The Ethics of Public Employee Wages

It looks like public employee wages are emerging as a major public policy issue.  A number of prominent conservatives have been making a loud case that government workers are spoiled and overpaid. (President Obama, while not endorsing the characterization, has agreed that the current economic crisis demands sacrifice from everyone and has frozen federal employee pay for the next two years.)

Much of the dispute is grounded in a claim that government workers earn more than private sector workers performing the same job. If it is indeed the case that two persons performing the same work are paid differently simply because one is employed in the private sector and another is employed in the public sector, this would appear to constitute injustice. What questions might Catholics ask when evaluating this claim?

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1. Are wages in the public sector actually higher or lower than those in the private sector? There is hardly a scholarly consensus on this question. The conservative think tank The Heritage Foundationhas strenuously argued that federal employees earn a 22% premium over comparable private sector workers. However, the federal Office of Personnel Management cites statistics showing federal employees earn 22% less than their private sector counterparts. Other scholars and sources issue findings all over the map. It’s not surprising that different observers come up with such divergent views – what’s the private sector equivalent of an FBI Special Agent? It’s easy to end up in the weeds when comparing the very different roles of civil servants and private sector workers.

 2. If (some) public sector wages are in fact higher than those in the private sector, which would Catholic Social Teaching honor as a ‘just wage’? Adam Smith and Milton Friedman would have us believe that a just wage is whatever you can convince someone to pay you, but for Catholics it’s not so simple. In fact, Leo XIII expressly noted that when the labor market results in wages “insufficient to support a frugal and well-behaved wage-earner” then the worker is a “victim of injustice.” If wages for public employees are established by macroeconomic statistical analysis, collective bargaining, neutral arbitration – or even political dialogue about what is fair or unfair – it’s not obvious that this makes them less ‘just’ than wages established on the individual labor market.

3. Underpaid Lawyers and Overpaid Janitors? While it is uncertain whether public employee wages overall are higher or lower than private sector workers, there is significant evidence that those at the top of the public pay scale typically earn less than their private sector counterparts, while those at the bottom often earn more. Everyone knows that Presidents, Senators and Representatives routinely leave public service to draw many times their salary as authors, lobbyists and members of corporate boards. Senior US executive officials like Peter Orszag, former OMB (Office of Management and Budget) chief, earn less than $200,000 per year - but he is probably earning upwards of $2 million per year in his new gig at Citigroup. This effect actually seems to reach down into the white-collar ranks of the federal workforce, with attorneys, for instance, drawing lower salaries when they choose public service over private practice.  

Meanwhile, low-paid blue-collar workers often get a noticeable bump in pay when enter public employment. According to the most recent numbers from the Bureau of Labor Statistics (May 2009), the average janitor nationwide earned $11.60 per hour – but those employed by state or local government earned $13.74.  That means janitors working for the government draw a salary nearly 20% higher than those in private office buildings, but I doubt even most tea party activists would begrudge the men and women who clean our public buildings an annual salary that amounts to less than $29,000 per year before taxes ($13.74 X 2080 hours = $28,579).

In fact, is there really anyone out there who thinks that as a society we pay our bankers and lawyers too little and our janitors too much? Maybe there’s something to be said in favor of the civil service pay scale after all.

Clayton Sinyai

 

