Charles Lane: On Wisconsin, again

By Charles Lane
Tuesday, February 22, 2011; 7:07 PM

There's a lull in the action up in the Badger State, so let me turn to Ezra Klein's latest post, which disputes the notion that there is any distinction, from the public's point of view, between unionism in the public and private sectors. According to Ezra, "Unions are not just about challenging the 'might and greed' of private-sector CEOs," but about "correcting the tremendous power imbalance between those who can be fired for asking too many questions or demanding a different bargain and those who get to do the firing and would prefer a more submissive workforce and a status quo that they've created and defined."

Ezra argues that the economic distinction posited by public unions' critics is phony, too: Yes, the public must pay higher taxes when unions bargain for higher wages in the public sector, but consumers have to pay the higher costs of increased wages in the private sector, in the form of higher prices. Same difference.

This is unpersuasive on a couple of levels. I doubt that anyone who has seen "Waiting for Superman" would agree with Ezra that unions are helpless to "define the status quo," or that enforced employee submissiveness is a major problem in the public schools. Be that as it may, public-sector workers often enjoy civil service protections designed to prevent politicized firing and discipline of the kind that worries Ezra -- and where they don't, they should. Scott Walker actually proposed strengthening civil service coverage in his bill. Few critics of public-sector unionism object to civil service protections; I strongly favor them since my goal broadly is the progressive one of depoliticized government service-delivery.

If it's the muzzling of dissent that worries Ezra, I would have thought he'd spend some reflecting on the relationship between the unions' use of mandatory dues money for partisan purposes and freedom of conscience for individual union members. As we all know, public-sector unions use their clout to promote free and open discussion within the Democratic Party, especially on issues affecting their interests like education.

Ezra really goes wrong, though, on the pass-along to the public of union conquests at the bargaining table. Of course private employers can attempt to incorporate the cost of higher wages and benefits into the prices they charge. But they are constrained in doing so by competition in the marketplace. Anyone who doubts this need only ponder the differing fortunes of the United Auto Workers-organized Detroit automakers on the one hand, and the nonunion international automakers on the other. By contrast, public-sector services are generally monopolistic. When expensive union contracts drive up their cost, the consumer has no choice but to pay higher taxes.

It's true that voters can rebel against higher taxes and vote out the politicians who bargained the costly contracts -- but that is a lot harder to effectuate than the decision to switch from an expensive UAW-built car to a cheaper import or a Honda made in Alabama. Come to think of it, this is probably one of the reasons that the union share of the private-sector workforce is plummeting while the public-sector share is not.

Previously, Ezra touted a study by the Economic Policy Institute purporting to show that public-sector workers are actually undercompensated when compared to their private-sector counterparts, adjusted for a series of factors of which the most important is education. The supposed bottom line: "Adjusting for the slightly fewer hours worked per week on average, these public workers still face a compensation penalty of 5% for choosing to work in the public sector."

But this, too, is a highly dubious assertion -- and not just because the study in question emanates froma think tank whose board of directors includes the heads of the AFL-CIO, the state and local workers' union and a major teachers union.

What the study mainly illustrates is (a) the old adage about statistics and (b) that the comparison Ezra endorses is wildly skewed because a disproportionate number of public employees in Wisconsin are teachers, which is itself a byproduct of the government's near-monopoly on educational services.

Over to you,Don Schwab of Middleton, Wis.:

At first glance it seems reasonable to account for education in wage analysis. After all, we value education as a society and know that those with more education obtain higher wages then those with less. Nevertheless, there are several serious problems with [this] method. Most important, it compares apples with broccoli.

Over half of local public employees are teachers. They have a bachelor's degree at least and often have advanced degrees. In the private sector, alternatively, college graduates tend to work in occupations involving business -- marketing, finance, production and engineering. Those with advanced degrees in the private sector often obtain MBA degrees and hold high-level managerial positions.

In consequence, comparing public and private sector employees on years of education is really comparing employees in very different occupations.

To be even more precise, the study Ezra cites makes much of the fact that 59 percent of full-time Wisconsin state and local employees hold a bachelor's degree -- twice as many as in the private sector. But, according to the federal Bureau of Labor Statistics, roughly 45 percent of all state and local employees in Wisconsin work for K-12 education or the community colleges. The vast majority of those, of course, are teachers, and that would account for the vast majority of all those college-grad state employees.

A fairer comparison would be between teacher compensation in Wisconsin's public and private schools. Alas, I couldn't find one; but according to the National Institute for Education Statistics, in 2007-08, the average annual base salary of all regular full-time public school teachers ($49,600) was higher than the average annual base salary of regular full-time private school teachers ($36,300).

No doubt it's difficult to make a clear apples-to-apples comparison of public and private-sector compensation; as Ezra notes, the former is skewed in the direction of pensions and other forms of deferred compensation -- a consequence, in part, of union leaders' and politicians' mutual need to obscure the full costs of their agreements from the public. Then again, there are some jobs -- lawyer and doctor come to mind -- that are just totally different in the public and private sectors. You cannot have a private-sector assistant county prosecutor, or a public-sector cosmetic surgeon. Yet the EPI study attempts to compare them, finding, spuriously, that public sector J.D.'s and M.D.'s are getting the shaft as compared to private-sector ones.

Given all the uncertainties, I'll maintain my skepticism about the EPI study, and refer interested readers to a disinterested source: the federal Bureau of Labor Statistics. It reports a 44 percent total compensation advantage for state and local employees over private-sector employees.


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