Labor's Fair Share

On Labor Day, What About Labor’s Fair Share?

• According to the Economic Policy Institute, productivity went up about 25 percent from 2000 to 2012. How much did compensation increase? Only about 7 percent. 
• From 1979 to 2010 the top 1 percent of households saw their after-tax income grow by about 202 percent.

Highest-Paid Hedge Fund Managers 2012

State/Local Versus Private-Sector Workers

State/Local Versus Private Sector Workers 

Putting aside job security, the calculations show that state/local benefits nearly offset the private sector wage premium, but compensation in the public sector is 4 percent less than that in the private sector

Key findings:

• State and local workers have a wage penalty of 9.5 percent.
• Pension contributions and retiree health insurance help close the gap.
• Total compensation for public sector workers is about 4 percent less than that in the private sector.

Update:

Just wondering why these studies (like the one above) - the ones where academics actually look at the numbers and report on such - rarely are discussed in the Milwaukee Journal Sentinel. Every anecdotal story and "gut" feeling was paraded out in their reporting during Scott Walker's vilifying of public workers. The claims of excessive pay, overly generous benefits, etc. This was all reported as a given, a known fact.

It was, and is, nothing of the sort. Studies refuted it then, and they still refute it now.

Public workers are a bargain. Private workers doing the same work would cost you (at least) 4% more.

Federal Employee Compensation

Unionized workers with only a high school diploma earn, roughly, 20 percent more than their private sector counterparts. When we consider age, education, and experience, public sector workers with at least an Bachelors degree, earn less than their private sector counterparts. These are the conclusions of three recent studies (here, here and here). The Congressional Budget Office's latest research on the topic (looking at Federal employees) has found similar results.

"CBO's study compares federal civilian employees and private-sector employees with certain similar observable characteristics. This analysis focuses on wages, benefits, and total compensation between 2005 and 2010."

• Federal civilian workers with no more than a high school education earned about 21 percent more, on average, than similar workers in the private sector.
• Workers whose highest level of education was a bachelor's degree earned roughly the same hourly wages, on average, in both the federal government and the private sector.
• Federal workers with a professional degree or doctorate earned about 23 percent less, on average, than their private-sector counterparts.

For Further Reading:

Right-Wing Assault on State Employee Pensions Based on Falsehoods

Economic Indicators

Civilian Labor Force: Milwaukee County

Consumer Price Index: Fuel Oil and Other Fuels; Water, Sewer & Trash
Fuel prices started to spike around 2002-2003.

Consumer Price Index: Housing; Rent of Primary Residence

Consumer Price Index: Medical Care
Medical costs began their exponential rise during the mid-1980s.



Consumer Price Index: Transportation

Transportation costs accelerated with the oil embargo of the 1970s. They've been on that elevated trajectory ever since.



Health Insurance: Not Covered

Home Prices

Light Weight Vehicle Sales

Manufacturing Durable Goods Sector: Output Per Hour
Output per hour has steadily increased.



Manufacturing Durable Goods Sector: Real Hourly Compensation

Compensation increased during the Clinton, late 1990s, boom years, but has stagnated since.



Resident Population: Milwaukee County

Nonfarm Business Sector: Labor Share; Output Per Hour

Output per hour has increased steadily, while the share going to labor has stagnated.



Nonfinancial Corporations Sector: Output Per Hour; Labor Share

Output per hour has increased steadily, while the share going to labor has stagnated.



Nonfinancial Corporations Sector: Profits; Real Hourly Compensation

Profits have been on an overall upward trajectory. Compensation hasn't kept up.



Total Construction Spending: Residential; Commercial

Unemployment Rate: Milwaukee County

Midweek Reading

Are Wisconsin Public Employees Over-Compensated?
Child Poverty Rose Dramatically In Wisconsin Last Year
Does Right-To-Work Create Jobs?
Jim DeMint's Race To The Bottom
Milwaukee Income Drops 22% As Jobs Threats Continue
Smart Growth Law Would Be Gutted By Proposed Legislation
Tax Cuts Break The Bank
What's Wrong With Right-To-Work?
Wisconsin Has Lean Public Sector
Wisconsin Public Servants Already Face A Compensation Penalty

Deaf or Just Stupid?

Why is it that even though numerous studies and analyses have found public workers total compensation is LESS than comparable educated and experienced private sector workers, we still hear and read, on an almost daily basis, about public workers lavish pay and their extravagant benefits?

Compound this with the facts that public workers actually provide services to taxpayers and those services have been found, a majority of the time, to be cheaper than the privatization of such services. Whomever [Republicans and Wall Street] decided our economic ills were the fault of government and public employees has led us astray and distracted us from the real causes and culprits.

