Analogy Watch: “Cairo has come to Wisconsin”?

From National Journal:

In an interview on MSNBC’s Morning Joe today, Rep. Paul Ryan, R-Wis., said the cuts were necessary to get Wisconsin back in the black.

“State workers who have extremely generous benefits packages, [Walker’s] asking that they contribute 12 percent to their health care packages. It’s not a lot, it’s about half of what private-sector employees pay, and he’s getting riots. It’s like Cairo has come to Wisconsin,” Ryan said. “People should be able to express their way, but we’ve got to get this deficit and debt under control in Madison.”

Frankly speaking, I’m not sure that’s the most apt analogy. In any case, here is one graph of wages, broken down by educational attainment, in private versus public sector, using BLS data and the CPS.

Figure 1: Annual wage for full time employees, by level of education attainment, in private sector (blue) and public sector (red). Source: Keefe (2011).

Notice that the wage differential is small, and in fact goes in the opposite direction of what is often asserted (except for the less-than-high school category). However, these data do not address the issue of compensation. Hence, Figure 2 replicates the comparison, using total compensation. The pattern is repeated.

Figure 2: Annual total compensation for full time employees, by level of education attainment, in private sector (blue) and public sector (red). Source: Keefe (2011).

Using the March 2010 CPS data, regression analysis controlling demographic characteristics (full-time, education, years of economic experience, gender, race, citizenship, and organizational size) confirms that real annual compensation for Wisconsin public sector workers is 4.8% lower than for private sector (-5.1% for Wisconsin State workers, and -4.7% for local government). These estimated differentials are statistically significant, as shown in Table 4.

Table 4 from Keefe (2011).

Analogy Watch: “Cairo has come to Wisconsin”?

About Menzie Chinn 83 Articles

Affiliation: University of Wisconsin

Menzie Chinn is Professor of Public Affairs and Economics at the University of Wisconsin, Madison.

Visit: Econbrowser

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