Dan Foster has a new piece at National Review on the supposed problems caused by fire and police unions. It pins the blame for local and state budget deficits on public-sector unions. And while it does make a few salient points about boondoggles, it uses some shoddy statistics to misidentify the source of deficit woes: Foster would have you think that public-sector unions drive the fiscal problems in the states, but what we're really seeing is bad fiscal management of public employee compensation, wage stagnation in the overall population, and evidence that unions are in fact a pretty good idea.
Start with the broader problems. Foster cites statistics that show state and local public-sector employees earn more than those in the private sector. But that's an old straw man: Once you control for factors like education and duties, you find that on average state and local public-sector workers are paid 6.8 percent to 7.4 percent less than their private-sector counterparts (see also here and here). It's also worth noting that most local and state employees are exempt from Social Security, something that's not in Foster's piece but does make direct comparisons harder.
To be more specific, Foster writes that "average total compensation for an officer in Oakland — a city in which the median family earns $47,000 — is $162,000 per year." But there's a difference between total compensation and income -- the former includes benefits. Assuming 70 percent of that is salary -- which is high, since as we'll see, local officials tend to back-load compensation to make their budgets look stronger -- a better, if very rough, comparison is the median income plus hypothetical benefits of $67,000 to $162,000. That's still a big difference, but when you factor in that the average officer pay will skew a small sample higher due to a few highly paid police department executives -- and that being a police officer requires special skills and training, terrible hours, and dangerous duties -- it seems much less outrageous.
In fact, the comparison doesn't make me think that police officers are necessarily being paid too much. It makes me think that the median income in this country is too low! As Richard Posner points out, median income has decreased in the last 14 years, even as income inequality has shot through the roof. The bigger problem here isn't that public-sector unions are being paid too much; it's that the rest of us are being paid too little.