Economic Policy Institute Study: Public Employees Earn Less than Private-Sector Workers

[Better Believe It]

Public-sector workers earn less
January 5, 2011


Last year, EPI published a paper by Rutgers University professor Jeffrey Keefe, which supplied overwhelming evidence that public-sector workers, on the whole, earn less than those in the private sector.

Keefe offered some suggestions for why these public employees are often perceived to be overcompensated. For starters, public sector workers are, as a group, more highly educated, work in more highly paid occupations and they tend to work moderately fewer hours than those in the private sector. In addition, it is frequently noted that public employees earn more in benefits such as health care and pensions: therefore, a simple wage comparison will not accurately capture difference in total compensation. Nonetheless, after controlling for multiple factors including level of education, hours worked and non-cash compensation, Keefe found that, on average, full-time state and local employees are undercompensated compared to “otherwise similar private-sector workers.”

Keefe’s 2010 paper, Debunking the Myth of the Overcompensated Public Employee, is highly relevant today as public workers are increasingly blamed for the budget shortfalls of so many state and local governments. A recent series of New York Times stories have focused on this trend, noting that more and more political leaders are demanding concessions from their public workforces, and attempting to pass legislation that would weaken the labor unions that represent much of the public workforce.

Keefe found that private sector workers earned average annual wages of $55,132, $6,061 greater than the $49,072 earned by public sector workers. When looking at total compensation including employer-provided benefits, this gap narrowed but the private sector workers still earned $2,001 more per year than public sector workers ($71,109 in total compensation, versus $69,108). This gap was especially large among more educated workers. College-educated workers on averages earned $22,966 less in total compensation.



Read the full article at:

http://www.epi.org/analysis_and_opinion/entry/public_sector_workers_earn_less/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+epi+Economic+Policy+Institute#When:22:17:35Z

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