In August, the New Republic, the New York Times and others warned that the 2010 campaign would feature a new Republican bogeyman. The Times announced, "There's a class war coming to the world of government pensions," while TNR's Jonathan Cohn
September 17, 2010


In August, the New Republic, the New York Times and others warned that the 2010 campaign would feature a new Republican bogeyman. The Times announced, "There's a class war coming to the world of government pensions," while TNR's Jonathan Cohn explained the latest GOP hatefest in "Why Public Employees are the New Welfare Queens." Of course, there's only one problem with Rush Limbaugh's claim that public sector employees are "freeloaders" and the charge from Indiana Governor and GOP White House hopeful Mitch Daniels that they are a "new privileged class in America."

Like so much else conservative mythmaking, it's simply not true.

That's the conclusion of a new study by the Economic Policy Institute. Just one of many recent analyses debunking Republican charges about government workers and their unions, EPI found that "on average, state and local government workers are compensated 3.75% less than workers in the private sector." The report by Labor and Employment Relations Professor Jeffrey Keefe of Rutgers University revealed that public employees are undercompensated compared to similarly skilled private sector counterparts:

The study analyzes workers with similar human capital. It controls for education, experience, hours of work, organizational size, gender, race, ethnicity and disability and finds that, compared to workers in the private sector, state government employees are undercompensated by 7.55% and local government employees are undercompensated by 1.84%. The study also finds that the benefits that state and local government workers receive do not offset the lower wages they are paid.

The public/private earnings differential is greatest for doctors, lawyers and professional employees, the study finds. High school-educated public workers, on the other hand, are more highly compensated than private sector employees, because the public sector sets a floor on compensation. The earnings floor has collapsed in the private sector.

Those findings echoed the results of another new study of the public worker wage penalty in New England. That joint research by the Center for Economic and Policy Research (CEPR) and the Political Economy Research Institute of the University of Massachusetts upended tired union bashing claims from the likes of Tim Pawlenty ("they are over-benefited and overpaid compared to their private-sector counterparts"), Chris Christie ("There are two classes of people in New Jersey: public employees who receive rich benefits, and those who pay for them") and Mitt Romney ("Average government workers are now making $30,000 a year more than the average private-sector worker"):

In this study, "The Wage Penalty for State and Local Government Employees in New England," PERI's Jeffrey Thompson and John Schmitt of the Center for Economic Policy Research demonstrate that in New England the reality is the opposite. While the average state or local government worker does earn higher wages than in the private sector, this is because they are, on average, older and substantially better educated. In reality, there is a wage penalty for public workers in New England of close to 3%.

To be sure, the attack on public employees heated up this summer, when Republicans in Congress pulled out all the stops to block a new federal aid package to state and local governments. Despite studies showing that cash-strapped states could shed as many as 900,000 teachers, policemen, firefighters and other workers, the Senate Republican Policy Committee insisted: "No state bailouts should be contemplated until the wages and pensions of public sector employees are brought into line." As the United Steelworkers' Fred Redmond wrote in The Hill last month:

The National Institute for Retirement Security (NIRS) and the Council on State and Local Government Excellence (COS & LGE) released a jointly-funded study on this topic just as the Republican sound machine revved up this spring. On the facts, they found that every one of the Republican assertions is false.

Analyzing data from the U.S. Government's National Compensation Survey, their economists found that when factors such as education and work experience are taken into account, state and local employees earn less than their counterparts in the private sector. To be exact, state employees earn 11 percent less than comparable private sector workers. Employees of city and county governments earn 12 percent less than their private sector counterparts.

Pensions and health insurance coverage make up a slightly greater share of public employees' overall compensation than those benefits do for private sector employees, but when those costs are included, state and local employees still wind up with less total compensation - 6.8 and 7.4 per cent less, respectively.

There is no question that states and localities face a crisis in meeting their future pension benefit obligations. But as Dean Baker of CEPR noted, many public employees don't get Social Security, adding "most public sector pensions do not provide retirees with an especially high standard of living." That public employees find themselves in the GOP's crosshairs has less to do with their compensation than being what Sarah Palin decried as "union thugs." As TNR's Cohn pointed out, "Unions represent around 37 percent of public sector workers, compared to 7 percent of private sector workers." He then got to the heart of the matter:

"But ask yourself the same question you should have been asking then: To what extent is the problem that the retirement benefits for unionized public sector workers have become too generous? And to what extent is the problem that retirement benefits for everybody else have become too stingy?

I would suggest it's more the latter than the former."

Right now, Republicans have bigger fish to fry. At a time of record income inequality, rising poverty and massive budget deficits, the GOP is focused on its $700 billion, 10-year tax cut windfall for the wealthy. As for public servants around the nation, they are, in the words of Rush Limbaugh, "a bunch of leftist, socialists, neo-communist union people asking their brothers in government to raise taxes."

No, they're just the Republicans' latest scapegoats. Scapegoats, it turns out, whose compensation is less, not more, than their private sector colleagues.

(This piece also appears at Perrspectives.)

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