The Vancouver Sun has once again out-sourced an editorial to the Calgary Herald who have once again out-sourced their material to the Frontier Centre for Public Policy, whom I have talked about before. The editorial in question is “Civil servants paid too much” but before we get into it, let’s start with this:
The Frontier Centre, an independent think-tank
Right. It might be “independent” but it’s clearly not ideology-free. As I pointed out in my earlier entry, someone at the FCPP told Google to include this description when indexed:
As for independence, it’s sources of funding are opaque, 74% coming from unnamed foundations, etc. One is beginning to wonder if the Fraser Institute has become so discredited that they have to go with the junior team. Anyway, here is the actual FCPP report Public Administration Wage Growth. The gist:
Over the course of the past decade, wage growth for public administration workers has dramatically outstripped wage growth in the rest of the economy.
The first thing I always wonder with these sorts of things is are we getting a true apples to apples comparison. The public sector statistically employs a more highly educated workforce. Study author Ben Eisen mentions this, but then gives the game away:
this backgrounder does not seek to compare public servants to equivalently skilled and experienced private sector workers to determine the size of the current pay premium.
Instead, this paper presents data showing that the rate of wage growth for provincial and federal public administration workers is unique among the twenty major industries tracked by Statistics Canada.
Ah. One of the keys, of course, is what 20 industries are chosen. The other key is the FCPP report is measuring growth of compensation and is not comparing actual compensation levels b/w public and private equivalents.
It certainly strikes me that, of the 20 industries, only 4 are actually comparable: Federal public administration, Provincial public administration, Local public administration and Management of companies and enterprises. Note, the FCPP is comparing public sector workers in charge of “administration, oversight and management of public programs”. IE. High skilled/high responsibility workers or, as the FCPP dubs them, “bureaucrats” and not other public sector workers like labourers. In that regard Federal/Provincial bureaucrats wages went up 59%/55%, while Local bureaucrats and Private sector managers went up 33%.
But from what? Where’s the context? What if Fed/Prov bureaucrats are catching up to the their private sector counterparts? There is significant evidence that bureaucrats were and still are underpaid compared to equivalent positions in the private sector. See here, here and here. The whole thing strikes me as ridiculous.
This backgrounder also examines Statistics Canada data to quantify how much money would have been saved by taxpayers if federal and provincial public administration wage growth had merely matched wage growth in industries with the next highest rate of wage growth in the economy behind public administration.
The next highest rate of wage growth in the 20 industries cited is real estate. What, pray tell, is the utility of measuring the growth rate of compensation of realtors and bureaucrats?
Eisen attributes the “high rate of growth” to “union influence” and “rent seeking”. Ok. Here’s an interesting factoid: The United States has a public sector unionization rate of 29% and expenditures for all levels of government on goods and services amounts to 20.6% of GDP. In Canada, the public sector unionization rate is 71% while government expenditures is…21.2% of GDP. That’s a difference of 0.6%. Furthermore, up until this year the Canadian federal government (and many provinces) had been running surpluses since the mid 1990s – this despite the alleged “growth” of public sector wages. I’m not certain about other provinces, but in British Columbia municipalities are required to balance their budgets by law.
In determining whether “civil servants are paid too much”, this study is rather useless. Of course, Barbara Yaffe is right in there.