Monday, February 28, 2011

Think Tank says Gov't Salaries Too High

Insight into Government is a weekly newsletter following provincial politics. In its February 25th edition, Insight examined a recent report released by a think tank regarding public sector salaries. With kind permission of Insight, that analysis is reprinted below.

Editorial writers and columnists had fun spewing easily worked up wrath this week over a “background paper” showing that public-sector salaries have increased faster than salaries in any other job sector since 1998. The paper came from a think tank (the Frontier Centre for Public Policy). So it had to be well considered, right?

Maybe. Various organizations churn out stuff like this. Their output often raises more questions than it answers. This paper did not track salaries in specific government jobs. It tracked overall changes in several job categories. Thus, if lower-paid jobs were being trimmed or privatized, the remainder would have shown up as earning higher average salaries, even if salaries for specific jobs were not moving much.

Nor was there any attempt to look into the relative ages of different workforce sectors; all things being equal, a more experienced employee force would earn more. Nor was there a discussion of the start date — because 1998 was about the end of major government cutbacks in Canada, it’s possible that public administration salaries were beginning a major rebound then. Selection of starting points is one of the biggest traps in this kind of study.

The author covers these and other possibilities by saying that “benign explanations” may exist but “are not evident” — meaning they didn’t look for any. Nor did the media who seized on the paper without asking questions.

But the main problem is that the conclusions are not fully supported by Statistics Canada numbers. Insight checked Statscan’s average weekly earnings reports. We found that the current series shows monthly numbers from January 2006 through November 2010. For Canada, public administration earnings grew by 18.1% in that period — compared with increases like 17.6% for professional, scientifi c and technical services, 34.8% for mining, quarrying and oil and gas extraction, and 43.3% for accommodation and food services.

For Alberta, increases in some of the more noteworthy categories were: public administration, 30.7%; accommodation and food services, 38.1%; health and social assistance, 27.9%; educational services, 23%; management of companies and enterprises, 33.6%; mining, quarrying and oil and gas extraction, 33.1%. Finally, comparing increases is not the same as comparing earnings. Food and hotel workers earn on average about half what people in public administration earn. Oil and gas workers earn about 50% more.

The closest match to weekly earnings in public administration in Alberta is in areas like wholesale trade and manufacturing. Much more analysis is possible. But the point was to create impressions of government spending and public sector workers. This paper, like many others on other subjects, went some distance to achieving its purpose.

Insight's critique provides a useful caution about the validity of think-tank studies. For practitioners, it is often useful to consider the conclusions reached by examining the think tank's goals, its funders and its general policy orientation. The Frontier Centre is, to my eye, fairly conservative in orientation. That it would produce a study suggesting public sector wages are high is hardly surprising.

-- Bob Barnetson

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