Sir: I was shocked Mr. Corcoran had the cajones to publish open questions concerning municipal payroll costs (“Budget survey? More info, please,” in the Dec. 20 Chatham Voice). He is correct this is not how it used to be.
I am excited to oblige with most of the answers showing repeatedly the public sector enjoys a 20-per-cent premium over the average private working class.
The disparity is due to the contract renewals over the past few decades when the public sector received wage increases plus benefits as opposed to the average factory or private employees whose wages did not increase due to rising benefit and pension costs.
The benefit costs came out of the private workers’ wages, which resulted in the stagnation of wages. All the while, government workers’ take-home pay increased every contract; their benefits were added on top of their salary.
The Fraser Institute and others analysts annually publish studies showing the wage gap illustrating the public service employee benefit by 7.6 per cent over the private sector. It compares similar skilled jobs requiring the same experience, skill level, and education.
If we factor in the average three-per-cent increase in every contract, the gap becomes 12.6 per cent with a 37.5-hour workweek and the number of sick days allowed per year being 12.4 days public verses 7.6 days missed in the private sector. But there’s more.
Where the gap takes off, is, as Bruce questioned, in the pension plan and the benefits. The gap lies in 95 per cent of those public pensions are defined benefit plan, against only 42 per cent of the private sector. Defined benefit plans add another 12.5 per cent of payroll costs that the employee receives over and above their salary.
Simply put, a private-sector wage of $60,000 is $67,500 for the public sector, but total costs is near $75,000 with benefits added.
What is detrimental to the economy is 18.6 per cent of all the employed work for the government. Let’s say one in six to include the retired who do have income. So look out your window and count six homes. You and your 4 neighbours must support the sixth home – their car, the mortgage, food, vacation, everything. Is that sustainable?
Another way to look at the budget is approximately $210 million is collected from property taxes and local sources which coincidentally is almost equal to the cost of paying our over 2,100 municipal employees, leaving the balance of over $100 million received from the province and federal coffers that pays for roads, sewers, etc. So for every $3 of budget, $2 is payroll.
The tough questions must be asked for we cannot solve current problems with current thinking.
Thank you, Mr. Corcoran, for publishing real public concerns.
Sources available on request.
Robert Hakker
Chatham
