Private vs. Public Sector Pay

Economix has posted a chart illustrating compensation breakdowns between private and public sector employees:

While pay disparities between the public and private sector are pervasive, I try to avoid broad comparisons like this. Averages are terribly misleading, especially when the inputs are different. The characteristics of private and public sector workers are not identical. We should, therefore, not expect equal pay.

Nevertheless, when comparing likes, I would still anticipate public sector employees to earn more than private sector employees.

Why third generation immigrants earn less

The Economic Logic blog has posted on an interesting new study by Vincenzo Caponi which finds that third generation Mexican immigrants  (particularly males)to the US earn significantly lower wages than second generation Mexican immigrants.

The table below shows the evolutions of earnings across all generations. It reports results for men and women using two definitions: the standard definition and the stricter definition. The standard definition includes those with at least one parent born in Mexico while the stricter definition includes those who not only have at least one parent born in Mexico, but also consider themselves Mexican.

 

Economic Logic concludes the following:

The way I understand it is that there is selection in migration decisions: only those with higher than average abilities (not necessarily realized human capital) go. Their children inherit some of those traits, and thus have higher than average abilities and human capital. While the first generation was not able to fully exploit this, while the second does, wages go up. But abilities of the third generation continue regressing to the mean, and the selection effect erodes. This generation ends up with lower human capital than their parents and thus lower wages.

Prostitutes who work with pimps earn more, are injured less and work fewer hours

In 2007, Steven D. Levitt and Sudhir Alladi Venkatesh published a study called ‘An Empirical Analysis of Street-Level Prostitution‘ that showed that contrary to public perception, prostitutes who work for a pimp are better off.  Below is the abstract:

Combining transaction-level data on street prostitutes with ethnographic observation and official police force data, we analyze the economics of prostitution in Chicago. Prostitution, because it is a market, is much more geographically concentrated than other criminal activity. Street prostitutes earn roughly $25-$30 per hour, roughly four times their hourly wage in other activities, but this higher wage represents relatively meager compensation for the significant risk they bear. Prostitution activities are organized very differently across neighborhoods. Where pimps are active, prostitutes appear to do better, with pimps both providing protection and paying efficiency wages. Condoms are used only one-fourth of the time and the price premium for unprotected sex is small. The supply of prostitutes is relatively elastic, as evidenced by the supply response to a 4th of July demand shock. Although technically illegal, punishments are minimal for prostitutes and johns. A prostitute is more likely to have sex with a police officer than to get officially arrested by one. We estimate that there are 4,400 street prostitutes active in Chicago in an average week.

The chart below shows that prostitutes who work with pimps earn higher wages and work fewer hours daily:

Moreover, the study finds that “women who work with pimps are much less likely to be injured by customers; one of the services provided by pimps is protection.” In addition, women working with pimps have significantly lower rates of sex acts performed as “freebies” to police officers to avoid arrest.

So who wouldn’t want a pimp?

‘Wages Grow for Those With Jobs, New Figures Show’

According to the New York Times:

For the first time since perhaps the Great Depression, it seemed possible that average hourly pay would actually begin falling, even before inflation was taken into account.

But that’s not what has happened.

Wage growth has picked up in the last several months, according to two different government surveys. You don’t hear or read nearly as many stories about pay cuts these days. Even though unemployment has reached its highest level in 26 years, most workers have received a raise over the last year.

That contrast highlights what I think is one of the more overlooked features of the Great Recession. In the job market, at least, the recession’s pain has been unusually concentrated.

And it hasn’t been concentrated in the typical way. Nearly every region and every demographic group has indeed been affected. But the pain has been concentrated within groups.

Teachers Pay Around the World

The graph below is part of the The Organization for Economic Cooperation and Development’s statistics on education around the world released on Tuesday. The average American public primary-school teacher with 15 years of experience and the minimum amount of training earns $46,633 annually. This is compared to the OECD average of $39,007:

Catherine Rampell from Economix explains that,

Comparing each country’s teacher salaries to the wealth of that country makes United States educational salaries appear lower. In the United States, a teacher with 15 years of experience makes a salary that is 96 percent of the country’s gross domestic product per capita. Across the O.E.C.D., a teacher of equivalent experience makes 117 percent of G.D.P. per capita. At the high end of the scale, in Korea, the average teacher at this level makes a full 221 percent of the country’s G.D.P. per capita.

Federal pay

From the Economist:

Chris Edwards, the author of “Downsizing the Federal Government”, points out that the average compensation (pay plus benefits) of a federal worker is now nearly $120,000 a year, twice what private-sector workers make.

And that’s in addition to cast-iron job security. A federal employee has only a 1 in 5,000 chance of being fired in any given year.

Just a thought, as the deficit explodes: can we afford such generosity?

Click here to read my previous post on the ascent of Federal pay.

The Continued Ascent of Federal Pay

The Bureau of Economic Analysis has released its annual data on compensation levels by industry. The data show an expanding pay advantage for federal civilian workers over private-sector workers.

Figure 1 shows at average wages. In 2008, the average wage for 1.9 million federal civilian workers was $79,197, compared to an average $49,935 for the nation’s 108 million private sector workers.

Figure 2 shows that the federal advantage is even larger when worker benefits are included. In 2008, federal worker compensation averaged $119,982,smore than double the private sector average of $59,909.

Thomas Sowell: Hollywood Economics

Thomas Sowell writes,

It is not really news that Hollywood is still producing anti-business movies, but there is a certain irony in it nevertheless.

Although these movies tap a certain envy and resentment of corporate wealth, that large corporate wealth comes from far more modest individual amounts of money from about half the population of the United States, which owns stocks and bonds — either directly or because money paid into pension funds or other financial intermediaries are used to buy stocks and bonds.

The irony is that the average Hollywood star who is making anti-business movies is far wealthier than the average owners of those businesses, who are half the population of the country.

The Los Angeles Times refers to documentary “films” that are “critical of corporate power.” But just what does this vague word “power” mean when it comes to businesses?

Click here to continue reading.

Wal-Mart outpays target

Wal-Mart out pays Target for cashiers, retail cashiers, sales associates and retail sales associates positions.

NYC Women earn more than NYC Men