The “Compensation Equity Act”: Anything but Equitable

Once again, the Canadian Taxpayers Federation (CTF) is promoting the idea of a “Compensation Equity Act” that would require British Columbia public sector workers to be paid no more than private sector workers doing the same job. An article in the Province newspaper quotes CTF’s BC director, Jordan Bateman, as claiming that “taxpayers are overpaying for labour throughout the system”, based on three examples:

Bateman insultingly refers to the bartending job as a “swill slosher”, and suggests that municipal workers are being “grossly overpaid” if they are getting more than BC’s $10.25 an hour minimum wage.

There’s swill being sloshed here, all right. But the swill is coming from the CTF, in its trying to justify why a “Compensation Equity Act” for BC is a good idea.

First off, shame on the Province for using the word “overpaid” in the story’s headline; for uncritically repeating Bateman’s unsupported assertion of “rampant overpaying plaguing the system”; and by characterizing the “solution” as “passing the provincial Compensation Equity Act”. There is nothing to “pass”, because no legislation of this kind has been proposed in the BC legislature.

The idea of a “Compensation Equity Act”  has been floated at least twice this past year. In the summer of 2012, the Independent Contractors and Businesses Association (ICBA) of BC released a report claiming that municipal workers’ pay is “30 to 40 percent higher” than workers doing the same job in the private sector (the source of that estimate is not clearly explained in the report). In early 2013, the Fraser Institute released a report claiming that BC public sector workers are paid approximately 14% more than their private sector counterparts. While the report itself did not propose any actions to deal with this differential, the news release announcing the release of the report suggested that “[g]overnments should implement formal processes to calculate total compensation for civil servants based on the wages and benefits of comparable private-sector workers”.

Anyone familiar with the CTF, the Fraser Institute, and the ICBA knows that they all share a decidedly anti-union agenda. And that’s demonstrated by one kind of comparison that’s missing from all of their pay research. While they all acknowledge that BC’s public sector is highly unionized, they all ignore the fact that unionized workers in Canada in general make more than non-unionized workers. This recent report from the Conference Board of Canada suggests that unionized Canadian workers earn an average of 8% more than non-unionized Canadian workers – so it’s entirely likely that a comparison between wages of unionized and non-unionized workers in comparable jobs only within the private sector would also show discrepancies. But the “Compensation Equity Act” apparently would only address pay discrepancies between public and private sector workers. So it seems that its main intent is not to make all pay rates truly “equitable”, but to attack only the unionized workers in the part of the Canadian labour market with the highest unionization rates.

Firefighting is a public sector job in Canada that doesn't have an easily comparable private sector counterpart. (credit: dvidshub/Wikimedia)

Firefighting is a public sector job in Canada that doesn’t have an easily comparable private sector counterpart. (credit: dvidshub/Wikimedia)

Another problem with the “Compensation Equity Act” idea is that there are many public sector jobs – for example, firefighters and paramedics – that don’t have clear counterparts in the private sector. None of the “Compensation Equity Act” proponents have yet given an explanation of how compensation rates would be determined for public-sector-only jobs. And the CTF’s choices to demonstrate “overpaid” public sector jobs suggest that the CTF doesn’t understand how compensation systems work  – because all of these jobs have skill components that could justify a higher than average pay rate. The duties of the Kelowna lifeguard position also include facility maintenance. The duties of the Richmond arena concession worker position also include program registration, skate shop assistance, and “a variety of clerical, typing/word processing and receptionist activities”. The duties of the Burnaby bartender position also include shift scheduling and “aiding the Restaurant Leader and Manager in the successful operation of the restaurant and lounge”.

The “Compensation Equity Act” idea also seems to be based on some very odd assumptions about public sector wages – that after they are paid out, they somehow disappear into some kind of mysterious black hole and don’t do anything more to benefit society or the economy. As BC Federation of Labour president Jim Sinclair points out in the Province article, “people who earn good wages spend good wages”. Public sector workers, just like every other kind of paid worker, spend their wages in the market. They spend them on housing, food, transportation, utilities, discretionary purchases, and so on. If public sector workers, just like any other kind of paid worker, get paid less, they spend less on all of those things – and demand declines for those products and services, along with a decline in the number of jobs associated with them.

But on a larger level, if a discrepancy between public sector and private sector wages requires the intervention of a “Compensation Equity Act” – why is it the public sector that would have to adjust? Why isn’t the CTF proposing legislation to require private sector wages to be in line with public sector wages? The CTF’s handwringing over public sector wages comes in the same week that fast food workers are going on one-day strikes across the US, protesting private sector wage rates that leave them struggling to support their families. This isn’t the kind of pay standard that anyone should be promoting as a desirable norm for any sector of the economy – so maybe the more important issue is why some private sector workers are so severely underpaid, not why some public service workers are allegedly overpaid.

And – speaking of pay standards – I tried to find out how much the CTF pays its own employees, to see how those pay rates compared with those at other not-for-profit agencies or with similar jobs in the public sector. For an organization that wants to force “accountability” on the public sector, the CTF is remarkably non-accountable itself. Its online annual report is a single page of “financial highlights” which doesn’t say exactly how many employees work at the CTF, and indicates only that the annual pay for its “top 10 highest compensated positions” ranges from somewhere below $71,000 up to $110,000. In contrast, because of BC’s public sector pay disclosure policy,  my 2011-12 salary as a public-sector worker is easily available online, along with the salaries for all similar public sector positions in the province. If the CTF is not willing to make the same kind of pay disclosures and comparisons that it demands from others, then it’s even more difficult to give any credence to its ideas.

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