The Myth of the Public Sector Wage Gap

In 2008 the Canadian Federation of Independent Business (CFIB) published 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.

The study was widely distributed and commented upon by the media, who published the CFIB's talking points without doing any research into the methodology of the study.

The fact that Treasury Board never once used the study as an argument for wage reduction during contract negotiation should pretty much tell you that the claims are ridiculous.  However, the National Union of Public and General Employees (NUPGE) asked an independent economist from the University of Guelph to review the CFIB's study.

His conclusions?  The study's methodology "would not be accepted in a second-year university economics course." Not only that, but "Some of the equations used in the 2008 Wage Watch report,... are simply mathematically incorrect."

In late 2011 the Canadian Union of Public Employees (CUPE) published their own study.  Their study used a sample set of over 4 million full-time, full-year employees in both public and private sector positions covering 520 different occupations.

Their results?

The public sector enjoys a premium of 0.5% over the private sector on average salary.  That's about $248.  When you factor in pension and benefits, the gap increases to 4.6%.

However, there are some really interesting numbers that came out of the study.  Women in the public service are paid 4.5% more than in the private sector.  Men in the public sector are actually paid less (-5.3%) on average than men employed in similar occupations in the private sector.  Women are paid more in the public sector because of much stronger pay equity legislation.

When considering average wages by occupation, it becomes apparent that there is greater equality of wages in the public sector.  Average earnings are consistently lower for the higher paid occupations, and consistently higher for the lower paid occupations.  Light duty cleaners make 15.6% more in the public sector than in the private sector, while computer programmers make 9.6% less in the public sector than in the private sector.