Public Employee Pay Lagging, Despite State Budget Improvements

The salaries of state- employed professionals exhibited sluggish growth for the second straight year, according to the 2005 AFT Public Employees Compensation Survey, the only national survey that tracks such trends.

At a time when most states are recovering from the budget crises of the past few years, the survey raises concerns that inadequate workforce investments could diminish the quality of already strained public services and hamper recruitment and retention efforts.

“Years of layoffs, hiring freezes and salary freezes have resulted in public services being stretched to capacity, with public employees asked to do more with less,” said Edward J. McElroy, AFT president. “While public employees have risen to the challenge, some relief is now in order-not only for their sake, but for the sake of all of us who rely on the public services they provide.”

The new report reveals that the median salary increase across the 45 jobs surveyed was just 1.19 percent from 2004 to 2005, significantly below the inflation rate of 3.15 percent for that period.

From 2002 to 2005, the median cumulative increase was only 4.6 percent, which compares to an inflation rate of 8.11 percent. The survey further finds that public sector professionals are significantly underpaid compared to their private sector peers.

The AFT survey comes at a time when states are regaining their financial footing after one of the worst budget crises in a generation. Since the last quarter of 2003, states have recorded six consecutive quarters of real revenue growth, with continued growth expected, according to a June 2005 study by the Rockefeller Institute of Government.

“With state finances moving in the right direction, states need to be wise stewards of their funds,” said McElroy. “Instead of squandering resources on short-term tax giveaways for a few, states should invest in high-quality public services that will benefit the vast majority of citizens for years to come.”

The AFT report highlights a significant private/public sector salary gap that could exacerbate a growing recruitment and retention crisis in state government workforces. In many states, it is estimated that more than 20 percent of state employees will retire in the next five years, heightening the need to attract highly skilled workers to the public sector.

Yet, the AFT analysis shows that private sector salaries exceed public sector salaries in 18 of the 21 cases in which job matches were made-in two cases (attorney and geologist) by as much as 90 percent. Across all 21 occupations, salaries in the private sector are, on average, almost 30 percent higher than those in the public sector.

“With so many experienced professionals expected to retire in the near future, certain states run the risk of a major ‘brain drain’ if they don’t make their salaries more competitive,” said Steve Porter, director of the AFT Public Employees division. “And the stakes are high. The quality public services that we’ve come to depend on-everything from clean air to safe bridges to health and human services-are at risk.”

One factor that helps reduce the public/private sector salary gap is collective bargaining. The AFT report finds that, for 43 of the 45 occupations surveyed, the average salary in collective bargaining states exceeds that in states where public employees are denied collective bargaining. On average, collective bargaining salaries exceed noncollective bargaining salaries by 16.2 percent.

The AFT Public Employees Compensation Survey has been published annually since 2000. The survey examines 45 representative job titles, asking states to match the job description provided by AFT Public Employees. This methodology allows for salary comparisons across states for a particular job title, although cost-of-living and other factors should be considered.

“This survey shows once again that public employees are a bargain to the taxpayers and citizens who benefit every day from essential public services,” said McElroy. “Public employees are the people who police our streets, inspect our food, maintain our parks, repair our roads-and, in general, see to it that our states and communities run smoothly and safely. Investing in public services-and the employees who provide these services-is one of the smartest choices we can make.”