One more data point in the public employee compensation debate

Public-sector workers provide services on which we all rely. If anything, they are undercompensated relative to similarly educated private-sector workers.

Andrew Cannon photo
Andrew Cannon

In the discussion of public workers and their compensation, let’s not lose sight of basic facts.

First, we rely on public workers every day. We may not see the public workers on a daily basis, but we certainly benefit from their work and services daily. Many of those services are such a normal part of our lives that we don’t even think about it.

So think about it for a minute. When you flush the toilet and the wastewater goes away but clean water comes out of your kitchen faucet, that’s the work of public-sector employees. The garbage and recycling you left on your curb Monday night did not magically disappear Tuesday morning; city sanitation workers collected that waste and took it away. Public employees educate our children in our elementary, middle and high schools and in our community colleges and universities.¬†They protect our neighborhoods and respond to emergencies. They treat our ill or injured relatives in hospitals and clinics; they keep our roads in working order and ensure that traffic signals work properly; they work to protect kids in dire circumstances.

Second, the reality is that these workers are underpaid when you make a fair comparison to comparable private-sector workers. IPP’s “Apples to Apples: Private-Sector and Public-Sector Compensation in Iowa” report highlighted this reality last February. Most public-sector workers earn less than similarly educated private-sector workers. When benefits are included, the gap in Iowa narrows but still remains.

Ours was not the only report to issue such findings. Such findings have been replicated again and again, all over the nation. Some reports found that benefits erased the compensation gap or even gave public workers a slight “advantage”; others matched Iowa’s findings in that benefits narrowed the gap but did not completely eliminate it.

Well, here’s another data point. “Comparing Compensation: State-Local Versus Private Sector Workers,” written by Boston College researchers, echoes many of the findings of the IPP report (as well as reports from the Economic Policy¬†Institute, the Institute for Research on Labor and Employment at UC-Berkeley, and the Center for State and Local Government Excellence studies).

The new Boston College report is notable for another reason, however. It examines assertions designed to undermine or call into question the findings of studies like IPP’s. Specifically, the report includes early retiree health benefits in the benefit package, adjusts for differences in pension/retirement packages between the two sectors, and examines the claim that public employees enjoy greater job security than private sector workers (when controlled for education level, they do not).

In sum, state and local government workers are paid about 9.5 percent less than private-sector workers. When benefit packages are included, the gap shrinks, but private-sector workers come out about 4 percent better.

Public-sector workers provide services on which we all rely. If anything, they are undercompensated relative to similarly educated private-sector workers. Should the debate around public employee compensation continue in coming months, let’s remember those two simple facts.

Better yet, let’s remind our family, friends, neighbors and elected representatives of those facts if the opportunity and need should arise.

Posted by Andrew Cannon, Research Associate

Author: iowapolicypoints

The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy. By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.

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