In Wisconsin Are Public Workers Overpaid Or Underpaid?
As an employee signing a contractual agreement, your best alternative determines your negotiating power. If you are offered $100,000, a bonus, pension plan, health benefits, career path, severance payment and so forth, you can readily compare this to your alternatives and then decide.
In evaluating Wisconsin, consider first the case of the contractual agreements for the academic staff of universities. When you first get a PhD, and appear to be a promising scholar, a number of universities may compete for you. You then choose.
The university's standard contractual offer is a position of an "assistant professor" for three years. If your performance is satisfactory, the university later offers you another three years with the same title. After this renewal, you are either "in" or "out."
If you are in, your ability to negotiate a significantly better compensation depends upon getting offers from other universities or from alternative employment opportunities. If you lack these, your salary would rise by a relatively small amount. The increase mostly depends upon internal bureaucratic criteria: counting publications and citations, administrative tasks, performance in the classroom, ability to get grants, visibility outside the university, attracting donors and so forth.
Since the overall compensation in the university depends to a large extent on competing offers, academics may neither be overpaid nor underpaid significantly - under the present financial arrangements. That is, if the government happens to allocate just the "right" amount to this particular sector.
However, if the government makes a mistake, and gives far too much money to academic institutions, there is absolutely no way to determine statistically if the academic staff is over- or underpaid. If the government misallocates and gives too little to this sector, then academics may be initially underpaid...
- Article by Professor Reuven Brenner. He holds the Repap Chair at McGill's Desautels Faculty of Management.
Read full article: Forbes, March 3, 2011