CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Are Public Sector Workers and David Brooks Overpaid?

Are Public Sector Workers and David Brooks Overpaid?

Print
Tuesday, 12 October 2010 04:06

According to the David Brooks methodology both are. Brooks points out that public sector workers get higher pay than the economy-wide average, which is the basis for his argument that they are overpaid. By this methodology, if Brooks get more than $22.67 an hour, the economy-wide average, then he is overpaid.

Economists usually approach this issue somewhat differently. They consider workers' education and experience. If we adjust for education and experience then we find that public sector workers get paid somewhat less on average than private sector workers. This is partially, but not completely, offset by the higher pensions that upset Brooks so much.

It is likely the case that many state and local governments did not adequately budget for workers' pensions, but this is more an issue of failed accounting and incompetent reporting (newspapers are supposed to be covering such issues) than excessive pensions. Brooks highlights an estimate that the amount of the average unfunded pension for all public sector workers is $87,000.

This does not seem particularly large. If we assume an average retirement of 20 years, this comes to $4,350 per worker pension year. Since many public sector workers do not have Social Security this hardly seems an excessive amount on the workers' part.

Brooks also complains that AFSCME, the public employee's union, was the largest single contributor to political campaigns between 1989 and 2004. While this may be true in the sense that AFSCME gave more money than Robert Rubin or Rupert Murdoch, AFSCME represents more than a million workers. Certainly the million richest Wall Streeters, oil tycoons, or tech entrepreneurs gave far more money to candidates than AFSCME. It is likely that politicians responded to their concerns roughly in proportion to their contributions.

Comments (21)Add Comment
...
written by PeonInChief, October 12, 2010 5:28
And many government workers negotiate higher pensions in exchange for lower wages. Governments like to do this because the cash outlay is then pushed out of that year's budget.
Going a step further
written by John H. McCloskey, October 12, 2010 6:45
"If we adjust for education and experience then we find that public sector workers get paid somewhat less on average than private sector workers."

Does it follow that privatization, a favorite nostrum of all selfservatives and of the good folks at the Democratic Leadership Council as well, tends to increase the gap? I mean, is it not bound to be the case that blue collars are much easier to outsource than white collars?

Happy days.
...
written by Ron Alley, October 12, 2010 7:22
Brooks is creative in his attempt to justify GOP anti-union, pro-corporate interest bias. Even if one accepts that public employee wages and pensions are too generous, then his argument still fails because he offers no solution. The obvious solutions are to retroactively slash public employee pensions and wages or to increase taxes and bring in the revenue needed to meet state and local governments' commitments.

The real problem is the success of the Grover Norquist starve-the-beast strategy. It has worked so well that governments' ability to take on major projects has diminished.

The rhetorical purpose of column by David Brooks is to foment class warfare by creating a mythical class of "government" employees that is favored over a mythical class of "private sector" employees. The pro-corporate interest, anti-union policies that Brooks champions are the cause of the plight of "private sector" employees. Until the Democratic Party acts to correct the pro-corporate interest, anit-union bias of tax, trade and domestic economic policy, we can expect to see more of such attempts to foment class warfare.
Pensions killed the tunnel, too
written by Brighton, October 12, 2010 10:38
Today, Brooks writes that NJ couldn't afford the tunnel because of pension obligations imposed by scary unions. So paying a fair wage and pension to a diligent government worker is wasteful, but a $20 million bonus to a hedge fund manager would be investing in future prosperity? My 2 cents here: http://brighton-towne.blogspot...rooks.html
poorly designed study, Low-rated comment [Show]
...
written by unconvinced, October 12, 2010 5:37
John, if you click on the blue highlighted text in Dean's post, you will find articles in which his contentions are backed up with data derived from research. Normally, in academia, if you wish to refute someone, you attack their data or methodology with more persuasive evidence. If you wish to persuade others of the truth of your assertions you should provide support for them with references to empirically grounded studies and generally agreed-upon principles.
...
written by AndrewS, October 12, 2010 5:47
"If you wish to persuade others of the truth of your assertions you should provide support for them with references to empirically grounded studies and generally agreed-upon principles."

Sure you can go that way. Or you can just repeat it over and over like Fox, the Washington Post, the Tea Party, etc. It works very well assuming your target audience are all morons.... like Fox viewers, Post readers and Tea Partiers.

Auto workers make $75 an hour you know.
clouded minds of all stripes
written by Polat Guney, October 12, 2010 5:56
It is interesting to read the studies and see people slice and dice the numbers, but let's take a step back.

On the one hand public employees, largely unionized, have some security, middle class incomes and decent benefits and pensions.

On the other hand, private sector employees, largely not unionized, have little security, stagnant incomes (for the last 3 decades!), and give-backs across the board in benefits and pensions. And all of this in a general condition of improving productivity and growth.

Yes, there might be some sort of compensation gap, but this argument has the problem upside-down, especially considering that we are in a recession/depression exacerbated by a collapse in demand.

It strikes me that the real problem seems to be less the 'rent seeking' of fat cat public sector workers, and more the sorry condition of workers in the private sector.

Of course getting funding for that study might be tricky.
I thought that David Brooks had retired years ago. I guess the economy is worse than we thought.
written by Scott ffolliott, October 12, 2010 7:04
Are Public Sector Workers and David Brooks Overpaid?