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7 years ago
 
Clayton
I am not sure I follow the logic of your argument justifying retaining the existing public employee compensation programs without review on the basis of catholic social teaching.
Your primary justification points to a marginal difference in janitor hourly salary rates. You then quickly pull out the canard I hear far too often in my home state of New Jersey from the public employee unions . In so many words- Look at what bankers and lawyers ( and of course wall street types) make and therefore don't even question our programs.
We have heard this for years in NJ- and if everyone in the state really was a goldman sachs partner and making untold millions a year in bonuses ( as the  propaganda inferred) then perhaps we could have a conversation on why millionaires would complain when the government workers get 3 to 5% annual increases the last few years like clockwork and make no contribution towards top of the line heath care packages. Not to even mention a defined benefit pension program that covers pension, colas and lifetime medical.
Alas, after years in the non government world of jobs cuts, larger employee medical copays, nominal or no salary increases and only 401k plans - the people left working in the private sector did have a problem. They didn't want the public workers to go destitute- but they did not understand the mindset that in this environment they were being forced to pay increasingly higher taxes to support the '' automatic raises, zero medical plan contribution/ defined benefit '' entitlement of the public employee unions. In NJ, the higher property taxes were threatening people's ability to keep their homes. They were looking for some shared sacrifice.
The response last year was disappointing - shrill complaints from state workers contributing -sacra blue!- a whole 1.5% of salary towards medical insurance ( at my company the cheapest family health plan costs the employee $5000 a year and it is a HSA with a family deductible annual deductible of an additional $5000)
 
Perhaps a different ''ethics conversation'' would expect public employee unions in the spirit of the catholic social teaching to embrace the opportunity to reduce the impact of tax increases on so many unemployed and struggling workers and companies who have helped finance the existing public worker benefit programs for so many years. I get they would not want the politicians to divert the savings. Still, I must say Clayton I won't wait for labor apologists to propose any such conversation anytime soon.


PJ Johnston
7 years ago
Just wages for that frugal well-behaved laborer are supposed to support not only the laborer himself but the entire family.  The traditional just wage is supposed to support an entire family (including children) on a single wage earner's income, even if the job is full-time minimum wage at McDonald's or Wal-Mart.
Vince Killoran
7 years ago
This is not about public employees being overpaid (they're not, with a couple of well-publicized exceptions) Rather, it's about political power and the conservative attack on the labor movement.  Now that they've about finished off private sector unionism they're going after public sector unions.


One of the most clever and downright unethical things I read recently was a major GOP political figure who announced the attack on public sector unions by claiming it was a battle of the "Haves" (i.e., public employees) v. the "Have Nots" (i.e., Joe Six Pack).  This, on the heels of their successful fight to keep the deep tax cuts for the wealthiest Americans!


I wish the USCCB would weigh in on this in a public way-as a moral voice for the labor movement it has professed so much support for since 1919-but they don't; the Democratic Party is run by Obama and centrist Democrats who won't help, and labor law is stacked against unions and the many people who vote for union representation but face employers who stall in signing the first contract.
Tom Maher
7 years ago
This article ignores the widespread and notorious abuses of public employment especially  wildly excessive salaries and pensions paid with little or no benefit to the public.
 
Who has not heard of Bell California where the police chief is paid more than $400,000 , the city councilors, a part time job,  are paid more than $100,000 each and the mayor is paid $500,000 more?  All the cities employees are  paid far more than  anyone anywhere .  Accordingly  the city is bankrupt and taxes will have to be raised  enormously due to these out-of-control financial practices.  Such blatant abuses have nothing at to do with social justice it is an exploitation of the public.  And this happens all the time in California and across America in public employment.
Mary Kennedy
7 years ago
As a professional with 3 graduate degrees in public service, I make less now than I did in 1997; and less than new entrants into my profession in the private sector.  As to my peers in the private sector with the same level of experience, I make anything from about 2/3 at the very lowest end to about 1/4 of what most of them make. I've never gotten a bonus.  I pay plenty for my healthcare benefit, and the deductibles and co-pays have doubled in the last year. Oh, and I was in the office Saturday, Sunday and Monday last weekend. No overtime. Not even straight time. And I wasn't alone, in fact the office hums on weekends.

My father, who worked in traffic lights, regarded himself as never off duty. Which meant that the simplest trip to the grocery could be interrupted by a light that appeared out of order, and after a long day on the streets, brought home reports every night.

