Tools for political truthiness: the public, total-compensation calculator

Protester in Madison, Wisconsin, 2011

Are teachers paid poorly, or well?   How much does it cost the city to employ one policeman?  Is that a good salary offer, or is it better to be a plumber?

These are basic questions we encounter all the time, personally and in political debate.

But it seems that people vary widely in their estimations and perceptions of who is paid what.  For example, U.S. opinion appears to be highly polarized regarding the compensation of public-sector workers, and there doesn’t seem to even be much factual common ground in the discussion (as with other many another policy issue).

So, in the typical wonk / librarian / nerd hope that better information will address the problem, and the lions will lie down with the lambs, I propose making an online tool to help this discussions.  To be neutral, let’s just call it a Compensation/Cost Calculator, Public, or CCCP.

I suspect that even a fairly simple calculator could be much more truthy than the vague, spurious claims that are tossed around in most political discussions.  Just imagine a straightforward Web site, at which you can plug in values for a few or many variables describing a job or job field, and get an adjusted total-compensation figure.  The point is that it can be a neutral, transparent model, so that anyone could analyze a job, or see and compare to others’ analyses of other jobs, using explicitly defined assumptions and formulae.  Any calculation can be preserved and cited;  someone could go back to it, challenge or tweak its assumptions.  A particular configuration of the model can be applied to any new or prior set of inputs, so you could for example see how jobs compare when you make different assumptions about health-care costs or pension-fund rates of return.  As compared to, say, comparing press releases from duelling lobbying, err advocacy groups, which are probably worse than useless.

The basic idea here is taken from the “total compensation” estimates or calculators offered by many larger employers, which attempt to quantify the total value of employees’ wages/salary, benefits, vacation time, etc.  A non-monetary benefit such as vacation time, for example, may be quantified by a device such as taking annual salary, dividing by paid work days, then multiplying this by number of vacation days — i.e. they are “paying” you for these days.   (Contrived as that may be, it provides a way to quantify our common-sense intuition that, say, a job with twelve weeks of vacation is better than one with two weeks).

However, unlike a employer’s calculator, our CCCP would be a general model, publicly available, with all inputs and assumptions transparent and modifiable.  Also, it could offer reputable data to use for many of the inputs, such as typical salaries, health-care costs, inflation estimates.  It could conceivably be linked to any relevant public data store such as public-sector salary records and Federal economic statistics, using Semantic Web / “linked data” methods (see http://linkeddata.org/).

There might also be a database of prior analyses of real jobs, if you were curious to look at or model on, say, actual UAW contract terms from Detroit, or what we pay members of Congress.  Perhaps if enough people got interested, you’d develop something of a global salary database, a more sophisticated version of the salary surveys that exist now.

So, of course you’d have basic variables such as:

  • Salary / wages / overtime
  • Current benefits, such as health care (absolute cost, or as percentage of salary.  As default, use a HR rule of thumb such as 35%)
  • Retirement benefits
  • The present-day annual cost, or compensation, for such deferred retirement benefits would be the amount that an employer would have to invest this year to sufficiently contribute to future total retirement costs.  This is a complicated calculation, but that’s why we have actuarials.

This model could have further and further levels of refinement:  for example, incorporating

  • Typical or promised pay raises
  • Trends in benefit costs.  (e.g. health care cost increases)
  • Job stability (e.g. as expressed by % annual turnover of employees in this field).   Most people value this, and you could propose a way to quantify it into total compensation.
  • Long-term risks, e.g. of corporate or governmental bankruptcy curtailing promised retirement benefits.
  • Estimate cost / years of required post-secondary education
  • taxation factors

Our CCCP tool could be extensible so that anyone could add new factors to refine the model, for optional use by anyone else.

Note, you could possibly use such a compensation calculator in two ways:
a)  compensation value to ME (factors such as your particular age may change calculations of, e.g. retirement benefits).
b)  compensation/cost on *average*, using inputs such as average worker age and salary.

Incidentally, the implications of this may be various.  For example, if teachers are shown to have relatively good compensation, then this might encourage more high-achieving students to pursue careers in teaching, which would be good for education.  If teacher compensation is shown to be low, this might encourage increased funding, which might also be good for education.  Some job fields, public or private, might be shown to have remarkable high or remarkably low compensation, and corrective action of any sort might ensue.  Those beleaguered financiers and executives, for example — maybe they’d at last get some respect.

But the CCCP takes no position.  We merely favor truth.

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As usual, to this post I add the disclaimer that, this may have been already proposed and done, I’m not sure because this is a blog post and I haven’t, of course, done exhaustive research or even half the relevant reading from the “field”, whichever field that would be.  It’s the Web, you know?

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