of living. I will be earning $4,685 less annually, than I had if I had recieved a 2% COLA every year...which is pretty standard in private sector.
Beyond that...this is not public sector vs private sector issue...and shouldn't be framed as such. This is really the average working middle class American vs. corporate influence and "muscle". If I am being paid $4,650 less than I should be it gives your employer (public or private) permission and ability to pay you $4,650 less than he should, because his wage is still competitive. Lowering the bar for one group lowers it for all of us!
We all need to band togteher and demand fair wages and benefits, no matter if public sector or private sector. We need to stop this mentality of "If I can't have it, neither should you!"
#8 Posted by Michele, CJR on Wed 8 Feb 2012 at 12:35 PM
Ryan, well, maybe I should have said 'minimized' rather than 'dismissed'. The tone was dismissive, at any rate. I'll stick by my original contention, that press coverage of public vs. private workers ignores the extremely valuable asset of civil service protection and job security.
Interesting, though, that in this context people who ordinarily depict un-unionized private workers as the victims of predatory employers grinding the faces of the working poor do a one-eighty and contend that public workers, who are usually unionized, are no better off than their private-sector counterparts. Hey, if there's no difference, what good are those unions again?
#9 Posted by Mark Richard, CJR on Wed 8 Feb 2012 at 12:36 PM
To Michele, thank you for your thoughtful letter. I have worked in both private and public sectors, and find it hard to maintain that, for my particular category, which is white-collar and professional, the latter are not significantly better fixed for a career. How many job changes does the average private-sector employee made vs. that of a public-sector employee? The public sector occasionally sees layoffs, but it never goes out of business. I've had two employers go out of business on me - that I can think of offhand. It is not unusual in my city for people I know to have been employed by the city for 25 or 30 years. You are much less likely to find that among people of the same age group in the private sector.
One aspect of this debate is that governments are 'socialist', i.e., the spread between top and bottom, as one might expect, isn't as wide as you find in the private sector. Public-sector workers with professional degrees and licenses do make significantly less in salary than their counterparts in the private sector for a given year - although I still suspect that the job security factor narrows the lifetime-earnings figure, as does the benefits package. (Funny how few studies project 'lifetime earnings' compared to the snapshot of annual earnings as of this year'. Tough, I know, but there ought to be some academics who have enough date to research it.) On the other hand, unskilled workers do better in the public sector, and they comprise the majority of public workers. Unskilled workers I've known lust after public sector jobs - '25 and out'. In your case, my quick-and-dirty math based on the figures you cite makes me guess that you are in the professional/college educated classification. That classification does, I believe, make less than their private sector counterparts, as I say, but they are working in a 'socialist' economy where you would expect this!
#10 Posted by Mark Richard, CJR on Wed 8 Feb 2012 at 12:52 PM
Mr. Richard,
I work for the government (Department of Defense), and I'm skeptical about your contention that unskilled workers are the majority in the public sector. I haven't had the time to dive for data, but I'd suspect that a very large number of unskilled government jobs have become contract positions. Even if the unskilled represent a majority, the ratio is changing and may not bolster your argument much.
Where I've worked, almost all of the government people have specialized skills and experience. Clerical work has become largely automated or "right-sized." Conversely, custodial, food service, and most maintenance jobs have been ceded to private contractors who pay non-union folk low wages and meager benefits. I'd guess the same situation exists at VA hospitals, the FDA, SSA, HUD and almost every federal agency. Can't speak to state and local governments, however.
Celebrate the savings, if you will, but I'm not sure that fewer and fewer people getting a living wage and modest (or no) benefits is the direction we should all be heading.
Again, I apologize for not backing up my anecdotal evidence for something more substantial. Perhaps in a later posting.
#11 Posted by Check, CJR on Mon 13 Feb 2012 at 05:42 AM
To Check, I always appreciate a thoughtful response. In my municipality, a good-sized city, 'white collar' workers and 'blue collar' ones are represented by different bargaining agents. The one representing 'blue collar' workers is much the larger.
Now, it is true that the latter have people with specialized skills not requiring much classroom work. But that's true of the private sector, too. I just don't see those jobs and workers turning over much, whereas I do see that in the private sector. In an earlier post I made an offhand reference to the phrase '25 and out' which I used to hear from municipal construction-inspection staffers. Show me the skilled-trade worker at a private contractor who can retire on a pension after 25 years.
#12 Posted by Mark Richard, CJR on Mon 13 Feb 2012 at 12:55 PM