Benefits of government work
This article originally appeared on watchdog.org.
MADISON, Wis. — Liberals have spent the past two election cycles frothing at the mouth about “equal pay,” as Mitt Romney’s former deputy campaign manager Katie Packer Gage put it, trying to “paint Republicans as backward cavemen” on the issue as part of their so-called “War on Women.”
But you don’t hear much indignation from the left about equal pay when it comes to the public and private sectors. They don’t seem offended that heavily unionized public-sector employees, on average, earn more than private-sector employees in like positions.
While it’s difficult to precisely compare government and private-sector compensation due to differences in education, average age and other factors, the general data show government work is a comparatively good gig if you can get it.
A recent Rasmussen Reports poll finds a majority of Americans feels the same. The survey of 1,000 adults, conducted on April 30-May 1, shows 51 percent of the respondents believe government workers not only earn more money than those in the private sector, but also work less and have more job security. Half as many (26 percent) disagree, while 23 percent are not sure, according to the telephone survey, which has a margin of error of plus or minus 3 percent.
On average, the majority is right.
Private-industry employers spent an average of $29.63 per hour worked for total employee compensation in December 2013, according to the most recent report from the U.S. Bureau of Labor Statistics. Total compensation costs for state and local government workers averaged $42.89 per hour worked, according to the BLS report, released in March.
A study published in 2010 by the Center for State & Local Government Excellence and the National Institute on Retirement Security asserts the numbers are misleading. The authors, University of Wisconsin-Milwaukee economics professors Keith A. Bender and John S. Heywood, insist that, on average, state and local government workers are better educated and have more work experience than do their private sector counterparts, demanding higher compensation.
“Thus, the fact that public sector workers receive greater average compensation than private sector workers should be no more surprising than the fact that those with more skills and education earn more,” the study’s authors conclude.
In terms of salary, the pay differences often are marginal. Depending on the state or local government, public-sector wages are often lower than in the private sector. Wisconsin employees, for instance, earn about 10 percent lower salaries than similar private-sector employees in the Badger State, according to a new study by the American Enterprise Institute.
A 2012 Congressional Budget Office report found that, overall, the federal government paid 2 percent more in total wages than it would have if average wages had been comparable with those in the private sector.
But it’s the benefits that ultimately tip the balance for the federal government’s approximately 2.3 million civilian workers who claim a combined $200 billion in total compensation.
“On average, for workers at all levels of education, the cost of hourly benefits was 48 percent higher for federal civilian employees than for private-sector employees with certain similar observable characteristics,” CBO estimates.
In its latest study, “Overpaid or Underpaid? A State-by-State Ranking of Public-Employee Compensation,” AEI tracks public-sector pay in all 50 states.
“There are big differences state to state,” said Andrew Biggs, resident scholar at the American Enterprise Institute and co-author of the study. “Some states pay over, some states pay less than the market value.”
On average, thanks mainly to generous benefits packages, the public sector earns 13 percent more than the private sector, the study finds.
Connecticut, for instance, pays its state employees 42 percent more than what similar private-sector workers receive, while Virginia pays 6 percent less, according to the analysis.
While Wisconsin public-sector employee salaries are about 10 percent less than similar positions in the private sector, state workers’ total compensation — thanks to very generous health care and pension benefits — comes out about 11 percent higher than their private-sector peers, according to the AEI study.
Wisconsin’s government employees still fare well post-Act 10, Gov. Scott Walker’s reforms of public-sector collective bargaining, according to a report Biggs published in 2012, nearly a year after the law took effect. Though public employees are now expected to contribute 5.8 percent of their pay for their pensions, a private-sector worker would have to save over 30 percent of her salary in a 401(k) to receive the same retirement benefits.
“Nationally, it matches up to what you would expect,” Biggs said. “The states that overpay you expect are going to be union-heavy states like California, Illinois, Pennsylvania, New York, states with big pension benefits, as opposed to states like Indiana or Virginia.”
And Big Labor can make a big difference on pay scales.
A Congressional Research Service study issued in March finds the wages of union workers may be 10 percent to 30 percent higher than the wages of nonunion workers.
Contact M.D. Kittle at [email protected].