Monday, August 9, 2010

A Different Way to Measure Public Sector Compensation

Let’s look at quit rates. Quit rates in the public sector are about one third what they are elsewhere. In other words, government employees sure do seem to like holding on to their jobs. More than just about anyone else, in fact. Doesn’t that tell us everything we need to know about who’s overcompensated?

I don't want everyone with a public-employee axe to grind running around shouting "definitive!" but this is certainly an intriguing way of looking at the issue.

Simply controlling for education doesn't definitively prove that the public sector employees are underpaid either, and that's the point.

Posted via email from rhymeswithclown's posterous


Ordinary Jill said...

It could also be that the public sector attracts those who are more risk-averse (or have deeper roots in the community) and are willing to forgo greater compensation in exchange for greater job security (or less need to relocate).

Jeremy R. Shown said...


I would say greater job security and less need to relocate are forms of compensation. Don't be fooled just because they don't show up on a pay stub.

D said...

Jeremy is exactly right.

If we look only at monetary renumeration, we are ignoring all other forms of compensation, and as Henry Hazlitt would say, ignoring the unseen.

Like opportunity costs.