Public employees earn more than 10 percent less than their private sector counterparts and better pension and health care benefits do not make up the difference, according to a new study.
The report from the Center for State and Local Government Excellence and the National Institute on Retirement Security (NIRS) found the state workers earn 11 percent less than private sector workers with comparable education and experience while local workers earn 12 percent less, and over the past 15 years, the gap has expanded. In California, the wage differentials are 9.8 percent for state workers and 6.1 percent for local workers.
“The picture is clear,” said Keith Bender, a co-author of the report and an associate professor in the Department of Economics at the University of Wisconsin-Milwaukee. “In an apples-to-apples comparison, state and local government employees receive less compensation than their private sector counterparts. These public sector employees earn less than they would earn if they took their skills to the private sector.”
The value of retirement, health care and other benefits is, on average, greater for public employees, but this only makes up for part of the difference. Even after accounting for benefits, the report found, total compensation is still 6.8 percent lower for state workers and 7.4 percent lower for local workers.
“For a long time, there has been a compensation trade-off in public sector jobs – better benefits come with lower pay as compared with private sector jobs,” NIRS executive director Beth Almeida said. “This study tells us that is still true today. What’s striking is that, on a total compensation basis – looking at pay and benefits – employees of state and local government still earn less than their private sector counterparts.”
The report concluded that, based on the findings, “now is not the time to advocate for large-scale rollbacks in the compensation of state and local workers.”
“Although the current recession calls for equal sacrifice, the long-term pattern indicates that state and local workers are not, on average, overcompensated,” the report stated. “If the goal is to compensate state and local sector employees in a manner comparable to those in the private sector, the data do not call for reductions in state and local wages. If anything, they call for increases.”
CalPERS is working hard to ensure the retirement and health security of our members, provide help to our employers, and manage our investments to meet our long-term liabilities. We hope this information provides education, insight, and clarity.
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