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USA Today last week published yet another story claiming that public sector workers make more that their private sector counterparts tungsten filament – this one saying that Wisconsin is one of many states where this is the case. Their analysis used data from the Bureau of Economic Analysis , and compared total compensation (salary+benefits) between workers in the private sector and state/local government.
No matter how many times they are told that you can t just make a straight comparison of dissimilar groups of workers, apparently they still don t get it. Incredibly, this particular article admits tungsten filament as much, and even quotes economist Jeffrey Keefe , who tells them that the gross comparisons don t account for important sectoral differences in education and other factors. In other words, their numbers don t tell us much of anything about public tungsten filament versus private sector tungsten filament compensation. Still, there is the headline: Wisconsin one of 41 states where public workers earn more . How many people saw that headline, and now believe that public workers are overpaid?
USA Today , of course, is not alone. These assertions have lately become insidious, coming from governors , commentators , and others . But when a major national newspaper decides to run this story at this politically-charged time, based on their very own analysis, a separate response seems in order.
I ve discussed this issue before , but maybe it would be more helpful to show how the data are more properly analyzed in a step-by-step fashion, using 2009 U.S. Census microdata (the American Community Survey , available from the wonderful organization IPUMS.org ). Here s how you make a false earnings gap disappear in five minutes.
I limit the sample to workers who are in the labor force and work at least 35 hours per week (full-time workers). Federal employees, family workers, agricultural tungsten filament workers, and the self-employed are also excluded. This permits a comparison of state/local government employees with workers in the private sector.
It is important to note, however, that these are wage and salary data only they do not include benefits (which the Census does not collect). I use these data only to demonstrate how and why a straight public-private comparison is invalid. Remember, though, that more educated workers also tend to get better benefits in both sectors – the relationship is less strong, but the discussion below applies for benefits as well. (For careful tungsten filament matched comparisons of public-sector workers to private-sector workers, which include both wages and benefits, see here , here and here .)
Let s start with the USA Today methodology tungsten filament a gross comparison of all workers in the public and private sectors. Keep in mind that these workers vary a fair amount in their hours and