The continuing debate over public sector compensation has obscured a fact that isn’t controversial. For all its flaws, the EPI work on public sector compensation acknowledges that even by its methods, which assume that all public employees would otherwise be working for the country’s largest corporations, that relative job security and retiree health benefits shouldn’t be factored in to compensation, that pensions shouldn’t be valued according to the size of the benefits promised, etc., less-skilled workers receive more compensation from state and local governments than from private firms.
Sabrina Tavernise has written an eye-opening article in the New York Times on how public sector jobs have helped a number of less-skilled workers climb into the middle class. (This reflects my family’s experience in New York city in the late 1970s and early 1980s, when the contrast between working in the low end of the private labor market and in the civil service was very pronounced.) Tavernise tells a deeply personal story of life in an economically depressed region:
It is not that there are no jobs, but rather that the jobs available pay too little and have no benefits, resulting in, as Mr. Beaver put it, “just scraping by.” A private hospital and two power plants do offer good jobs, but they are highly competitive and many require some higher education, something that fewer than one in five people here have, according to 2009 census data.
So most people scrape by, as Ms. Taylor did before landing her state job in 1996. At the time, she was living in a trailer and working in low-wage jobs at Wendy’s, Dairy Queen and a Big Lots discount store. Her hourly wage jumped to $9 when she started at the Gallipolis Developmental Center, a state home for mentally retarded people, up from $5.25 at a private nursing home.
“If I wasn’t working at the G.D.C., I’d have to work around the clock,” said Chris Smith, Ms. Taylor’s colleague, referring to the center, where she has worked for 20 years. “I’d have to work two or three jobs to keep at this level.”
The Taylors are not college educated, but their public-sector jobs have made them middle class. Together they earn about $63,000 a year, a sum that puts them squarely at the middle point of earnings for American families, and higher than the $50,000 earned by the typical Gallipolis family.
Money is still tight. When their washing machine broke in November, they had to put the new one on a credit card. They could not afford college for either of their sons. One is in the Marines, and the other, a high school senior, just enlisted.
“We’re not living in any rich, high-income way,” said Ms. Taylor, 37, who, together with her husband, protested the public-sector bill in Columbus this month.
This is in many respects a wonderful and inspiring story, and I certainly see no sense in criticizing the Taylors for making the best of a difficult situation. But one wonders about the larger point of the story. Should all less-skilled workers be given public sector jobs, regardless of the cost to taxpayers or whether the services delivered are necessary? I don’t think anyone believes that, or rather I don’t think anyone engaged in American public policy debates believes that. Another approach would be to use direct wage subsidies to supplement the incomes of less-skilled workers, to make full-time work a viable way out of poverty. I tend to think that this latter approach is the better way to go, as it gives firms the flexibility they need to do their jobs well and to respond to new circumstances. It also gives workers more flexibility, as direct wage subsidies wouldn’t necessarily keep workers tied to depressed economic regions. Rather, they could migrate to areas where job opportunities are more plentiful.
As a friend pointed out to me, the Taylors’ story is a complicated one. Ms. Taylor had children at a very young age, and it could be that she chose to stay in Gallipolis rather than move elsewhere so that her children would have the benefit of having relatives close by. It is impossible to say, which is part of why I’m wary of argument by anecdote.
The article continues:
Retirement is less secure for private workers. Jeanie Norton, 49, ended up earning less than minimum wage when her job as an airlines reservation agent was eliminated in 2008. At the time, she and her husband, a carpenter who is now unemployed, were building their dream house. She lost her health insurance and had to break into her 401(k) to keep them afloat. Now she drives an hour each way to work as a waitress in Gallipolis.
“I thought I had it all figured out,” Ms. Norton said, “but now I’m just making it. I’m going on faith in God.”
