[TURC] FW: Who gets paid more, public or private sector workers?
- From: Toby Sanger <tsanger@xxxxxxx>
- To: "turc@xxxxxxxxxxxxx" <turc@xxxxxxxxxxxxx>
- Date: Thu, 26 Feb 2015 13:45:21 -0500
Hi Turcers:
My apologies for any multiple postings on this.
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This week’s article (below) focuses on Who gets paid more, public or private
sector workers?, critiquing the Fraser Institute’s recent spate of reports on
this.
Previous issues included pieces on Why are women leaving Canada’s labour
force?, Canada’s (hidden) dimensions of inequality, Ending austerity and
Syriza’s Greek victory and Plunging oil prices expose cracks in Canada’s
economy.
You can see a number of the previous issues archived
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Please don’t hesitate to send me material you think might be relevant,
suggestions or comments.
In solidarity,
Toby
From: CUPE - Canadian Union of Public Employees
[mailto:webmaster=cupe.ca@xxxxxxxxxxxxxxxxxxxxxx] On Behalf Of CUPE Webmaster
Sent: Wednesday, February 25, 2015 2:42 PM
To: Toby Sanger
Subject: Who gets paid more, public or private sector workers?
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Who gets paid more, public or private sector workers?
The Fraser Institute has issued a spate of reports claiming public sector
workers are overpaid. How much credibility do these have?
Very little, it turns out.
There are three major ways of comparing pay and compensation levels, going from
the very detailed to much more general, and flexible, calculations.
The most accurate involve comparing very specific occupations in the public
sector with similar occupations in the private sector. The only study of this
type routinely and comprehensively done in Canada is by the Institut
Statistique du Québec. Its most recent
analysis<http://cupe.us6.list-manage1.com/track/click?u=063650e035f4e4bfa6f0fa053&id=e920a44459&e=e8b3c5da32>
for 2014 found that Quebec government employees were paid on average 8.4 per
cent less than their counterparts in the private sector. When pensions,
benefits and working hours are taken into account, total compensation for is
comparable, just slightly below comparable private sector employees.
The next most accurate calculations involve comparing average wages by
occupation and other relevant variables using the most detailed aggregate data
and occupational groups available. In Canada, the Census/National Household
Survey (NHS) provides data at the level of 500 different occupational groups,
the most detailed available. Analysis using these data has been conducted by
the Canadian Federation of Independent Business (CFIB) on one hand and by CUPE
and the Canadian Centre for Policy Alternatives (CCPA) on the other.
The CFIB’s analysis using 2006 Census/NHS data included serious errors
(outlined in CUPE’s Battle of the
Wages<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=23ae5c3a62&e=e8b3c5da32>
and elsewhere) and it appears they are no longer doing this analysis. CUPE’s
analysis<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=51967bda46&e=e8b3c5da32>
using 2006 Census data found that public sector workers were paid on average
0.5 per cent more than similar occupational groups in the private sector.
However, this premium was entirely because there was less of a pay gap for
women in the public sector. Men in the public sector were paid on average 5.3
per cent less than men in similar occupational groups in the private sector. In
fact, pay scales in the public sector are more equitable than in the private
sector by all different aspects: gender, age, region, and occupation. This is
the consequence of both higher unionization rates in the public sector, but
also because stronger pay equity legislation and political considerations
ensure public sector pay scales are more equitable than the increasingly
inequitable pay scales of the private sector.
Further analysis using 2011
Census<http://cupe.us6.list-manage1.com/track/click?u=063650e035f4e4bfa6f0fa053&id=34f034af65&e=e8b3c5da32>/NHS
data by the CCPA found that public sector workers were paid on average about
two per cent more than those in similar occupational groups in the private
sector, but once again this is because of a smaller pay gap for women and also
considerably smaller pay gaps for aboriginal and racialized workers compared to
the private sector. Men in the public sector were paid on average 1.5 per cent
less than those in similar occupational groups in the private sector. Since
2010, base wages in the public sector have increased by about two per cent less
than the private sector, so overall average wages are now likely to be very
similar.
The Fraser Institute reports use Labour Force Survey data that include just 25
occupational groups, far fewer than the 500 included in Census data and so it
is considerably less accurate. While this type of method using econometric
analysis takes account of a number of other variables (age, education, gender
etc) that can affect pay, whether other variables are included or not can have
a significant impact on the results. For instance the Fraser Institute analysis
doesn’t account for aboriginal or racialized worker status, whose pay gaps are
very different in public and private sectors.
