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Worth vs. Value

by Susan Marden, Public Relations Consultant

A hard day’s work

On a recent visit to Manhattan, I found myself waiting at Columbus Circle for friends. There was a City of New York construction crew working on a pipe in a ditch at the intersection nearest me. Picture it: five guys are in the ditch, and by the looks of them, they’d been there all day. They’re grunting and heaving and trying to fit two pieces of pipe together. Colorful language is emanating from the ditch, but also raucous laughter and so my interest was piqued.

They were trying to replace a broken section of pipe in a line that probably dates to the 19th century and snakes its way up 7th avenue all the way to the 79th Street Basin. They had cut a new piece, but were having trouble fitting it to the line. There were conversations about cutting pipe, greasing pipe, grading the site– all these thoughts, ideas and suggestions batted around by a crew that probably had a collective 100 years’ experience and who were going nowhere until the ditch was back-filled.

Meanwhile, Columbus Circle is whirling around them with frenetic energy, horns honking, people sidestepping the site, when I heard one passerby say to his companion, “You couldn’t pay me enough!”  And that’s when I started thinking about worth vs. value.

For what it’s worth

Worth is what the market says a person should be paid for performing a service. It is, of course, relative to things like education, or geographic markets –it pays more to be an engineer in New York City than in Dubuque. Still, there is a fixed range of wage that workers can expect for any job. The education, qualifications and experience required to perform a job determines the worth of the job and, therefore, its wage. Wages are paid in salary and benefits.

Value is what an employer gets for that wage. An exceptionally qualified worker who also happens to be reliable, conscientious and highly focused on her job is still only going to receive the prevailing wage, but her value to her employer is far greater than the wage alone. There is no price on value.

A good value

In the private sector, wages are also determined by the employer’s need or desire to be highly competitive, which often puts upward pressure on wages. In the public sector, there is no upward pressure on wages, which are stifled by the limits of taxpayer dollars.

The crewmen in the ditch probably were making the prevailing wage for manual labor construction jobs. But their combined knowledge and commitment to work even under the most difficult conditions put a much higher premium on their value – especially since the broken pipe was part of the water main to the Time Warner building, which houses thousands of private sector workers depending on it.

Taxpayers continue to side-eye public employees’ pension plans, sometimes openly denigrating that portion of their compensation, but they and their elected officials would be wise to calculate value into any equation when evaluating compensation.

Public employees have longer tenure than their private sector counterparts and higher education levels, According to the Economic Policy Instituteabout 54% of public servants at the state and local level have a college degree, compared to 35% in the private sector. Given that public employees provide vital services of extremely high value to taxpayers, it should concern them that benefit cuts are causing municipalities to experience difficulty attracting qualified personnel.

EPI concluded that, “when comparing employees with similar education and other characteristics, state and local workers across the country are underpaid relative to workers in the private sector. Estimates of the gap between public and private-sector compensation vary, but a 2010 study found that total compensation for state workers in the U.S. was, on average, 6.8% lower than compensation for comparable private-sector workers. Public workers at the local level, meanwhile, were 7.4% less than their private-sector counterparts.”  This disparity traditionally has been mitigated by public sector retirement benefits. Without those benefits, talented workers are drifting away from public sector jobs.

The Center for State and Local Government Excellence also recently issued a working brief comparing the effects of benefit cuts on private sector candidates looking for jobs in the public sector. “Taken together, the results imply that the public sector had trouble hiring and retaining the same type of workers it used to after a benefit cut,” the brief says.

Maybe we should stop thinking about the cost of public pensions and start thinking about their value.