There are several major problems with the Fraser Institute’s analysis of public and private sector wages. Read the following opinion editorial by Paul Moist, CUPE national president, published on May 1, 2013 by Troy Media.
At the Canadian Union of Public Employees (CUPE), we agree with the Fraser Institute’s suggestion that we should to have a conversation about wages and inequality. However the real inequality problem lies not between middle class public- and private-sector workers, but between regular Canadians and the rich CEOs the Fraser Institute works with. Further, the basis of this conversation needs to be grounded in rigorous research and in a broader conversation about equity and wages in Canada.
There are several major problems with the Fraser Institute’s analysis of public and private sector wages. First, despite its claims, its report doesn’t actually account for different occupations in its analysis. Page 35, which specifies the equation the Fraser Institute used, does not include occupation as an explanatory variable, even though it should be the most significant factor.
One worker might have the same age, sex, marital status, educational level, and tenure on the job as other, but one works in the public sector as the Governor of the Bank of Canada and the other in the private sector as a clerk at a rental agency. According to the Fraser Institute’s analysis these would be similar workers, both working in the same industry (Finance, Insurance and Real Estate). Of course the Governor of the Bank of Canada gets paid considerably more. It is mandatory to account for specific occupations when comparing wages.
The Fraser Institute’s analysis is also based on just one month of data from the Labour Force Survey. Statistics Canada’s monthly labour force numbers are notoriously unreliable. No reputable economist or analyst bases conclusions on only one month of the data.
CUPE’s Battle of the Wages found that public sector workers are paid on average just slightly more (0.5 per cent) than those working in similar specific occupations in the private sector. Those in lower paid occupations, such as cleaners, cooks, secretaries and clerks, are generally paid better in the public sector. Higher paid occupations, such as lawyers, accountants, managers, computer and IT workers, are generally paid less.
Women face a smaller pay gap in the public sector than they do in the private sector, thanks in part to much stronger pay equity legislation and policies in public sector workplaces. On the other hand, men in the public sector are actually paid an average of 5.3 per cent less than men in similar occupations in the private sector. While the overall averages are very similar (within 0.5 per cent), public sector pay is considerably more equitable – by sex, age, occupational group or by region.
These more equitable wage scales in the public sector are a reflection of the priorities of our union: to reduce inequality, eliminate discrimination, achieve pay equity for women and raise wages for the lowest paid.
Private sector wage scales should not be a model for the public sector. The fact that many would be paid poverty wages while CEOs and executives take home tens of millions is a mistake.
Instead, more equitable public sector wage scales should be a model for the private sector, with better wages for the lowest paid and less excessive compensation at the top. Even the IMF, the OECD and the Conference Board have stated that growing inequality is bad for society and the economy. It’s only by reducing inequality and raising wages at the bottom that we’ll truly move ahead.