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October 22, 2021

Do gov't workers really earn more than those in the private sector?

In the U.S., perhaps now more than any other time, the rift between public and private sector is front and centre.

It’s not that Barack Obama, who will clash with Mitt Romney tonight in the last of their three presidential debates, is overtly pro-government, but it’s that Romney is so pro-business, which is to say he’s decidedly anti-government.

Yet for all the hand-wringing about high government wages critics say would never fly in the private sector, perhaps what we know about public-private pay gaps in the U.S. is all wrong.

And, more importantly, perception may be way off in Canada, too.

According to new data recently released, at a time when Romney all but lives his life under a monstrous “Slash Government, Damnit” banner, life ain’t so peachy in the American public sector.

*Bing: Who is Canada’s highest-paid government employee?

By numbers from the Federal Salary Council (FSC), the gap in pay between public and private sector workers is growing – just not in the way you might think.

As the U.S. economy continues to languish, it is actually private sector workers that earn plenty more than their public sector counterparts. On average, according to the FSC, government employees are paid 34 per cent less than those working for private companies, compared to 26 per cent less last year.

Relative to Canada, where private and public sector employees are compensated similarly on the whole, that’s a seismic gap.

Here at home, according to the Canadian Union of Public Employees, government workers are paid just a half per cent more than private sector employees, using salary data from the 2006 census. (Women earn more in the public sector vs. private, while men earn less in the public sector vs. private.)

Still, an undeniable sentiment exists across North America: while you’re not going to get a Jamie Dimon-like pay package working for the government, the public sector may at least be a safer bet to earn a working wage.

Where’s that notion come from? Perhaps, in fact, it has nothing to do with today’s paycheques, but tomorrow’s.

According to an analysis of B.C. public sector employee pay packages, the Canadian Taxpayers Foundation uncovered that nearly 90 per cent of the province’s government workers have pension plans in place. In the private sector, that number plunges to under 20 per cent.

So while lamenting public sector wages vs. those in the private sector may be inaccurate in the short-term, in the long-term there’s no unclear edge to cashing a government cheque.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...