Prompted by a recent report by the Wisconsin Taxpayer Alliance (WTA), Jo Egelhoff of FoxPolitics.net got on the topic
of public sector vs. private sector compensation in Wisconsin.
According to the WTA report
, average public sector benefits are 50.1 percent greater than the average cost of benefits found in the private sector in the state. This, Egelhoff concludes, is a sign that public sector workers are on a "gravy train" in Wisconsin.
Such a conclusion, however, doesn't tell the whole picture.
For starters, simply comparing "average" benefits packages misses a key point, which is that not all private sector packages are worse than their public sector counterparts. To be sure, a number of top executives in the private sector ride a pretty nice gravy train of their own when it comes to benefits.
And I'm not mentioning that as a "gotcha," but rather as a means for pointing out a fundamental difference between benefits in the public sector and benefits in the private sector.
As a relatively low-level administrative employee at UWM, I get paid a heck of a lot less than the chancellor (and justifiably so); but, in spite of the salary difference, I still get the exact same health care package as he gets, and so does every receptionist on campus, every custodian on campus, every full-time food service worker on campus, etc. That's not something you could say about top executives and lower-level employees at too many private sector corporations, particularly ones that come close to the size of UWM.
Just to clarify, I'm not trying to make the point here that private corporations should need to give the same benefits packages to all employees -- that's an entirely different discussion -- but rather my point is that while a wide gap has developed in much of the private sector when it comes to your position and the benefits you receive, the public sector has opted to keep everyone in largely the same boat when it comes to benefits, which is a big reason why "the average" cost of benefits for the public sector is so much higher than the private sector.
But even more fundamental than that is the issue of total compensation -- that is, benefits plus salary.
Jo addresses the issue of salary in her post, citing some average salary figures from 2005 that were included in the WTA report along with some figures
crafted by the conservative Maine Heritage Policy Center (MHPC). Both suggest that even when you factor in salary, Wisconsin public sector employees are still making out better than employees in the private sector.
But, really, you don't need the WTA or the MHPC to relay the total compensation figures for Wisconsin -- the Bureau of Economic Analysis (BEA) publishes those figures
on its website for everyone to see, and it even breaks it down by industry and individual county.
Using the BEA data, we can see that total compensation for the private sector in Wisconsin grew 17.6 percent between 2001 and 2005, while total compensation for the public sector grew 18.7 percent in the same period.
And, if you look at the data prior to 2001, when the economy was still kicking in high gear between 1998-2000, private sector compensation grew at 12.1% in Wisconsin while public sector compensation only grew at 9.7 percent. And if you take out the big recession years of 2001 and 2002, and just look at the last three, private sector compensation again outpaces public sector compensation in Wisconsin, 9.1 percent to 6.8 percent.
But, of course, these macro-analyses are complicated because -- although we can see in the BEA data that total private sector employment increased by 7.5 percent between 1998 and 2005, while total public sector employment jumped 6.7 percent in the same period -- that data doesn't tell us what type
of jobs exist in each sector or what type are being created and, as a result, driving compensation increases.
Indeed, just as an example, it seems likely that the private sector includes more minimum wage positions than the public sector (think fast food, retail, etc.). And, even beyond wages, the lowest paid positions in the public sector are still receiving excellent benefits packages, just like the higher ups, while it's a pretty safe assumption that those minimum wage workers at places like Dairy Queen or ShopKo aren't getting much of anything in terms of benefits, especially in comparison to the management at their respective companies.
When that's factored into the aggregate -- thereby increasing the "average" compensation for public workers and decreasing it for private workers -- does it necessarily mean that all or even most public sector workers are riding a gravy train?
All in all, there always should be an eye towards how the public sector is being compensated. But using aggregate data to create alarm about a so-called special gravy train for an entire sector of workers is more problematic than it can be made to appear, particularly considering that aggregate data, in and of itself, isn't even all that alarming.