Study: State, local government workers earn less than private sector
Employees of state and local government earn an average of 11 percent and 12 percent less, respectively, than comparable private sector employees, according to a study released Wednesday. Commissioned by the Center for State and Local Government Excellence (SLGE) and the National Institute on Retirement Security (NIRS), “Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years” shows that the pay gap between public and private sector employees has widened in recent years.
The report’s authors, University of Wisconsin-Milwaukee Department of Economics associate professors Keith Bender and John Heywood, analyzed data from the U.S. Bureau of Labor Statistics to conduct the study. Among the findings:
Jobs in the public sector typically require more education than private sector positions. Thus, state and local employees are twice as likely to hold a college degree or higher as compared to private sector employees. Only 23 percent of private sector employees have completed college as compared to about 48 percent in the public sector.
Wages and salaries of state and local employees are lower than those for private sector employees with comparable earnings determinants, such as education and work experience. During the last 15 years, the pay gap has grown. Earnings for state and local workers have generally declined relative to comparable private sector employees.
The pattern of declining relative earnings remains true in most of the large states examined in the study, although there is some state level variation.
Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, healthcare and other benefits, state and local employees earn less than private sector counterparts. On average, total compensation is 6.8 percent lower for state employees and 7.4 percent lower for local employees than for comparable private sector employees.
Read the entire story from American City and County, our sister publication.