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?
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.