Public Sector Pay

Kevin Drum’s query about whether the public sector is overpaid seems like a great pretext to link once again to the hilarious “We’re F***ing AFSCME” video:

It also seems fairly easy for me to answer. When was the last time you heard that private military contractors are having trouble retaining people because they keep leaving for higher pay in the Marine Corps? Or a story about how your friend’s son has a passion for investment banking, but decided to take a job as a high-school math teacher for the money? Or that it’s a problem how people will go work for five or six years in the private sector to gain experience and then “cash in” by taking that expertise with them and going to work for a regulatory agency?

All that said, I think it’s perfectly reasonable to have some questions about the nature of public sector compensation (too skewed toward longevity, too sticky in downturns, etc.). But even that is just a small piece of the picture which is just that the real question with the public sector isn’t about the numerator (“are we paying too much”) it’s about the denominator (“are we getting anything of value for our money”). An administrator charged with operating America’s system of sugar import quotas is going to be overpaid at any salary — he’s not creating any value for the country or the world. At the same time, a really effective teacher is worth an enormous amount, and if compensating really effective teachers lavishly increases their supply it’s well-worth doing. Most parole and probation officers, whatever fine qualities they may have have human beings, are embedded in a system that accomplishes very little. And if the agency you work for isn’t accomplishing much, then it’s easy to be overpaid. But cutting salaries doesn’t really address this — transforming the probation system to something like Hawaii’s effective HOPE program does.


My sense, however, is that it’s pretty rare to find a situation where you’ve got an otherwise useful public library system being undermined by overpaid fatcat librarians. When we’re spending too much on public sector personnel it’s usually because we’re paying them to do something that just shouldn’t be done.