Are Wisconsin’s state and local workers overpaid?

19 Feb

"Republicans say that public-sector employees have become a privileged class that overburdened taxpayers," write Karen Tumulty and Brady Dennis. The question, of course, is whether it's true. Consider this analysis the Economic Policy Institute conducted comparing total compensation -- that is to say, wages and health-care benefits and pensions -- among public and private workers in Wisconsin. To get an apples-to-apples comparison, the study's author controlled for experience, organizational size, gender, race, ethnicity, citizenship and disability, and then sorted the results by education. Here's what he got:


If you prefer it in non-graph form: "Wisconsin public-sector workers face an annual compensation penalty of 11%. Adjusting for the slightly fewer hours worked per week on average, these public workers still face a compensation penalty of 5% for choosing to work in the public sector."

The deal that unions, state government and -- by extension -- state residents have made to defer the compensation of public employees was a bad deal -- but it was a bad deal for the public employees, not for the state government. State and local governments were able to hire better workers now by promising higher pay later. They essentially hired on an installment plan. And now they might not follow through on it. The ones who got played here are the public employees, not the residents of the various states. The residents of the various states, when all is said and done, will probably have gotten the work at a steep discount. They'll force a renegotiation of the contracts and blame overprivileged public employees for resisting shared sacrifice.

Which gets to the heart of what this is: A form of default. There's been a lot of concern lately that states or municipalities will default on their debt. This is considered the height of fiscal irresponsibility -- an outcome so dire that some are considering various forms of federal support. But the talk that states or cities will default on their obligations to teachers or DMV employees? That's considered evidence of fiscal responsibility. And perhaps it's a better outcome, as defaulting to the banks makes future borrowing costs higher, and can hurt the state economy in the long-run. But it's not a more just outcome.

That, however, is how it's been presented. State and local budgets are in bad shape. They'll need deep reforms across a variety of categories, from tax increases to service cuts to changes to employee compensation. But the focus on public employees -- and the accompanying narrative that they're greedy and overcompensated -- obscures a lot of that: It makes it seem as if the decisions that have to be made are easy and costless and can be shunted onto an interest group that some of us, at least, don't like. It's the Republican version of when liberals suggest we can balance the budget simply by increasing taxes on the rich. But it's not true.