Another Study Busts the Myth of the "Overcompensated" Public Employee

A recent study by the Economic Policy Institute, a non-profit Washington D.C. think tank, demonstrates that when salary and benefits are considered together, state government workers receive a compensation package 7.6% lower than comparable private sector employees.

The study, entitled Debunking the Myth of the Over-Compensated Public Employee, controlled for factors such as education, experience, hours of work, gender, organizational size, and race.

As expected, the study found that retirement and health insurance benefits comprise a larger share of compensation for public employees than for private sector employees. Wages and bonuses for private sector employees are higher than for government workers.

The public perception that state government workers are overcompensated may result from some under-appreciated factors. While small employers outnumber large private firms, large firms with more than 500 employees employ nearly half of all workers. Government pays high-school educated workers more than comparable private sector employees. For college-educated labor, however, state and local employers pay on average 20% less than private employers in total compensation.

Wisconsin state employees, facing calls to contribute to their pensions and pay more for their health insurance, might want to emphasize that the focus should be on total compensation, not any one benefit. The last 1% of the employee pension contribution was picked up by the state in 1983, when the state faced a serious deficit and made the contribution instead of granting any pay increase. Because the state contribution was not subject to social security taxes, this was beneficial financially to the taxpayers as well as to the employees.

Any change should be negotiated with a comprehensive view of total compensation, which this study shows is somewhat lower than comparable private sector pay and benefits.

For more information, see the full EPI study here.

Of course, public employees on the front line know from experience that they are hardly a pampered class.

But gut feelings are backed up by other studies, like the recent study from the Center for State and Local Government Excellence.  Like the EPI study, this one compares apples to apples and reaches a similar conclusion.

Not only are public employees generally paid less than comparable private sector employees, another study shows that Wisconsin has fewer public employees per capita than most states.  

So, those politicians wanting to balance their budgets on the backs of public employees are not basing their attacks on the facts.  It's just more campaign posturing.  Is anybody surprised?