What frustrates me about an article of this kind is that it presents deeply sympathetic figures to make an implicit argument, yet it necessarily gives us a fragmentary picture. We don’t hear the stories of other people born and raised in Gallipolis who made the very difficult decision to leave friends and family behind to move to Dallas or Houston or Atlanta, where making economic progress might have been somewhat easier. And we don’t hear about the rising property taxes that have forced an elderly couple that kept a protective eye on neighborhood children to sell their home.
Pensions have shriveled. In 1985, medium- and large-size companies paid full pensions to four out of five workers, according to the Bureau of Labor Statistics. By 2010, that number was down to one in three. Four out of five public workers still receive the full benefit.
For those on the lowest rungs of the income ladder, wages are so skimpy that the state sometimes picks up the slack. Jeremy Bostic, 27, who supports several relatives on his small salary as a manager at Kmart, has to supplement his earnings with food stamps.
Food stamps are used by a large and growing number of Americans, and it’s striking that Tavernise includes this observation in an article ostensibly about public jobs. Food stamps and other transfers represent a very different kind of intervention. If less-skilled workers in the public and private sector were given the same amount of compensation, perhaps there would be more room for work supports for all low-income workers.
Dim prospects push young people here toward another government solution. Brynna Frazier, 30, said the most popular choice among her friends was the military, which, at $1,600 a month with health insurance, was the best job around. Ms. Frazier, a waitress, has not had health insurance in any job she has ever worked, including Wal-Mart, Taco Bell and a telemarketing firm.
The best job around is an important part of the equation. One of the more depressing facts about modern life is that geographical mobility is often the only route to social mobility. There are large swathes of the planet that are far less economically viable than they once were, including entire countries where billions of people struggle to eke out a living. This is a dynamic process. The American Midwest has had a profoundly uneven economic experience in recent decades, with a handful of regions thriving while others have gone into precipitous decline. And it is certainly possible that some of today’s decaying regions will at some point experience a renaissance. But it helps to have some historical perspective. In 2008, Matt Frost wrote the following on a similar theme:
Call me heartless, but I say bring on the ghost towns! Appalachia, for instance, is full of putative “communities” that only stay afloat thanks to severance taxes, disability checks, and Oxycontin sales. A glance at this map shows the combined effect of high fuel prices, long commutes, and lousy wages on Appalachian counties. The coalfields were only populated as densely as they were because self-contained enclaves of corporate micro-statism suited the needs of the industry at the moment it emerged into national and global prominence. Even then, though, right-thinking parents encouraged their children to get educated and eventually leave. Now, on the other hand, politicians sell economic development to nervous parents as a way to keep the next generation close by, even if the young people are all driving an hour to work at a call center.
Politicians have a strong incentive to appeal to local pride and to promise that a dying town can be raised from the dead with the aid of public funds, i.e., with the aid of taxpayer dollars drawn disproportionately from the regions where strivers moved to find a better life.
Let’s not forget the people who are left out of the story. Living in a slightly more spacious apartment and getting to spend a bit more money on your favorite fast food might strike some of our friends as banal, but those are the simple pleasures on the other side of the great tax trade-off. Think about the 35-year-old who moved from Gallipolis to go to college, dropped out because he had to find a job, made his way to Philadelphia where he’s been working as a waiter, climbing the ladder from small neighborhood joints to a fine dining establishment. This isn’t necessarily the life he envisioned for himself, but he’s able to take care of himself and his kid and he’s saving to open up a small restaurant of his own in Northern Liberties. And by the way, he’s a devoted liberal who despises Republicans, cheers on public sector unions, and never forgets where he came from. However much this guy shouts at the TV when he sees someone spouting off conservative talking points, and however much he says he’d happily pay higher taxes in solidarity with the people he left behind in Gallipolis, some of us believe that helping him get a little closer to the goal of starting that restaurant by leaving him with a little more money in his pocket at the end of the month is the best way to move the world forward. If his business gets off the ground, he might be able to hire a kid who just arrived in town from Gallipolis, leaving behind a chaotic family that wasn’t always quick with praise or encouragement.