How Relevant is the Crescendo Study on State Pay?
Douglas Rooks in the Sun Journal recently did a story about a study commissioned by Maine State Government to look into pay disparities between state workers and private sector workers. The study concluded that state worker compensation (wages and salaries plus benefits) are lower than their private sector counterparts. However, there are severe limitations in the scope of this study that cast doubt on its purported conclusions.
- Proponents of the Crescendo study lead you to believe it covers everyone in the private sector. Yet, that is not the case. First, the survey focused only on companies with more than 100 employees. According to data from the Maine Department of Labor, companies with more than 100 employees only constitute 34 percent of all employment in the state. Second, for jobs that had no private sector counterpart, they were compared to jobs in the government sector in New Hampshire and Vermont. Third, there were approximately 100 municipalities in the survey.
- Proponents of the Crescendo study lead you to believe the results are iron-clad. Yet, keep in mind that this was a voluntary survey with all the reporting inaccuracies that go along with such methodology. For instance, the national Consumer Expenditure Survey has been plagued for years with folks reporting higher expenditures than income. Surveys are imprecise. Also, the response rate per position examined was very low–half had 10 or fewer. This means a few companies may have had too much influence on the comparisons.
- Proponents state that the Crescendo study is a new and better way to make private/public compensation comparisons. In fact, studies like this are appearing all over the country and their flaws are being duly noted. In particular, Andrew Biggs at the American Enterprise Institute has challenged these studies on a number of grounds. In a study looking at California, he found:
Whether public-sector employees receive above-market compensation is an empirical question that demands a thorough accounting of wages, benefits, and job security. In the case of California public employees, wages are slightly lower in the public sector. Initially, benefits appear only slightly higher, implying rough parity in compensation between the public and private sectors. However, properly accounting for retiree health benefits and defined-benefit pension plans generates a public compensation premium of around 15 percent. The additional job security granted to public-sector employees is equivalent to an approximately 15 percent increase in public compensation, meaning that the total public-sector pay premium in California may be as high as 30 percent.
- To put a finer point on the job security issue, as I blogged previously, if it were so bad being a state worker then the turnover rate would be very high . . . but the evidence suggests that’s not the case with private sector workers three times more likely to leave their job.
- Finally, the Crescendo study is all about differences in compensation. However, it says nothing about employment levels. My research shows that over-employment in the state government workforce is just as big of a problem as over-compensation.
These are some of the technical issues with the study, but there is a bigger picture problem yet to be discussed and that is the fact that Maine’s private sector has been continuously shrinking as a percent of personal income and now ranks as one of the smallest in the country. Additionally, over the last decade the private sector has lost 15,400 jobs while state and local governments have added 400 jobs. In the face of these devastating losses, the claim that state government workers are making less than the private sector just doesn’t pass the smell test–especially when it’s private sector workers that disproportionately represent those in the unemployment line.
Amy
Posted on Apr 26, 2011
Once again we see the canard that, "if it were so bad being a state worker then the turnover rate would be very high" yet private sector workers are more likely to leave their jobs. This once again commits the apples and oranges problem. State workers are quite different from private sector workers. They are older on average, include far fewer non-citizens, and have higher levels of education. Workers who change jobs frequently are young and less educated and have a higher percentage of non-citizens. You simply cannot credibly compare the two groups on any metric unless you control for education, profession, age, and citizenship status. Bivariate comparisons are the wrong method to use; multivariate methodologies are necessary.
Gerald Weinand
Posted on Apr 26, 2011
Of course, what Moody fails to mention is that while Maine State employees receive a pension, they are NOT eligible for Social Security benefits. And since Maine State employees currently contribute a higher percentage of their wages to ME-PERS than private sector employees do in FICA taxes, his omission is even more glaring. And I haven't mentioned the 2% FICA holiday for 2011, which - 2012 being an election year - will likely be extended next year. So while Maine State Employees contribute 7.65% (with the Governor proposing a 2% increase on top of that), private sector employees will only contribute 4.2% of their wages to SSI this year.
narsbars
Posted on Apr 29, 2011
The 2% increase does not fund pensions for State Employees. It funds tax cuts for the richest 10% of Mainers and corporations. The pension system is purposely being made less generous to State Employees, less generous than the Social Security they will not be eligible to collect. Many State Employees are willing to FULLY FUND the pension costs for the next two years in return for a status quo contract and leaving the pension and benefit alone. 100% with no contribution from the State, (over 12 % of their pay) yet the state still refuses to do anything that will not punish Mainers that have given a life time of service to their fellow citizens. The compromise on the table as of last night is "punish the retireees" and leave the current state employees alone except for freezes in pay, cuts in pay, cuts in benefits, and just let the attack on the rights of workers slide by. Bruce Poloquin lied, the gov. tells people to kiss his ass, calls his constituents dingbats, and ran on the record of forcing Mardens employees on to the State welfare system Anyone need a commissioner's job? Simply agree to take money from those you regulate, buy lawyers, signs, and anything else from out of state.
Kathleen Caso
Posted on Jun 29, 2011
Narsbars, You are a very angry person with a serious axe to grind. Maybe you need a union brake! Bruce Poloqun lied, really! How about making clear honest statements with facts. It appears you should have chosen a different career path.