Wage Gaps in the Public and Private Sectors

I was surprised to hear last class that pay for public-sector executives has been on the rise relative to that of private-sector executives, so I did some more reading on the subject.  I was surprised to discover that not only has executive compensation in the public sector been rising, but that there has also been a general rise in public sector pay relative to the private sector pay since 2001.  This is most likely due to better educated and older public-sector workforces (as Prof. Casey mentions in his last post) and the skyrocketing costs of generous public benefits and pensions.  See this chart: 

From Mandel on Innovation and Growth

In fact, as I dug deeper, I found that studies on public-sector wage trends actually tend to be in slight opposition to what we discussed:  though the average public-sector worker is more highly paid than the average private-sector worker, private-sector employees do out-earn public sector employees at the high-end executive level.  See this:

From the New York Times 

Notice that the private-sector "wins" here only at the low end and the $150k+ end.  Here's a study by Harvard economist George Borjas showing how significantly top private executives out-earn top public executives.

So this may be bad news for us aspiring public-sector execs, but I would consider it a "plus" for the public-sector in general:  there is much less of the stratification that has plagued our society within public institutions.  In fact, in something of a Swiftian proposal, conservative columnist Ross Douthat has suggested that, if liberals want to reduce income inequality, they should simply grow the public sector:

"This is the lesson of Western Europe, where the public sector is larger and the income distribution much more egalitarian. The European experience suggests that specific policy interventions— the shape of the tax code, the design of the education system — may matter less in the long run than the sheer size of the state. If you funnel enough of a nation’s gross domestic product through a bureaucracy, the gap between the upper class and everybody else usually compresses."  

Of course, the implicit danger here is that a larger public sector would result in a slower economy, but I'm not sure that is a fair implication.  After all, a huge private sector economy has proven to create bubbles and our recent economic disaster.  But I don't know.  Is "less stratification" a legitimate "plus" for the public sector (do those of you in the public sector see it affecting how your organizations are run)?  And is "key driver of statewide economic growth" a legitimate "plus" for the private sector?

Sean