He, however, could support a family on his salary.  I cannot.  So how come when people want to "level the playing field" they look to excavate?  Rather than tearing down my little pension benefit or complaining that I get health insurance (with hefty deductibles and copays) for myself and can guy it for my dependants, shouldn't we be concerned that everyone, including the janitor and the worker at McDonald's, can get those things?
7 years ago
I think a major issue in this debate that this post ignores is that of perception or "optics", as the political professionals might say.  Ezra Klein, David Brooks & Reihan Salam have had some very interesting, fact-based discussions on this topic in their various fora.  I think what galls many workers about the public sector unions and their members is that in a supposed era or belt-tightening, the public employees quibble when you challenge their automatic pay raises or the tenure that keeps employees safe from any true quality control.  It is a similar battle with the teachers' unions.  Whatever the economics, they do themselves no favors by dissing reformers who do have some legitimate concerns (when you factor in not just "wages" but extra benefits as well, it seems non-rebuttable that similarly situated public sector workers are paid premiums over their private counterparts) and rebut any effort at even modest changes to the system.

As for the larger claims about the labor movement, I think it would be an interesting project for a Catholic academic to push the Church on a re-thinking of labor policy.  The rhetoric of Leo hardly seems to fit the economics of today's labor markets.  What's interesting is you get Catholics who think the Church is outdated on contraception but quote Leo verse and chapter.  Labor economcs have changed dramatically, and its time the Church address those realities.
Gabriel Marcella
7 years ago
Some data with respect to federal employees:

1. In 2007 the federal government employed 2.7 million (not including military).
2. Of these, 344,000 worked in the Washington area.
3. The biggest employers: DOD, 675,000 civilians; Postal Service, 757,000.
4. 43% of federal employees had college degrees or higher.
5. Average salary was $66,262; in Washington-$84,867.

These figures should be compared to state and local, which unfortunately I do not have. For more info go to: http://www.opm.gov/feddata/factbook/2007/2007FACTBOOK.pdf.

Democracy is expensive. If we are unwilling to pay for talented civil servants the effectiveness of government will decline
Vince Killoran
7 years ago
Pope Leo XIII was the first to address labor rights-and just about every pope since has had a lot to say on the subject.  So, discussions & debates should be welcomed-but the "labor question" is not some outdated concern of the Industrial Era.


The attack of public sector unions, especially teachers' unions, is not the purview of the political right: liberal "reformers"-led by the NEW YORK TIMES-have done an excellent job of concealing the fact that both the AFT & NEA support reform measures.  The conflict is over control: liberal corporate critics don't want to include unions in the process.


I like P.J. Johnson's point about keeping focused on a "living wage," and Mary Kennedy's tory about "getting by" on these modest salaries.  The worst thing we could do would be to engage in a race to the bottom with excessive concessions.
7 years ago
Having worked in the public sector as both a union member and then in management, my perspective is  that, in general, public workers are paid less than their counterparts in the private sector (though federal employes are better paid) but receive better benefits to compensate.Among such benefits are the pensions  they receive -which currently are problems in some areas duringthese hard economic times.
Conservative groups have seized upon this (as well as a couple of bad union  actions -I remember well transit strikes in New York) to attack the unions.
I wonder how much the Heritage Fundation gurus make and what benefits they have?
I also think Catholoic tradition has strongly suported the rights of workers to organize to balance the relationship in the workplace.
I doubt that tradition means a lot in this ideologicaly divided country. Still, both by experience and by value system, i think good labor-management-political relationships make for effective public service  remuneration. 
Rich Austin
7 years ago
Jeff Landry wrote: “Democracy is expensive. If we are unwilling to pay for talented civil servants the effectiveness of government will decline”.  Bingo!  But hey, if some people think the price of democracy is too high let them try totalitarianism .  
Do private sector workers ever complain about their wages being too high?  Of course not. They can justify every penny they receive, irregardless of the fact that their income and benefit costs are passed on to consumers.  Higher prices or higher taxes,  what’s the difference?

Why isn’t excess profit-taking under the microscope of  public discourse?  Why are the uber-rich excluded [protected?] from having to justify personal incomes far in excess of what they will ever need to live very comfortable,  economically secure lives?  Why do some working class folks who drive rusty old pick-ups and who live in dilapidated housing feel moved to defend the wealthy?  Their chances of ever entering the “Ultra High Net Worth” ranks are less than 1/3 of one percent.

