It used to be public servants earned 15% or so less than their private-sector counterparts. In return, they had greater job security, better benefits, richer pensions and lighter work loads. They still have superior benefits and pensions, work fewer hours and are only one-sixth as likely to be laid off.
But now they are better paid, too.
According to a new study released this week by the Fraser Institute, the pay gap between public and private sector workers is an average of nearly 11% in favour of those employed directly by governments (civil servants) and indirectly (teachers, professors, health care workers, nurses, police and others).
The one-fifth of Canadian workers in the public sector – municipal, provincial and federal – also enjoy longer vacations, take more non-vacation days off each year for personal reasons (13 versus eight) and retire on average 2.3 years earlier.
What Fraser’s researchers found in examining multiple studies on the public-private wage gap conducted by academics, union economists and business analysts is that in study after study “wage differences between the two sectors over the past three decades consistently indicate a premium for government sector workers. The specific wage premiums vary depending on the data source and time period.
What is clear, however, is that a premium exists.
Fraser’s own study even corrected for such factors as gender, age, marital status, education, length of service, size of firm, industry and occupation. Still, it found that Canadians employed in the public sector make noticeably more money than people in comparable jobs in the private sector.
Take pensions as an example. Just 24% of private-sector employees have employer-provided pension plans compared to 90% of public-sector workers. Moreover, 94% of public-sector pensions are “defined benefit,” meaning retirees get paid a set amount after they leave their jobs (typically 70 or 75% of their working salary) – whether or not there is enough money in the pension fund.
Any shortfall is made up by taxpayers for years and years and years after civil servants retire.
The gap is not universal among all job categories. Middle managers in the public sector actually make 12% more. Office supervisors and teachers make 15% more; arts and culture workers, 8%; child care workers, 24%; social workers, 18%, and police and firefighters nearly 40%.
Similar work done by the Canadian Federation of Independent Business determined that when all compensation is taken into account and divided by hours worked, federal workers made more than 40% what their private counterparts made, provincial workers made 35% and municipal employees nearly 30%.
This has come about because governments are gambling with someone else’s money – namely taxpayers’ money. As employers, governments can keep giving rich raises to public employees because they know they can tax you to pay for it. The result is that as taxes rise, private-sector workers are working harder and taking home less so they can pay for better pay and more perks for their neighbours who work in the public sector.
Middle-class taxes have been rising and wages stagnating not because the “rich” are getting away with income murder. The middle class is stuck in a rut because governments are huge and getting bigger, and their No. 1 expense is public workers’ compensation – about 50% of total government expenditures.
It’s not the One-Percenters we should be resenting. It’s the politicians who cannot restrain growth in the size of government and who lavish pay and benefits on Canada’s 3.7 million public sector workers.
In all they son's command. Indeed.