New Report Confirms Public Sector Employees Earn Less Than Private Sector Counterparts

By Rozsa, Stephanie | Nation's Cities Weekly, August 16, 2010 | Go to article overview

New Report Confirms Public Sector Employees Earn Less Than Private Sector Counterparts


Rozsa, Stephanie, Nation's Cities Weekly


After examining labor data spanning a quarter century, researchers conclude that state and local government employees earn less total compensation than their private sector counterparts with similar education, training and work experience.

A report commissioned by the Center for State and Local Government Excellence (CSLGE) and the National Institute on Retirement Security finds that in 2008, state and local workers averaged 11 percent and 12 percent smaller salaries, respectively, than similarly qualified private sector employees.

The report determines that while benefits compose a slightly larger share of total compensation in the public sector, the difference is not dramatic (4 percent), especially in comparison to larger private sector firms. With benefits factored in, state and local employees still earned an average of nearly 7 percent and 7.4 percent less, respectively. This trend holds true across and within some of the nation's largest states, including New York, California, Michigan, Pennsylvania, Illinois and Texas.

The report is a rejoinder to the debate about public sector compensation recently reignited by a spate of media attention.

The most infamous story came from Bell, Calif., where the city of 37,000 paid several top employees egregious salaries, including $800,000 to the chief administrative officer.

In a series of articles, "USA Today" (most recently on August 10) reported that public sector employees are overcompensated compared with their private sector counterparts. The newspaper's analysis compared the salaries of similar occupations in each sector, accountants to accountants, for example.

While this approach may seem logical, the reality is that 80 percent of private positions do not have direct public sector equivalents.

For the 20 percent of occupations that allow comparison, USA Today only relays the raw salary differences that suggest higher earnings for state and local workers.

While both reports draw data from the same source--the U.S. Bureau of Labor Statistics--USA Today fails to take into account the fact that the average public employee has a higher level of education than his or her private sector counterpart. …

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