Let’s talk about the real differences between pay in the public sector and pay in private industry. Low pay for people employed at cities, counties, state governments and some (if not most) federal agencies is frequently either casually dismissed with shallow responses or fiercely debated as tempers flare.
After many years experience working on pay practices in virtually every industry (and some hardly anyone had ever heard of), the differences in government service seemed obvious to me. Nevertheless, the first draft of my thoughts was forwarded to scores of public workers, government supervisors and elected officials. No one objected to anything in it. Most asked for permission to forward it to others who had been puzzled by the very dynamics it explained.
Key points follow, covered in detail in the original article that was eventually published in 2005.
Unique Organizations Create Problematic Peer Comparisons
Public enterprises provide substantially different products or services than private firms. Most government services providers don’t face competitors like private firms. There are fewer "like enterprises" competitively engaged in substantially the same business. That makes it difficult to find valid benchmarks against which one can compare a job's content and pay rate. Making meaningful comparisons for pay decisions between different government bodies can be almost impossible.
Broader Pay Ranges Exacerbate Final Choices
The wider salary variances found among candidates for professional and management jobs encourage public employers to bargain-shop and hire at bottom pay levels.
Public Managers Get Less Pay Due to Low-Ball Hiring Rates
Public enterprises are hypersensitive to the need to avoid the perception that they are wasting taxpayer money. So, when given wide options for management pay, they typically lean to the conservative side and select people willing to accept less money in exchange for a promise of job security or other non-cash perquisites. As a rule, especially in conservative areas where living costs and wage expectations are low, the higher you rise in a public enterprise, the more your pay lags behind your peers in the private sector.
Good Government Work Rarely Brings Financial Rewards
Public employees rarely receive bonuses, extraordinary raises or even recognition for good work. If something is done right... well, that is what the taxpayer expects. So no special reward is due. But if anything is done wrong and the public finds out, heads roll.
Public Service Means Defensive Tactics Prevail
Corporate officers report to highly experienced Boards of Directors who do not panic easily. Elected officials serve at the pleasure of the voters, who panic over everything. The continuity of senior leadership in the public sector is constantly held hostage to the current mood of the electorate. Elected officials and their appointees, whether arrogant reformers or entrenched caretakers of the status quo, therefore emphasize problem prevention and damage control.
Going With the Flow Is Encouraged
Workers who calmly produce non-controversial results in government service are most likely to get ahead. If consistently successful, they will become very underpaid for the responsibilities they exercise while very overpaid for the results they produce.
Don’t Blame the Victims
Nothing here should be interpreted as criticism of people who did not create these dysfunctional dynamics. Those who embrace the special challenges of public service should not be condemned for merely doing what they are rewarded to do. Instead, they deserve our sympathy for being forced into this kind of adaptive coping behavior by a political management system that gives a higher priority to risk avoidance than to achievement. Government employees work within systems driven by defensive preventive pressures, while business workers are more frequently encouraged to achieve positive results. Simply being constantly in the public eye forces management to adopt very different attitudes towards achievements and remuneration, because every expense will be challenged and any error will be condemned.
If you thought they had it easy, it might be time to cut them some slack. So… what did I miss?
E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. After over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), serves on the Advisory Board of the Compensation and Benefits Review and will express his opinion on almost anything.
Creative Commons image "U.S. Capitol" by cliff1066