Public-Private Pay

From time to time, news sources such as the Sacramento Bee and the San Francisco Chronicle update their databases of pay of state employees including UC. Yours truly from time to time has posted objections on privacy and ID theft grounds to such posting and has challenged the news sources to post their own payroll data.  Not surprisingly, they have yet to agree – and for good reason.

It’s not that there cannot be salary abuses – either in the public or the private sector.  But there are ways to deal with that problem, mainly by posting pay by occupation without individual names, using distributions and charts, etc., or confining the by-name disclosures to top officials.

In any event, such postings bring about the expected angry comments by folks who are annoyed that anyone in the public sector gets paid more than they do, or for the wealthier critics, more than their cleaning help.

Along with this debate comes the general issue of whether public employees are paid more than private.  As economists routinely point out, such comparisons of simple averages mean little unless there are adjustments for occupational composition and other factors relevant to pay.  But such pointing out of the need for adjustment has never hindered popular comparison of the simple averages.

A variation of this practice occurred a couple of days ago in the Sacramento Bee when a report appeared noting that a Census Bureau comparison found that simple average public pay in California (all levels of government) was about a fourth higher than simple average U.S. pay for all states combined.  See http://blogs.sacbee.com/capitolalertlatest/2013/08/californias-public-workers-among-nations-best-paid.html. The underlying Census report can be found at http://blogs.sacbee.com/the_state_worker/2013/08/california-high-on-list-of-highest-paid-government-employees.html

But as in other comparisons, you want to make adjustments. One is for the local labor market; what is the general level of pay in the private sector in a particular state?  Last week, a database came online provided by the California Business Roundtable – a business/employers group – which takes available labor market and other data and provides convenient access.  According to that source, annual public sector pay in California is about 5% below the private annual wage.  Go to http://www.centerforjobs.org/profiles/california/ and scroll down towards the bottom.  This finding is actually rather surprising result because public workers tilt toward white collar more than private and because of the quite large higher ed component of the public sector in California (including UC).  But, again, it all goes to show that without adjustment for more detailed components of pay, comparisons of simple averages don’t tell you much.

It’s tough when you don’t know what the meaning is: