Quote Of The Day

“The question for states and cities is not whether “collective bargaining” is a basic undeniable right, but how much union power in the public sector is too much. Progressives talk as though it can never be enough–or, at any rate, that no union privilege, once extended, should ever be withdrawn. Conservative supporters of Walker talk as though public-sector unions have no legitimate role at all. To me, the evidence says that the balance needs redressing. Public-sector workers in the US are better paid (if you take benefits into account) and enjoy greater security of employment than their private-sector counterparts. Quit rates from public-sector jobs are about one-third of quit rates in the private sector. Equally important, to my mind at least, is that the unions’ quasi-management role in education (especially) has expanded to the point where it is difficult to run schools well, and practically impossible to pursue systemic school reform. So I think the power of public-sector unions needs trimming in states like Wisconsin.” — Clive Crook, blogging at the Financial Times blog

51 Responses to “Quote Of The Day”

  • He’s wrong to say public sector employees are better paid. The truth is that public employees that generally make less money make more than private sector counterparts, but public employees that generally make more money make less than their private sector counterparts. The net effect is that public employees are under compensated, but there is more equality. The floor is higher, but at the same time the highest paid are not paid through the stratosphere.


    This is about targeting people that generally have lower compensation. Got a deficit problem? Go after the poor. Meanwhile Obama cuts the estate tax and extends the Bush tax cuts. And the trick with the Bush tax cuts is to initially help everyone, like sending people a couple hundred bucks immediately, then over the next few years phase in benefits skewed towards the wealthy. Then have Obama make them permanent. You may think it’s really immigration, but I think the policies show a consistent trend towards exacerbating the inequality gap.

  • The EPI study (again – EPI is an arm of unions, union funded, union board members, basically a union think tank, so take what they say with that in mind), has been discussed widely on the blogosphere. I am curious Jon: have you even seen counter arguments? Probably not. I doubt you have any conservative/rightwing blog sources. So let me point you to one: See here. It starts to get good towards the middle.

    Here my preferred test to see if they are over paid: turn over rates. Think about it, from a market standpoint, the “right” pay is the minimum pay, call it X, required to get someone who produces X amount of productivity. If you pay too much relatively to productivity, you get a flood of applicants. If you pay too little, you get a shortage of applicants (try paying someone $1/hour to work as a construction worker – probably wouldnt get ANY applicants. Try paying someone $100/hour to work as a construction worker – probably would get an OVER abundance of applicants, including an application from ME).

    And what does the data show? There are more people wanting to be teachers than teacher positions available. Hence overpaid. But do read my first link.

    Onto your second point: your rich vs poor paradigm. It is simply not true. There are two points to remember about state taxes. First, state taxes tend to be regressive, not progressive. This makes sense. Its alot easier for Warren Buffet to choose to live in Oklahoma than San Francisco – and not be adversely affected. Second, states get most of their income from sales tax and other regressive tax systems. So a higher than needed pay will come directly from probably a much poorer tax base. Second, the real thing that busting the budget in Wisconsin is Medicaid – a state program for the poor that Wisconsin public school teachers are too rich to be on. So if Wisconsin is not able to keep union wages under control, now and into the future, its likely to come at the expense of much poorer citizens – the medicaid program. See here for a better explanation of this point.

  • Are you reading the right wing blogs? Because according to the source you just cited your quote of the day is wrong. Her claim is not that the EPI is wrong. It’s that it’s inconclusive. But your quotation says the public sector is overpaid. You should read Megan before approvingly citing incorrect things.

    The best you can do is correct for every mitigating factor you can imagine. That’s what EPI did. Some things can never be known with absolute certainty. But that’s the best you can do. And it points in the direction I state.

    There are more people wanting to do everything than there are positions available. We have 20% underemployment in the country. More people wanting to be engineers than engineering jobs, more people wanting to do construction than there are construction jobs, more people wanting to work at the auto plant than there are plant jobs. Everyone is overpaid.

    I don’t think your point about state taxes changes what I said. You’re right about Medicaid, but that’s part of our overall health care problem with through the roof costs, triple that of Spain with crappier outcomes. Twice the rest of the industrialized world with worse outcomes. So yeah, health care is a huge problem. Not social security though, right?

  • No, EPI did not “correct for every mitigating factor you can imagine”. Did you even read the response by McArdle? It specifically said it didn’t control for everything worth correcting for.

    Here is what McArdle wrote in the response I linked to:

    It’s obvious that this study doesn’t control for everything we can imagine, because it doesn’t even control for the matters that are of central dispute in Wisconsin: protection from being fired. This is, as people on both sides keep noting, so extraordinarily valuable that workers are willing to give up quite a lot to get it. And of course, a job that offers this sort of protection is likely to attract workers who especially value it. All government jobs offer this perk, which is valuable to the workers and costly to the employers; ceteris paribus, I’d expect that other compensation would be lower to compensate.

    Obviously, it also doesn’t control in any way for other job or worker characteristics that effect compensation; jobs working for state and local government are systematically different from other sorts of jobs, because so much of what the government does isn’t done by anyone else. Though, oddly, for the teachers at the heart of this dispute, we do have a good comparison: private school teachers. And as I understand it, public school teachers have higher wages, and much better benefits, than private school teachers.

    Much more criticism at the link. But after you supposedly read the link, your response is: “The best you can do is correct for every mitigating factor you can imagine. That’s what EPI did.”

    Come on Jon. Atleast read the links I link you to. I read the ones you recommend. Have an honest open view about stuff like this. You may be wrong. Honestly – what right wing blogs do you read? What blogs on the right can I assume that you have read their content? I could give you a long list on my side. In fact, I read more left-wing blogs than right-wing blogs. Honestly.

    Regarding current wages: I agree. In a deflationary and high unemployment market, everybody is overpaid. But even in a normal market, teaching positions are in high demand. Especially by those with degrees in fields that dont have much private sector pay. English. Sociology. Anthropology. Chicano Studies. etc.

  • Regarding social-security, as I have said before: I am okay with the government paying for vital necessities for the poor. Things like medicare. Education. Even a very minimum standard of living. My problem isn’t when this is done for the poor, my problem is when this is done for the rich. Fundamental difference between us.

    If it was up to me, we wouldnt necessarily get rid of social-security and medicaid, and even some of medicare: I would just means test the hell out of it.

  • What I’m saying, which was reflected at your link, was EPI tried to think of everything they thought mattered. You can always come along after the study is done and imagine one or two other items. That’s never ending. Protection for being fired seems minimal to me. I mean, are you afraid of being fired? How often are people fired in the private sector? That’s really rare if you are just normal and don’t try and cause problems. On the other hand maybe people do care enough about that to take reduced wages. I wouldn’t, but maybe I’m different. The solution is not to just dismiss the report but correct for that factor and see what it tells you.

    The evidence, such as we have it and of course not corrected for EVERY SINGLE factor because that’s impossible, says that public sector employees are paid less. That’s kind of like when you explain inequality by just offering what to you sounds like a plausible explanation (immigration) but not bothering to do any work to quantify it and pretending that explains everything because there is some symmetry in the timeline. You haven’t done any work to show it. To me it’s kind of like saying that the cause is some obscure invention that happened to occur in 1975 since it fits the timeline. I was kind of hoping you’d try and quantify it. Since you won’t maybe I will. Another little project for myself.

    You’re pretty critical of me for not reading the right wing blogs in response to EPI and yet as we read your source we find it disconfirms the claim you quoted here. You’re just as delinquent as I am apparently.

  • My social security comment was just an illusion to the discussion we had earlier at my blog. Not really trying to make a serious point.

  • I wrote “illusion” and meant “allusion”.

  • I dont think they tried Jon. I think they fudged the numbers just enough to get what they want and avoided that which would point in the opposite direction. I think job security is a HUGE thing and it’s especially associated with government jobs. Yet they completely ignored it. That has been the traditional trade-off in taking a government job: lower pay, for more job security. How convenient that they just skipped over that, don’t you think?

    And job security is MORE than merely the fear of being fired. It’s that your particular occupation wont be outsourced. It’s that your particular occupation faces little to no competition. It’s that you work for the only “company” (the government) that can perform that task. In fact, I would argue that one of the reasons why those of us in the tech industry get paid a premium over others is precisely because we come into the profession knowing it’s a dynamic environment – the company can close due to a myriad of reasons that a government worker wouldn’t have to worry about.

    And it makes sense you wouldn’t take the price difference: you work in the private sector. That’s the point of McArdle’s article (again, did you actually try and understand the article?): that union and government jobs self select for precisely those type of people – people who would take a pay-cut for more job security. The private sector tends to attract the more risky, ambitious type, while the public sector tends to attract the more risk averse type.

    Regarding studies, here are others that come to a different conclusion: CATO comes to the opposite conclusion, Citizens Budget Committee does as well (unless you are management), Heritage also finds a public sector premium.

    So yes, we can throw think tanks around all day. But what about actually peer reviewed published papers? Here is one that agrees with my side.

    With that said, I still think all of these studies underestimate the pay advantage of these union public sector workers – especially teachers. What they almost all fail to take into account is the garbage degrees that teachers are forced to pursue. These studies treat all bachelors and graduate degrees equally, but anybody familiar with college life will know that some are alot easier than others. And teachers tend to be concentrated in the especially easy majors: ethnic studies, english, and especially ‘education’.

