Public Service and Teacher’s Salaries
Full disclosure. I was the president of a localPublic service union but at the same time might be taking what is considered a conservative position. Be that as it may, I firmly believe that the public service in Canada is the most equitable employer in the country because the ratio between the lowest and highest paid employees is a lot smaller than is the case in large private sector corporations. In the private sector, on average, a CEO earned 149 times more than the average employee in 2018. The CEO of the Bank of Montreal earned $11.1 million in 2020, 367 times the amount of a teller working 40 hours per week. He earned more in one than any of his tellers did in one year. You can decide if that is fair compensation for for a CEO who did not meet his objectives for the year. In the Public service, on the other hand, the ratio is closer to 3 or 1 ($70,000 compared to $200,000). Furthermore, the ratio between the lowest paid clerk and the Clerk of the Privy Council (a cabinet minister) is only 6 to 1. I firmly believe that Canada should institute a basic income that a family can live on.
Having provided the above comments as a backdrop I now come to my principle arguments which will be controversial.
Pay Increases, Absolute or Percentages.
What is the fairest method of increasing wages, absolute increases or percentage increases and for whom?
When I worked for the Hudson Bay Mining & Smelting Co. before going to university in 1960, wage increases were given in cents per hour. Earning $1.96 per hour when I started, I received a $0.07 increase as did everyone, regardless of job classification. In order to earn an even higher income, one had to change jobs through transfer or promotion. Was this method fair? From the company perspective, it kept wages significantly lower. The absolute gap between the lowest paid workers and higher paid workers remained the same under this system. For example, if one earned $5,000 per year in 1960 and received a $100 increase per year for 20 years, your salary after 20 years would be $7,000., or an increase of 40% in total. For, the employee earning $10,000, the increase would be the same, $2,000, for a total of $12,000. However, the total percentage increase would only be 20%, resulting in a big saving for the company but a relative loss for the higher paid employee. As a general principal, it also puts less inflationary pressure on the economy and keeps products more competitive. However, is it fair to the higher paid employees to see their relative wages go down. They would not probably think so.
This regime changed when, after a lengthy strike, the plant was unionized and pay increases were calculated on a percentage bases.
What happens using this same example. Hypothetically, if all workers received an increase of 2% per year for 20 years, the pay package for the employee originally earning $5,000 would increase to $7,430, or by 49%, an absolute increase of $2,430. The annual salary of the higher paid employees would jump to $14,859, the same overall percentage increase of 49% but an absolute increases of $4,859. Lower paid employees might think this is quite unfair. There increased spending power is only about 60% of that of the higher paid employees. The tables have turned.
From a macro economy perspective this brings maximum inflationary pressure. Is there a compromise position. One could argue that it is most important to protect the entire salary of the lowest paid workers against inflationary pressure. Conversely, it could be argued that the higher earners have more discretionary income and thus not all of it need be protected against inflation. Thus, one could increase their salaries by the rate of inflation. For the higher paid workers, the portion of the salary equal to the lowest paid workers would be increased by the rate of inflation and the remainder increased, say, by half the rate of inflation.
Turning to my same hypothetical example, the salaries of the higher paid workers would increase to $13,469 or by 35% instead of 49%. It would still be a significantly higher absolute increase for the higher paid workers but not with the same inflationary pressure.
Lest you think governments are not interested in such pressures, some will remember the draconian interest rates of 22% of the mid 1980s, and the freezing of Public Service wages for six years. On the latter issue it would have been far less harsh to at least have increased the base salary by a modest percent. Incidentally, the wage freeze was judged to be a violation of law and for compensation, Public Servants were provided a dental care insurance plan.
Perhaps this ‘tiered’ approach could be applied among all industries.
Teachers’s Salary Scales
Teachers are also Public Servants and thus this formula could apply to them as well. But there is a second dimension to teacher’s salaries that warrants examination. It would seem axiomatic that one should be paid for the job you are hired to perform and not for your level or type of education. To be sure, many jobs require a certain level of education or specific training and thus there will be a high correlation between level of education and financial remuneration. I worked in government as a research analyst and was paid commensurate with my classification, not my education (a PhD). The base education required when I joined was a B.A. As I concluded my career, most recruits were required to have an M.A.
The exception to this general rule appears to be the teaching profession, one of the professions to which I belonged for six years. In my first year of teaching I received an immediate raise of $600, annually, when I completed my B.A. The logic for paying teachers for their level of education was to encourage teachers to improve their education and thus, in theory, make them better teachers. To a point this is logical and commendable. However, there are diminishing returns. Does a masters degree in mathematics make you a better primary school teacher than a B.Ed would? If you are better, are you that much better? If so all teachers should be required to have at least an Masters degree.
Education has become enormously expensive in part because teachers are becoming more highly educated and garner higher salaries as a result. If one were to bring teachers salaries within the normal structure of how wages and salaries are determined, on the principal of equal pay for work of equal value, then teacher’s salaries would come down. The funds saved could be allocated to other pressing needs within the education system. As it is, salaries have become an increasing portions n of the educational n budget.
I must confess, however, that if one attempting to implement either of these regimes might result in massive Labour unrest. What government would be courageous of foolish enough to try? On the other hand, many attempts have been made, some successful, to freeze public service and teachers’s salaries. Perhaps this would not have been necessary if salary increases had been more modest for higher earners or teachers salaries were geared to job, not education.
