Public vs. private sector, and the cost

There are many things you can say about people in government giving one another more generous pay than those in private life. But not that it isn’t happening. Or that it’s surprising.

A new Fraser Institute study confirms, again, that public-sector wages and salaries are over 10 per cent higher than for comparable private-sector positions, adjusted for age, gender, experience and so forth. And that’s just the tip of the iceberg.

Public-sector workers also enjoy the overly generous pensions that have largely vanished in the private sector due to their tendency to bankrupt firms. Nearly 90 per cent of government workers get a registered pension plan as against under a quarter in the private sector. And over 90 per cent of government plans are the lavish defined-benefit sort, against less than half of private plans. One proof of pension generosity: public-sector workers retire more than two years earlier on average.

As far as the researchers could measure, the differences just keep piling up. Government workers take 60 per cent more “personal leave” time a year and, or because, they are seven times less likely to lose their jobs. Defend it if you will. But don’t say it’s not going on or that it doesn’t matter.

There is room to quibble at the margins. It could be argued, not entirely snidely, that many public-sector jobs lack precise private-sector equivalents. Police officers are not just security guards with better pensions, and there’s no such thing as a private soldier in Canada … mercifully. Both these noble professions underline the differences that arise because there is no private-sector equivalent to the state’s monopoly on legitimate force.

I’m all for proper compensation for those who put their lives on the line for us. And I do not wish to see teachers subsist primarily on rice and beans. Even governmental positions like associate assistant deputy minister (yes really, EX-04 classification federally), which do not exist in the private sector for the same reason people salt leeches that attach themselves to their legs, should be reasonably paid.

Government cannot be “run like a business” given the necessary lack of “consumer choice” about, say, which police force to be arrested by or which tax collector to patronize. “Red tape” is the alternative to total lack of oversight, and bureaucrats need to feed their families, too. But not at the expense of sucking the private sector dry with an air of sanctimony. And this Fraser study even understates the differences by leaving out the self-employed. (So don’t forget to visit www. johnrobson.ca and make a monthly pledge.)

There are limits to statistical analysis here as elsewhere. Appropriate data may not be available, which the Fraser study addresses. And some things simply resist quantification.

For instance, you might think government work would be less stressful on average, given the tension that arises from not knowing where your next paycheque but one might be coming from. Instead it seems to be exceptionally demoralizing, given its “Yes, Minister” atmosphere of procedures that convert hard work into comic futility. But the problem of excessive public-sector compensation remains real. And like much in the modern state, it is unsustainable over time, but can do much harm before it collapses.

So what is to be done? First, many jobs now exclusively or primarily public could be contracted out. Indeed, the ferocity with which public-sector unions fight such proposals, from school vouchers to private garbage collection, shows how well they understand what a ridiculously good deal they get from the state. Other government jobs, for instance in big bureaucracies devoted to business subsidies, should not exist at all.

Second, we need to understand why governments consistently cut themselves such a big slice of the pie. Consider politicians’ obnoxious habit of “buying labour peace” on extravagant terms from public-sector