In addition, by having broad occupational categories and not accounting for
selection or the level of responsibility involved in a job, their analysis
effectively considers police officers and security guards as equals. Because of
the broad occupational categories involved in the Labour Force Survey and
flexibility involved in econometric analysis, results using these methods have
come up with very different results: higher wages in the public or private
sector depending on what’s included in the analysis.
The bottom line: The real point for workers shouldn’t be whether public or
private sector workers make a few bucks more at any one point in time, although
these comparisons always come into play during labour market contract
negotiations which keep wages relatively equal between sectors. The real point
should be that average wages for all workers have barely kept up with inflation
while top incomes and corporate profits have skyrocketed. And using the highly
inequitable pay scales of the private sector as a norm for the public sector
will just make the situation worse and suppress wages and benefits for all
workers—which is exactly what the well-paid executives of the Fraser Institute
and the CEOs they represent want.
In brief:
* “Deeply troubling”: That’s the title of an
analysis<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=84d219a7b0&e=e8b3c5da32>
of the Harper government’s plans to double the amount that can be sheltered in
Tax Free Savings Accounts. Simon Fraser University professor Rhys Kesselman
says it would be extremely regressive, highly disproportionately benefiting top
income and wealth holders. It would eventually deplete federal revenues by $15
billion a year: eating “everyone out of house and
home<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=03d19fe6d2&e=e8b3c5da32>”
and make the original tax break even worse, Double
Trouble<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=b041644a67&e=e8b3c5da32>.
Ottawa’s Parliamentary Budget Officer
agrees<http://cupe.us6.list-manage1.com/track/click?u=063650e035f4e4bfa6f0fa053&id=82251f3fce&e=e8b3c5da32>
in a separate analysis, calculating it would cost the federal government $14.7
billion and provincial governments another $7.6 billion annually and that it
would make the tax break “much more regressive”.
* Corporate profits hit another record. Profits of Canadian corporations hit
a record $355
billion<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=29f89a4b57&e=e8b3c5da32>
last year, 8.7 per cent above their take in 2013, even though they declined in
the fourth quarter. This works out almost exactly $10,000 for every single
Canadian. This sounds great, but don’t expect a cheque anytime soon. The
benefits of these profits are concentrated among a few and the average tax rate
they pay on those profits was only 18.3 per cent, a third lower than the
average rate in the dozen years up to 2000. Banks and financial corporations
took about a quarter of the total, followed by manufacturing, trade,
construction and then oil and gas. Air Canada’s profits soared by 56 per cent
to $531
million<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=18e285b57a&e=e8b3c5da32>.
* Women have the numbers, but not the power. Women now make up a majority of
public sector workers, but still lack the power men have.
Research<http://cupe.us6.list-manage1.com/track/click?u=063650e035f4e4bfa6f0fa053&id=d65de5ba2a&e=e8b3c5da32>
by Marika Morris and Pauline Rankin at Carleton University found that while
women represent 55 per cent of all federal public sector workers, they
represent 45 per cent of all executive positions below the top level and just
one-third of deputy ministers. But just as women are reaching the top, the
influence of even top public servants in Ottawa is diminished, as power is
increasingly
centralized<http://cupe.us6.list-manage1.com/track/click?u=063650e035f4e4bfa6f0fa053&id=933c45f2c5&e=e8b3c5da32>
in the Prime Ministers Office.
* Public servant morale and engagement down. The federal government’s Public
Service Employee
Survey<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=afffe9d6d8&e=e8b3c5da32>
found that employee satisfaction, engagement, and resources available had
deteriorated since the last survey. Only two-thirds felt they had the support
needed to provide a high level of service, down from 75 per cent three years
ago, fewer felt they had adequate support to maintain work-life balance and
almost half said having to do more with less affected the quality of their
work. About one-fifth reported they had experienced harassment in the past two
years.
* Shifting economies. Ontario, Manitoba and British Columbia will lead
economic growth in Canada this year, benefiting from the decline in oil prices
and lower dollar: growing by almost three per cent in real terms, according to
the latest provincial
forecast<http://cupe.us6.list-manage.com/track/click?u=063650e035f4e4bfa6f0fa053&id=0977499e3c&e=e8b3c5da32>
by the Conference Board of Canada. Quebec, PEI, Nova Scotia and New Brunswick
are expected to grow by about 2.3 per cent, Saskatchewan by less than one
percent, while both Alberta and Newfoundland and Labrador are expected to
decline.
All content: Toby Sanger<mailto:tsanger@xxxxxxx>, Economist, CUPE National.
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