Comparing Public & Private Sector Compensation Over 20 Years

Correcting Myths About Federal Pay

The Myth of the Overcompensated Public Employee

Public Disregard

Ulterior Motives

Union Facts

The Wage Penalty for Government Employees

Wisconsin Government Employment Levels

Workers Versus Plutocrats

Compensation Conundrum

Rene Booker received a payout of $52,000 "for a mere 4 1/2 weeks of work," squawks the Journal Sentinel. As usual, devoid of any context or perspective. Because a 26-year veteran of public service took advantage of a negotiated perk (which should be considered deferred compensation), the Journal feels all public employee compensation elements (sick leave, vacation, etc.) should be restricted.

Booker's payment amounts to an $1,558 average bonus, per year, for 26 years of service. A paltry sum compared to private sector golden parachutes and their ludicrously lavish retirement packages. And, many of these same private sector companies, guilty of such profligate spending on compensation, are companies on the public dole in one fashion or another - receiving tax credits, subsidies, loan-interest loans, and other gifts and giveaways from taxpayers.

The Journal claims these proposals (further cuts to public worker compensation) would bring public worker policies "into line with what is common practice on the private sector."

Which private sector workers do they want the public sector workers' compensation packages to be more like? The CEOs? Upper management? Or should college educated public workers (60% have a college degree; only 30% of private sector workers have a college degree) compensation packages be more like burger-flippers? Roughly half of Wisconsin teachers have a masters degree or better? Should they be compensated along the lines of a window washer? Do those whom call for the public sector to be more like the private sector realize part of the private sector is still unionized? (Sadly, only approximately 7 percent.)

When compared for education and experience, public sector workers already earn less than their private sector counterparts. The overcompensated public employee is a MYTH! Let me repeat that - the overcompensated public employee is a MYTH!

What we are witnessing is a willing-accomplice media rewrite history on behalf of financiers and creditors, at the expense of the American middle class and in opposition to the American Dream.

It's The Teachers' Fault...

that Wisconsin students are performing so well.

Wisconsin's teachers are successful. The anti-union, right-wing, pro-business crowd always talks about rewarding success or, as they phrase it, "Not punishing success."

Shouldn't they be defending teacher compensation as a rightful outcome of the teachers' success?

Walker Doesn't Understand Basic Economics

From Dean Baker:

"It's always scary when someone in a position of responsibility doesn't understand some of the basics of their job. Apparently this is the case with Wisconsin Governor Scott Walker.

In a column in the Washington Post this morning Walker noted that under his new compensation package for public sector employees in Wisconsin, workers in the state will still be paying a far smaller portion of their health care benefits than most workers in the private sector or federal employees. He then comments:

"It’s enough to make you wonder why there are no protesters circling the White House."

Actually, it's enough to make you wonder what Governor Walker could possibly be thinking.

Employer payments for pensions, health care coverage and other benefits are part of a total compensation package. It makes little difference to an employer whether they pay another dollar for health care or for wages. Public employees in Wisconsin had bargained for a compensation package that gave them lower wages than their private sector counterparts, but more generous benefits. Their total compensation package was still somewhat lower than for private sector workers with the same education and experience. When Governor Walker increased the amount that workers had to pay for their pensions and health insurance, he cut their pay pure and simple putting them further behind their private sector counterparts.

Governor Walker seems not to understand this simple fact. According to the logic of his column, a worker getting a salary of $40,000 a year with full health care benefits and an employer provided pension would be better off than a worker getting $200,000 a year and no benefits. Obviously this makes no sense. It would be good if one of Governor Walker's aides could explain this to him."

The Undercompensated Public Employee

Public workers with a high school, some college, or an associates degree have average total compensation which is 6, 9, and 5 percent, respectively, better than equivalent private sector workers. All other categories of public worker suffer a compensation penalty when compared with their private sector cohorts. Overall, public workers total compensation is 3 percent less than their private sector counterparts. [Table courtesy of the Economic Policy Institute]

John Schmitt, of the Center for Economic & Policy Research, gives a breakdown of the educational attainment of public and private sector employees. One would imagine, since public sector workers are generally higher educated, that they would be compensated more, but they are not. "When state and local government employees are compared to private-sector workers with similar characteristics - particularly when workers are matched by age and education - state and local workers actually earn less, on average, than their private-sector counterparts. The wage penalty for working in the state-and-local sector is particularly large for higher-wage workers," Schmitt notes.

For Further Reading:

CBS Joins The Attack On Public Employees

Out of Balance: Comparing Public & Private Sector Compensation

Wisconsin State & Local Government Employment Levels