Here is the long and the short of it: There is a class war. It has existed ever since the first worker was enslaved to set the first stone in the first pyramid in ancient Egypt. From time to time workers have demanded a modicum of  fairness in order to help balance the scales held by Lady Justice.  We need to do that now.   Her scales are horribly askew.  Ironically, the substance of  that reality is not being discussed. Instead,  totalitarian-leaning corporate chieftains and their Congressional benefactors and media apologists seem to be succeeding in [once again] pitting worker against worker.  Public versus private,  private versus public. And while we are down here wrestling in the mud the redistribution of wealth that goes from our pockets into the bank vaults of the filthy rich continues.   
 
 
Stanley Kopacz
7 years ago
Vince Killoran has it right.  The war on the unions begun by the Reagan administration won't be a complete victory until the public sector unions are decimated as completely as the private sector unions have been.  Democracies need distribution of power.  With all the concentration of wealth and power and the accompanying  atomization of the workforce, our democracy is in peril.  If unions are obsolete, then something else has to be invented.  We have a lot of economic behemoths slouching around.  Hopefully, people will figure out what our ancestors did about their behemoths.  Band together (this was natural and preexisting and not the theoretical collaboration of rugged individualists), kill the mammoths (economically and socially in our case), cook their flesh, use their bones to make shelter, their ligaments to bind arrowheads to shafts so they could kill more.  Or domesticate them as in India.  Of course, back then, the mammoths didn't have a Fox News and the rest of the corporate media to tell the humans what a great privilege it was to get trampled.
7 years ago
I should hesitate to add that the labor unions today face greater challenges from China and India (to begin with) than any corporation or CEO in the US today; compare labor costs here (with productivity) and those abroad and you begin to see the problem.  Talk of slaying our "behemoths" is music to the ears of China & India.
Rich Austin
7 years ago
Workers are being duped by slicksters who promote their version of “globalism”.  Globalism, in one form or another, has been with us for centuries.  India sold spices to China who sold tea to the UK who sold pharmaceuticals to Bolivia who sold coffee to the US who sold machinery to India, etc., etc, etc.  As representatives of international investors, economists, bankers  and corporate CEOs and their Congressional mouthpieces  opted to look for the best deal.  Their unstated motto of “build it cheap; sell it for plenty”  is the essence of today’s globalism.  Globalizers have no allegiance to nations or people. The bottom line is what counts.     

Productivity in the US is quite high, but will never match the “productivity” of exploited workers in China, Bangladesh, Burma,  Pakistan,  Guatemala, Sudan, and elsewhere. Those workers are paid less-than-sustaining wages, and have no protection against  unsafe worksites.

Comparing the US to other nations by saying, “things could be worse” reminds me of the radio jockeys  who tell us how lucky we are that we’re not paying $7 per gallon of gas like people in Italy. What they fail to mention is that people in Italy have 100%  free, quality health care, and other mandates that improve their lives.  Do the math.  Paying $7 a gallon but getting 100% free health care - and other benefits - is a heck of a deal that if practiced here would save the average family several thousand dollars annually.  

Any discussion about jobs, the economy, the environment,  and peace,   is incomplete if  social and economic justice for all is not the centerpiece for such a discussion.

Lastly, who speaks on behalf of workers?  Organized labor, that’s who.  Politicians don’t. Corporate CEOs don’t. The Heritage Foundation doesn’t. Bankers don’t. Coiffed and manicured media pundits don’t.  The sole voice for workers is labor.  

A great, socially-responsible labor leader once said, “know your class and be true to it”.   

Amen.
7 years ago
"Lastly, who speaks on behalf of workers?  Organized labor, that’s who."

You mean the fat cats that run the unions, like the ones arrested in last weeks mob crack down?  Or the one indicted in NYC last week?  Or the labor leader of NYC's public union under fire for his exorbitant salary?

