Robyn Benson, PSAC

Fraser Follies


Once again, the Fraser Institute has issued an irritatingly flawed report purporting to show that public employees are living large compared to their “counterparts” in the private sector. And needless to say, the public service fans over at the National Post read the executive summary and ran with it.

I have quite a few observations to make and questions to ask about this mischievous document, about its methodology and its ideology. Please bear with me. Some of this stuff can be dry as dust, but it’s considerably more toxic. And poisons need antidotes.

Let’s start with the “counterparts” idea right off the bat. We quickly discover that there’s a lot less here than meets the eye.

For a start, we aren’t getting job-to-job comparisons. Instead, the authors compare whole job categories. All sorts of factors are added in, like age, education and so on to “correct” the analysis. But if you take a closer look, apples are not being compared with apples.

Three examples. First, public sector Chefs and Cooks are mostly people who work in large institutions like prisons and hospitals. In the private sector, they are people working throughout the entire food service industry. One might reasonably expect a higher level of pay for the higher level of responsibility that goes with prison and hospital work.

Then there’s the Protective Services group. In the public sector that’s mostly police officers. In the private sector, it’s security guards. Is higher pay for police a “wage premium,” or a recognition of their responsibility to the community and their difficult working conditions?

The Sales and Service group in the public sector is probably dominated by municipal employees working in sports and recreation departments, and in community centres. In the private sector, these jobs would be mostly general sales and service positions: think fast-food industry, or a Wal-Mart “associate.”

Funny thing, though: when job-to-job comparisons are actually made, we get startling differences in the findings. We don’t have good data at the federal level, but in Quebec these more detailed comparisons are actually studied. Results? Overall compensation (salaries and benefits) is 3.3% higher in the Quebec public sector. But when you factor in private-sector unionization, that figure drops into the negative range, to a stunning -13%. Salary-only comparisons are even starker.

Returning to the Fraser Institute study, the difference in the so-called “wage premium” for men and women is remarkable. But the authors don’t, or won’t, deal with it:

Note that male-female wage and union/non-union wage differentials are outside of the scope of this study. At the federal level, the wage premium for public sector workers was 7.8 per cent for males and 16.0 per cent for females compared to the private sector.

Women are, as the authors themselves might put it, far more “overpaid” than the men. Why is that? Well, the answer is simple: we won the pay equity fight. Women in the private sector are still inadequately compensated; the value of their work is not recognized.

Women in the public sector aren’t getting a “wage premium.” They’re getting justice.

Pensions are also part of the total compensation package. Once again, the Fraser Institute folks chase the lowest common denominator. Some folks have no pensions; some have a defined contribution plan, which depends on the market; others, including most public employees and more than half of the private-sector ones have a defined benefits plan—you get a guaranteed pension based upon years of service.

But rather than supporting the idea that all Canadians should have comfortable retirements—say, by reforming CPP, and protecting private sector employees against company bankruptcy—the authors see public sector pensions as just more “premium.”

In fact the clear message from the Fraser Institute is that public sector employees should receive no more total compensation than their private-sector equivalents.

But there we go: where are those equivalents? The authors engage in misleading category comparisons, and quite a bit of guesswork. Looking at the job-to-job comparison numbers from Quebec, I wonder if the Fraser Institute would support immediate equalization for the clearly underpaid public sector. But I don’t really wonder very hard.

So what do the authors want done? They want the “premium” gone, and they have clever suggestions for eliminating it. My personal favourite is this one:

Specifically, the recommendation is to provide unions with a lump-sum compensation total by hour, or perhaps per year, for workers covered by collective agreements. The union would then be asked to determine the mix of wages and benefits for its members.

Given that nearly three-quarters of the workers in the public sector are unionized, asking the unions to contribute to the solution, rather than maintaining the adversarial relationship, is critical to the longer-term sustainability of public sector compensation.

Frankly, after reading that, I didn’t know whether to shake my fist or burst into giggles.

But that’s the Fraser Institute for you. Their studies keep coming, a steady stream of talking points for the right-wing media and politicians. Here’s another one. Because of “creeping progressivism” in the tax system, too few Canadians are paying federal taxes—but they all get to vote, and so they make decisions about the future of this country.

They’re “exempt from the costs of their decisions,” says the Fraser executive v-p, who is the co-author of the public sector compensation report as well. But we aren’t talking high-income offshore account-holders here. No, the problem is the child tax credit, a too-large personal exemption, and giving unemployed people incentives to find work.

Meanwhile, the Fraser Institute is a registered charity. It pays not a penny nickel in federal taxes.

Every year—part of the legacy of former Ontario Premier Mike Harris—the Ontario government must publish a list of public sector employees who make more than $100,000—the so-called Sunshine List. Conservatives love this stuff. “Legislated mandatory wage freeze,” demands the Ontario Progressive Conservative finance critic.

But none of these outraged true-bluers has any problem with major executive compensation in the private sector, some of it in the millions of dollars. What—no total compensation comparison? Where on earth did it go?

And guess what—here’s our old friend the Fraser Institute once again. Its moonshine, it seems, is accompanied by a fair bit of sunshine as well. Because of its charitable status, by the way, which nets it millions every year, taxpayers are effectively helping to subsidize the Institute’s highly paid executives.

I can hardly wait for the next report.

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This page contains a single entry by Robyn Benson, PSAC published on April 8, 2013 9:00 AM.

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