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Next time you are watching the news, and you hear a story about state and local government employees’ pay and benefits breaking government budgets—turn the channel. If your newspaper runs a story about how public employees’ compensation is bleeding taxpayers dry—write a letter to the editor.
A report issued on April 28 “challenges some widely held beliefs” about state and local employee salaries and total compensation packages, which include the cost of benefits, says economist and report co-author John S. Heywood.
“Out of Balance? Comparing Public and Private Compensation Over 20 Years” finds that not only do jobs in the public sector typically require more education, but also that state and local government employees earn less than their private sector counterparts. The report was commissioned by the Center for State and Local Government Excellence and the National Institute on Retirement Security.
Heywood and Keith A. Bender, both professors in the Department of Economics at the University of Wisconsin-Milwaukee, found that local government workers typically earn 12 percent less than their private sector counterparts with comparable earnings determinants, including education and work experience. State employee wages and salaries are 11 percent less. When the value of public employees’ retirement, healthcare and other benefits is taken into account, total compensation for local government employees is 7.4 percent lower on average than in the private sector. For state employees, total compensation lags 6.8 percent behind.
Because jobs in state and local governments consist disproportionately of occupations that demand more education and skills, “accounting for these differences is critical in understanding compensation patterns,” Heywood says.
Specifically, Heywood and Bender found that 48 percent of state and local government employees finished college, compared with 23 percent of private sector workers. They also found that the state and local government labor force is disproportionately female, married, black, unionized and older.
Elizabeth K. Kellar, president and chief executive officer of the Center for State and Local Government Excellence, says the study sheds light on her organization’s January 2010 survey of hiring managers who work in government. “Hiring managers told us that despite the economy, they find it difficult to fill vacancies for highly skilled positions such as engineering, environmental sciences, information technology and healthcare professionals. The compensation gap may have something to do with this.”
The Center for State and Local Government Excellence identifies best practices and conducts research on competitive employment practices, workforce development and other issues, in an effort to help local and state governments become competitive employers in the knowledge economy. The nonprofit National Institute on Retirement Security is dedicated to promoting informed policymaking by fostering understanding of the value of retirement security to employees, employers and the economy. [Kathy Walsh]

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