CFIB public sector wage study found to be biased | National Union of Public and General Employees

CFIB public sector wage study found to be biased

'Because the study is so obviously inadequate and misleading, we challenge the CFIB to withdraw it and apologize to public sector workers in Canada for misrepresenting their situation.' - Larry Brown, NUPGE's national secretary-treasurer.

By Larry Brown
National Secretary-Treasurer
National Union of Public and General Employees (NUPGE)

Larry Brown, national secretary-treasurer of the National Union of Public and General Employees (NUPGE)Ottawa (1 Oct. 2009) - In late 2008, the Canadian Federation of Independent Business (CFIB) released a study claiming that federal public employees enjoyed a wage advantage over private sector counterparts of 17.3% – and as much as 41.7% with benefits included. For provincial public employees CFIB claimed the straight wage advantage was 7.9%, rising with benefits to 24.9%.

The National Union of Public and General Employees (NUPGE) represents a large number of direct public sector and broader public sector employees, along with a number of private sector employees.

Nothing in the CFIB's sensational conclusion reflected any experience we’ve had. The finding wasn't validated by any research we’ve ever done or seen. And it didn’t resonate with the years of wage freezes and rollbacks experienced by workers through the 1990s. No serious management negotiators ever tabled anything like these figures in negotiations to argue against our wage proposals.

It would have been flattering to think we’d done such a good job bargaining for our members but in the end we came to the conclusion that the CFIB results were just simply wrong. All serious researchers came to the same conclusion. Moreover, the CFIB study was frankly ignored by anyone who understood the reality of the situation.

The report was an obvious case of a pre-determined conclusion in search of supporting facts. One proof of the CFIB’s clear bias in producing this report was their insistence that public sector employers have no competitive pressure to reign in their employees’ wages, completely ignoring the long history of government employers using legislative power to impose settlements on public sector workers.

CFIB's record of hostility to the public sector

Unfortunately, the CFIB has an established track record of hostility toward the public sector. It may be that the CFIB is afraid the wages paid by many of their members will look too inadequate compared to wages in other sectors. It may be the lack of benefits, especially pensions, for workers in their sector will make it difficult for small business employers to attract employees. It’s certainly odd the CFIB hasn’t made the connection that public sector workers spend their salaries in the stores, and purchase the services, of CFIB members.

Download NUPGE Research - An examination of the Public Sector Wage Premium in CanadaOver time this incorrect CFIB study began to be quoted as fact in the media and elsewhere. We kept hearing that this dubious large differential really did exist. The mere fact this study was obviously incorrect was apparently not enough to invalidate it. CFIB spokespeople themselves peddled the purported conclusions of this study at every opportunity.

Because there is a large disconnect between what we experience every day on the ground and the claims made by the CFIB, NUPGE commissioned its own review of the CFIB study.

We asked an independent economist to do an assessment of the CFIB study. David Macdonald has a Master of Arts (MA) degree from the University of Guelph. He is a Research Associate with the Canadian Centre for Policy Alternatives (and coordinator of the Alternative Federal Budget project for the CCPA. He is also a frequent media commentator on national public policy issues. His report is attached.

Conclusions from the independent assessment by David Macdonald:

  • The methodology used in the CFIB study would not be accepted in a second-year university economics course.
  • Every serious unbiased study done by academics has concluded there is a much smaller differential and that much of it is explained by the fact that women in the public sector have to be paid equal pay for work of equal value. The CFIB study ignores the role of women’s wages in the overall picture.
  • The evidence also suggests the differential reverses with those in management positions. Actually, in the case of management employees there is a huge gap. Managerial public sector employees earn 41% less than their private sector counterparts. The CFIB doesn’t mention this.
  • The serious studies show that differences in unionization rates between the public and private sectors are a major determinant of the wage gap. Of course the variation increases if one compares union to non-union wages. It does in the private sector as well. Unionized workers in the private sector enjoy a wage advantage that amounts to between 7% and 14%, according to credible research.
  • Because the CFIB study does not compare union wages to union wages, it misses another important point. Every credible study has concluded that the gap between female and male wages is consistently smaller in unionized workplaces. Again, the CFIB study ignores the role of women’s wages in the overall picture.
  • The CFIB study essentially manufactures the wage gap, including benefits. They admit that they didn’t actually have broken down benefits variables in their census data purchase. Instead they inappropriately used unadjusted averages to get their results. Their assumption is based on Statistics Canada research that compares all employees; the benefits of highly qualified public employees are compared to the benefits earned by minimum wage workers in retail or fast food restaurants. When it comes to benefits, the CFIB study throws in everything, uses a completely different standard, and then claims the result is meaningful.
  • The CFIB study does not factor in key elements like education and experience, factors considered by every employer in Canada when determining wage levels.
  • One academic study has examined the effect of immigrants in the workforce. That study found that there is no difference between the wages of immigrant and non-immigrant workers in the public sector, but there is a lower wage level in the private sector of 14% for immigrant men and 11% for immigrant women.

The CFIB has written, circulated and propagated a study that is inept and incorrect. They’ve ignored crucial factors that would show that the public sector wage differential that does exist, a fraction of the differential claimed by the CFIB, is based in large part on the lack of public sector discrimination against women’s wages or the wages of immigrant workers.

Some will no doubt claim that our analysis is suspect because we too have an established track record - in our case one of defending the public sector.

We simply challenge any reader, researcher or writer to look at facts that are available, review the analysis attached, and come to their own conclusions. We’re confident the CFIB study won’t stand up to any serious scrutiny. It contradicts every serious academic study but does confirm the CFIB’s longstanding biases, and should be treated as merely unsubstantiated propaganda.

And because the study is so obviously inadequate and misleading, we challenge the CFIB to withdraw it and apologize to public sector workers in Canada for misrepresenting their situation.

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

More information:
Download NUPGE Research - An examination of the Public Sector Wage Premium in Canada - a critique of the 2008 study by the Canadian Federation of Independent Business (CFIB) called Wage Watch: A comparison of public and private sector wages