What’s Really the Value of Public Sector Employment?

Those who have been following the hubbub over public employee compensation in Wisconsin are probably familiar with the Economic Policy Institute white paper that concludes Wisconsin public employees are uncompensated by about 5 percent compared with their private sector counterparts. Good thing that’s settled. Now that we know Wisconsin public sector unions haven’t actually been able to cash in on those collective bargaining privileges that they’re so eager to protect, there’s no question Gov. Scott Walker should stop persecuting disadvantaged government workers, right?

Well, no. I looked through the paper in question which, while interesting, doesn’t mention much-discussed perks of working in the public sector. Take job security, for instance. Job losses in the recent recession are an excellent example, as public employees have been systematically sheltered (until recently) from cuts. As of January, government employment was down less than 1 percent from its pre-recession peak, while there were 5.6 percent fewer jobs in the private sector.

That doesn’t even scratch the surface of the other upsides of public employment, like the perks of a defined benefit pension plan. Take, for example, the fact that these plans aren’t vulnerable to the undulations of the market like our junky 401ks. These things can’t be easily observed in aggregated data like those employed by the EPI study.

Public union supporters may deny the relevance or existence of these variables but, as Megan McArdle noted with pithy elegance today, if collective bargaining and other union privileges haven’t brought these benefits to members, why are they making such an effort to preserve them now?

This simple question, like the lower quit rates observed in public employment, shows that the proof is in the pudding: if compensation was really so weak and unions were really so ineffective, people would leave. Though the bare figures for compensation – the dollar values for wages and benefits – may be equivalent or slightly lower in the public sector, this doesn’t really get at the true value of a public sector job: stability, security, and benefits.

Check out my colleague Anthony Randazzo talking through the Wisconsin issue on RT yesterday.