Public Employee Pay Gains Outpace Private Sector

There is a widening gap between the total compensation (pay and benefits) of state/local government workers and private sector employees, according to a recent article "State, local government workers see pay gains" in USA Today.  This conclusion is based on an analysis of data reported by the Bureau of Labor Statistics, which shows that state and local government employees now earn an average of $39.50 per hour in total compensation versus the $26.09 an hour earned on average by private sector workers. 

The data show that the gap has been widening every year, rising by an average of $1.02 an hour last year and $2.45 an hour over the past three years.

The article points out that benefits are a big factor in the growing gap, as private sector companies have trimmed pension benefits and asked employees to pay a greater share of medical costs, while few governments have imposed similar restraints.

Comments

[Frank Giancola]

Ann,

Those are strange numbers. If you take out the cost of benefits, the private sector average wage is $18.42 and the public is $26.26. It must be that the public sector includes more professionals, managers and unionized wage employees, proportionately, than the private sector.

When we advertised jobs in the public sector, our tag line was "Good Pay, Great Benefits."

Frank

[Ann Bares]

Frank:

I can't pretend to have a deep knowledge of that data; it is possible that there is a job make-up difference that accounts for some of the gap, and certainly the impact of unionization could be a factor(although that certainly exists in the private sector as well, tho perhaps not as pervasively). I do know, though, because I have done the studies using local surveys, that public sector employees are (often? typically?) paid at higher levels when you do direct comparisons (e.g., accountant to accountant, receptionist to receptionist). And my consulting colleagues who focus on that sector tell me that it's the case.