I thought that David Brooks had retired years ago.I guess the economy is worse than we thought.
...
written by BOXER, October 12, 2010 7:55
I have a protest sign in my front yard it says,
TAX THE RICH, END THE WARS and NJEA STRIKE BACK!
Gov. Christie is threatening the teachers union here in Jersey in the race to the bottom. My next sign will ask him to take on the PBA too.
Public Employees Not Rent Seekers
written by izzatzo, October 12, 2010 8:00
"Rent-seeking" is wildly off the mark as a characterization of public employees. It generally means the use of government to manipulate a market in order to collect economic rent.

If public employees were rent seekers, then all private contractors who replace public employees would be rent seekers as well. But neither private contractors nor public employees are in a market in the first place. They perform non-market government functions instead.

Waste and inefficiency associated with either public or private employees working for government - including excess salaries and benefits - doesn't necessarily constitute rent seeking, unless a true private, more efficient market indeed has been replaced with a government monopoly regardless of whether it's staffed with private contractors or public employees.

While "rent-seeking" is traditionally used by conservatives to bash government influence over markets where private market power arises directly from that influence, conveniently excluded are areas like patents and copyrights as Baker repeatedly reminds his readers.

That leaves the last big hole in rent-seeking accusations - private markets which don't depend on government for their market power to collect huge economic rents. It's "rent-seeking" too, but survives in the opposite direction - by preventing effective government intervention necessary to achieve efficiency via regulation and dissipation of the rents to customers instead of owners, i.e., the ongoing rampant deregulation of private monopolies based on wild claims that they're "competitive".
izzatzo
written by PMA, October 13, 2010 3:55
That's the best comment you've ever posted, and that's saying something since all your comments are awesome.
Not even close
written by dupin, October 13, 2010 10:22
As a large city (over 1 million citizens) government worker in the IT field, I find David Brooks assertions to be ludicrous. First, based on salary surveys from trade publications, IT workers where I work average about $20,000 less annually than the national average for the same job functions. Second, we contribute 9.81% of our salary to our pension, so it is not non-contributory (as it was in my previous corporate job). Third, unless you start work here after about age 40, you can't retire in 20 years. 20 years does get you 55% of your base pay, though insurance costs are considerably higher for retirees. Fourth, a study done a few years back determined that our benefits were in the bottom 25%, and they haven't improved since then. We may not be typical because amongst other things, we aren't unionized, but at least in our case, none of the arguments hold water.
...
written by john, October 13, 2010 11:30
I understand the term rent-seeking. I am pointing out that public employee unions behave similarly to rent seekers in how the extract compensation from captive politicians. This explains how the pension formulas changed dramatically in 1999 in California which in turn led to our current era of police/fire retiring at after just 30 yrs of work at 90% of final pay. And most other state/city/county workers retiring after 35 years at 50-90% of last years pay.

I read the referenced article. I did not find the part where total lifetime compensation was adjusted for hours worked, vacation time, sick time, and an earlier and more lucrative retirement packages. If my critics could direct me to that data I would appreciate it.

I do not get my info from Fox News and I am not a Tea Partier. But, I understand those are convenient insults to hurl at anyone that shows a hint of independence. They are actually similar to the insults directed at me when I post on conservative blogs and criticize the Wall Street/D.C. collusion: "Typical liberal. Where do you get you info CNBC and NPR?"






...
written by PeonInChief, October 13, 2010 12:28
What really irritates the "public workers are overpaid and get pensions" crowd is not so much that state workers with advanced degrees get benefits, but that janitors and clerks get benefits and pensions too. And yes, that is more than similar workers in the private sector get. A good thing, too.
Eric
written by Eric, October 14, 2010 11:32
John, you might be interested in the following:
http://www.epi.org/publications/entry/BP270/
Despite the issues that the data on benefits out there just aren't as good as the data on wages, at the level of the individual, the author attempts to factor benefits into the
calculation. You can jump to Table 6 (and 4) for the key results if you want. For those who don't have time to go to the link, it seems like the
total compensation for public and private is around the same, after adjusting for fewer hours worked by public workers. (It can be slightly
less or slightly more, depending on what comparison group you want to
use.)

I don't have time to read it in detail, but I would guess, though adjusting for hours worked, he is not adjusting for any possible earlier retirement.

I would also point out that for firefighters and police, it seems unfair not to mention the dangerous aspect of this work. (Apologies if you made this in an earlier comment, I didn't read all of the comments.)

Eric
http://www.cheapsunglassesmall.com
written by sunglasses wholesale, October 16, 2010 6:01
Here has on-line sunglasses wholesale house.
Price preferential benefit, fine quality.
Quickly rushes to purchase the cheap sunglasses!
Timberland boots sale
written by Timberland boots sale, October 18, 2010 11:10
Timberland boots are very popular amongst everybody, from young to old people. A pair of Timberland shoes brings beauty and comfort to wearer. Most people buy Timberland boots for wet weathers or outdoor activities.?Timberland 2011 shoes are certainly more stylish than its formers. Every pair is excellent style and exquisite crafting which drive the development of Timberland boots sale. A cheap Timberland boots can be found at a larger range of styles. Timberland boots are high quality and comfortable as well as being genrally water resistant.
DD
written by Nike Air Max, December 10, 2010 7:09

This blog is cool.

No Doubt! your blog contain very useful information.


Great blog article about this topic, I have been lately in your blog once or t
DD
written by Air Max 90 pas cher, December 10, 2010 7:21
Thanks for the blog loaded with so many information. Stopping by your blog helped me to get what I was looking for.


I found your site in yahoo. And I will be back next time, thank you.
...
written by Air Max pas cher, December 10, 2010 7:22

What a fun pattern! It's great to hear from you and see what you've sent up to. All of the projects look great! You make it so simple to this.Thanks!

So great , I like it

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives