Study shows government wages are outpacing private sector

Those concerned about high public wages while the private sector pay languishes will be interested in the facts recently released by Ben Eisen of the Frontier Centre for Public Policy.

The Frontier Centre for Public Policy last week released a new study that uses Statistics Canada data to examine wage growth in different industries across the Canadian economy.

Between 1998 and 2009, the average weekly wage for federal government public administration workers jumped by 59%. For provincial public administration workers, the average wage grew by 55%.

The weekly wage for the average worker in the economy increased by 30% during that same period.

Public administration workers not only saw their wages go up faster than the economy wide average over the past ten years, wages for those workers at the federal and provincial level increased faster than any other major category of worker tracked by Statistics Canada.

In the study, Public Administration Wage Growth in Canada, Frontier analyst Eisen provided context on the rate of wage growth for public administration workers compared to other workers in the economy by analyzing Statistics Canada data that tracks the average wage growth in a wide range of industries.

An examination of those data shows wage growth for federal and provincial public administration workers has been faster than the growth experienced by any other industry tracked by Statistics Canada between 1998 and 2009.

The paper discusses the gap between the rate of wage growth for public administration workers and workers in other industries. The findings include:

– Federal government public administration workers saw their average wage increase almost twice the rate of wage growth in the economy as a whole, which grew at approximately 30%.

The next highest rates of growth were in the real estate and mining and oil extraction industries. Wage growth was 46% in those categories.

Rapid public administration wage growth caused the pay gap between the average public servants and the average worker in the economy to grow considerably. In 1998, the average annual wage for federal public administration workers was approximately $10,000 higher than the average worker in the economy. By 2009, that gap had grown to $25,000.

If wage growth for public administration workers had been modestly restrained to the same levels as the other industries in the economy that had the next highest rate of wage growth, the public administration wage bill in Canada would have been $2.6-billion smaller in 2009.

“The interesting thing is not just that public administration wages are rising faster than the average worker in the economy, it is that no other major industry tracked by Statistics Canada comes close to matching public administration in terms of wage growth,” said Eisen.

“Growth in the wage gap between public servants and the average worker in the economy over time is not necessarily objectionable. There are a number of benign potential explanations. The size of the gap, however, between wage growth for this one category of workers and all other categories tracked by Statistics Canada is striking,” he said. “Future research should carefully examine the causes to determine if we are overpaying for government labour.”