    Study after study (see here, here and here) has shown that ‘education’ is the least challenging major and the one that transfers the least amount of knowledge to its graduates. The reason so many teachers pursue this degree is because of union pressure: pay premiums for teachers are based on only two things, seniority and credentialism. So teachers who want stronger raises are pushed to get higher degrees – but these degrees confer little if anything to their teaching abilities.

    But this is hard to control for, so its often left out – but that doesn’t mean we shouldn’t take it into account.

    Jon – now you are doing what you chastise me for doing, not answering my questions: again, how many rightwing blogs do you read? How many can I count you as having read? My guess: none.

  • I read a lot from right wing blogs, but it’s mostly religious or Muslim bashing. So I read lots of apologetics blogs. Jihad Watch, Answering Muslims, Uncommon Descent. But of course I also read the atheist blogs. Debunking Christianity, Pharyngula, Richard Carrier, AIG Busted, whyevolutionistrue.

    Economics wise I get a lot of info from reddit, which is an aggregator. They have stories from both sides which are up and down voted based on preferences of viewers. Lots of Ron Paul love, but also for Greenwald. So you get both sides there, though it tends to lean left (since it’s more democratic). Yours is the only economic blog I read regularly. I subscribe to the following political/economic blogs: Angry Bear (which is my most recent addition), David Friedman, Megan, Greenwald, Andrew Sullivan, Chomsky Watch, and the ever important “This Blog Has No Theme.” Yours and Darfs are the only ones where I pretty much read everything. So my main sources are right wingers actually.

    It happens that I hadn’t heard the right wing Koch brothers backed response to EPI. But that’s why I’m here. Now I have sources to look through if I want to understand the corporate profit seeking arguments.

    There’s your answer. Sometimes I don’t answer because I regard a question as irrelevant. Kind of a genetic fallacy. I don’t deny that I don’t read a lot of right wing economics blogs. Everybody has limitations. These will create blind spots for me. I think most people that work full time and have a family have limitations, as you do. You’re very blind to a lot as well. You could stand to read a lot more leftist blogs. On the other hand I suppose you are busy, so if I want to correct your shortcomings that’s up to me. Complaining about the fact that you don’t read more blogs or books of my choosing isn’t going to help.

    So let’s talk about this Citizens Budget Commission report which you say contradicts EPI. I read your link. Like EPI it says that higher wage publicly compensated employees make less than their private sector counterparts and lower wage make more. EPI says that among those lower compensated employees when you correct for inflation the disparity reduces. So for instance if public school teachers are better educated that means they are more qualified and would be expected to make more. Help me understand how this is different from what EPI is saying. EPI is not denying that teachers in the public sector make more or people in food service working for the public make more.

  • Sorry, I said “correct for inflation” and meant correct for factors like education.

  • Thats not one of my favorites – read the CATO one instead. Thats about as unbiased and fair as EPI is. 🙂

  • This is why I don’t always read your links. You say it contradicts EPI. I read it. It doesn’t. Your links just don’t support your thesis in many cases and I find that I’ve wasted my time.

    CATO is a Koch brothers creation. They seek to enhance their corporate interests, which means the interests of their tyrannical institution. EPI you say is union backed. Unions are democratic institutions. I’ll take an institution serving people over an institution serving a tiny handful of oligarchs. One biased in favor of working people. That’s a lot of people. The other biased towards the Forbes 400.

  • Fine, I’ll digest the Citizens Budget Committee link. Here is the pertinent part:

    “While for some managerial and technical occupations wages were higher in the private sector, a large number of service and blue collar occupations had wages that were higher in the public sector.”

    This is why I put in my link “unless you are management” in parenthesis. The key point that escapes the inflation argument from EPI is this: “We have now updated our analysis with BLS data from 2007-2009 and the same pattern continues. “ No need to factor in inflation – its already included and it finds the opposite of what EPI found.

    So this is a direct contradiction of the EPI study.

    With that said, why do you (conveniently) ignore my strongest argument: The only peer reviewed study I have found actually agrees with me, see here.

    Think Tanks, whether those that agree with you, or those that agree with me, should be seen with suspicion. The studies that should be relied on most, are those that are peer reviewed by peers and published in professional economic journals. And on that point, it looks like my side has the stronger argument.

  • Before I respond help me understand what you mean when you talk about inflation. I don’t see that inflation is a factor. Remember that I used the word “inflation” in a response, but I then corrected that and said I misspoke. I’m not sure what you are saying. Remember, EPI also says that wages are higher in the public sector for some occupations, particularly the lower paid. So it sets a floor and keeps the higher paid out of the stratosphere.

  • Forget inflation then. I only brought it up because you did.

  • The Citizens Budget Committee report doesn’t contradict EPI as far as I can see. I thought maybe my misunderstanding of the role of inflation was the reason, but if inflation is irrelevant then I don’t see a contradiction.

    So you think I should look to CATO then?

  • No, then fundamentally we agree: Lower level government workers are overpaid, higher level government workers are probably underpaid.

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