Non-unionzed workers here in the South in plants like Toyota, Mercedes-Benz, and Mitsubishi - workers who enjoy higher wages and better benefits than their counterparts elsewhere - would beg to disagree with your analysis.  Your belief in this nascent "class warfare" is not only incompatible with the very Catholic social teaching you purport to rely on, it is wholly imaginary.
Jim McCrea
7 years ago
The big factor so often overlooked in these arguments is the idea of "job security."  I spent my entire working career (42 years) in private industry in various levels including the manager and director levels.  Never once did I have an employment contract.  Never once did I assume that my job was somehow "protected" because of my level of attainment or achievement.  Three times in my career my job "went away" and, with the exception of a decent but far from opulent severance package,  the attitude "don't let the door hit you in the a** when you leave."

Yes, I made good money - maybe even better than public sector counterparts.  But I knew that I had no backup when times got tough.

Can most public sector workers say that?  It seems to me that they have always "traded" salary/wage parity (I still question that!) for a much more secure work environment.

And don't get me started on the difference in cost-sharing for "benefits" between the 2 sectors.
Vince Killoran
7 years ago


There's nothing wrong with seeking job security-just ask the ranks of 50-somethings who have been left out to dry in the last couple of years.  They're too young for retirement and too old to "re-boot."  Even the few I know who did so have had little luck on the job market.


Do unions "work"? They are among the most productive work sites (remember the Dunlop Commission findings in the 1990s?), and they help keep neighborhoods economically healthy.  I could cite lots of real academic studies (start with Richard Freeman's work) but anti-union forces are motivated by ideology, not facts. They don't like the idea of workplace democracy.  
John O'Grady
7 years ago
There appears to be a lot of confusion here with respect to what “government” workers make, but first we need to separate out whether we are talking about municipal, state or federal employees.  However, the real problem at all levels of government is the size of the “shadow” government.  Did you know that the Federal civilian workforce is about the same size as it was during the Kennedy administration (~50 years ago) at 1.9 million employees?  The problem with the size of federal government is that we now have over 10.5 million employees working for government-funded contractors and grantees.  The size of this “shadow workforce” of is excessive because the size of the federal civilian labor force has been severely limited.  U.S. taxpayers are paying a huge premium for maintaining a relatively small Federal civilian workforce for political reasons.  Just how bloated the costs are for a small fraction of this shadow government is exemplified by over $543 billion dollars paid to just the top 200 government contractors in fiscal year 2009, ending September 30, 2009.  For every federal employee you replace with a contractor, you add almost two people to the payroll, because you have to have contract officers in place on both sides, supervisors for the contract employees, benefits and personnel for the contractors, etc.  In fact, the ratio is over four contract employees for every one federal civilian employee.
The shadow government of contractors and organizations has been dramatically increasing in federal government.  For example, in 2006, the true size of the Federal government stood at over 14.6 million employees, which included Federal civilian employees, postal workers, military personnel on the Federal payroll, and the millions of Federal contractors.  This represented an increase of 2.5 million employees from 2002; almost entirely due to contractors.  Yet, this shadow government of over 10.5 million employees working for Federal contractors and grantees is virtually never mentioned in these discussions about the size of the federal bureaucarcy. 
From fiscal year 1999 to 2009, the expenditures for just the top 200 contractors increased by over $357 billion.  During that same period while the U.S. Federal budget increased by 82 percent (from $1.7 trillion to $3.1 trillion), the Federal contractor purchases as a percent of the total budget increased from 10.9% to 17.5%.  It is not the Federal civilian workforce that needs to be “thinned out” or “capped,” but the size of the “shadow” government, which has grown to over four times the size of the federal civilian workforce, with expenditures in trillions of dollars.
Finally, federal employees have taken the oath of office to “…support and defend the Constitution of the United States against all enemies, foreign and domestic;… [to] bear true faith and allegiance to the same; … and [to] … well and faithfully discharge the duties of the office….”  We take that oath seriously, whereas private contractors have no such allegiance. 
I note that the top federal contractors paid over $4.7 billion fines and penalties for instances of misconduct in the fiscal year ending September 30, 2009.  Since 1995, those same large contractors accumulated 737 instances of misconduct totaling over $20.6 billion in fines and penalties.  Misconduct by these huge corporations included such practices as price-fixing and bid-rigging, cost/labor mischarges, environmental violations, government contract and grant fraud, denial of basic humanfreedoms, violations involving employees' safety, health, and personal rights (i.e., discrimination, etc.) and tax violations.
Cutting the size of the federal civilian workforce does not make sense.  We have already been doing “more with less” for over 50 years.  Unfortunately, all of this rhetoric by the anti-government politicians ignores the size of the shadow government (could it be PAC donations?), and focuses on the cost of of all discretionary programs, which in 2009 amounted to just 12% of the budget.  How does that make sense?
Stanley Kopacz
7 years ago
THe big companies and business leaders sold us out to the Chinese.  I have seen it up close.  They have been and will be of no use to this country and they really don't care about this country.  If possible, alternate systems and institutions have to be grown within the US.  THe major parties are now almost wholly owned by the moneyed interests.  I'm surprised the Democrats still exist as a party but I guess they are needed as part of the facade of democracy we presently have.  They are to the left of Attila the Hun and the Republicans are to the right.  When they compromise, we get Attila the Hun.
Tom Maher
7 years ago
One of the most serious unresolved economic conditions facing this country is the imminent bankruptcies of several states that  will have very serious impact on their  public employees.  California, New Jersey, Illinois and other states have enormously public debt and have no means of paying off their accumulated unfunded pension obligations.  The unfunded pension obligations of states, cities and towns are measured nationally in trillions of dollars and are a large percentage of the total annual Gross Domestic Product of the United States.  This level of unfunded pensions indebtedness  and other state indebtedness is unsustainable.
 Some people are calling for bailouts for these states to prevent them from going bankrupt.  The problem is no credit source could  even partially bailout all that is owed by these states.  The federal government is itself in a crisis of being barely able to finance its own 14 trillion dollar indebtedness.  Private banks and investors do not have any desire to buy the risky debt of states on the verge of bankruptcy.   Today the federal reserve announced it will not bailout states and municipalities.
 The call for "sharing" the debt incurred by rich states like California by less-wealthy states that have balanced their budgets and have managed their debt is politically non-viable. No one realistically expects the taxpayers of less wealth but better managed states to bailout wealthy but chronically poorly managed states such as California.
 So accordingly union activist like the author,  Clayton Sinyai, correctly see what states like California are de facto bankrupt.  Since one of the main expenses of state government is the salaries of public employees and the funding of the  pension obligations of these employees, all public employees of such states will be impacted.
 One viable solution that may be open to states is to change federal law to allow states to go into bankruptcy, like cities or private businesses do when they can no longer pay for all their expenses..  Currently states have no  legal ability under federal law to legally go into bankruptcy.  The state therefore do not have any legal means to halt payments and  re-organize its finances under court supervision. States have no way of  getting out from under union contracts and pension obligations that it can no longer hope to pay for.
 Limiting spending on wages and pension benefits to levels that are realistically sustainable is the essential ethical and practical problem being faced by society and public employees today.
7 years ago
"Hopefully, people will figure out what our ancestors did about their behemoths.  Band together (this was natural and preexisting and not the theoretical collaboration of rugged individualists), kill the mammoths (economically and socially in our case), cook their flesh, use their bones to make shelter, their ligaments to bind arrowheads to shafts so they could kill more."

Would you please provide a source in Catholic Social Teaching for this particular gem?  What world do some of you live in?  The President of the US held an economic summit with the leader of China & announced a major trade deal; no labor union representation was in the room.  That President is a Democrat.  When did he last appoint a union leader to a meaningful post?  I raise these facts to show how the labor market has changed, yet some of you talk as if John Rockefeller were still walking the earth. 

Fortunately there are saner analyses on this problem.

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