State government employees out-earn private sector peers by 6 percent, study finds

Maciej Walczak/

The debate over how public and private sector compensation stacks up is playing out at both the state and the federal levels. On average, state government employees make 6 percent more than their private sector counterparts, a study released Thursday finds.

The study, released by the nonprofit group Citizens Against Government Waste, was conducted with the research firm John Dunham and Associates. Researchers analyzed state government employee wages and benefits in all 50 states, comparing public and private sector workers across 22 occupational categories provided by Bureau of Labor Statistics breakdowns of specific career fields such as architecture, engineering and transportation. According to Citizens Against Government Waste President Thomas Schatz, this study differs from others comparing public and private sector pay because it looks at details within individual states and across occupations.

According to the study, no state government pays its employees at or below private sector wages. Texas has the largest difference between public and private sector pay, researchers found, while Utah and Montana have the smallest disparities.

“The disproportionate public sector compensation is a major driver of unfunded state and municipal pension liabilities across the country, which has been accurately described as looming financial crises by pundits and experts of all political stripes,” Schatz said in a statement.

Schatz was joined at a press conference unveiling the study by city councilman Pete Constant, who discussed the negative effects that rising public sector salaries and pensions have had on public services such as law enforcement, fire protection and infrastructure repair for San Jose taxpayers.

“Politicians should not be asking hardworking taxpayers in the private sector to pay more for the pay and benefits of their better compensated public sector counterparts while making devastating cuts to the essential services our residents rely on,” Constant said.

The study emphasizes the plight of bankrupt municipalities -- Stockton, Calif.; Harrisburg, Pa.; and Boise County, Idaho -- where high salaries, and particularly unfunded pension liabilities, have contributed to dire fiscal realities.

“Without real changes to the existing system, entire states may find themselves insolvent,” Schatz said.

Another organization, the Economic Policy Institute, called the findings in the CAGW report Thursday “bunk,” and cited other studies that have found contradictory results.

EPI said in a statement that the CAGW report fails to mention that employee pensions have been underfunded because of the stock market collapse between 2007 and 2009 and that poor municipal funding often is the result of “political and moral failure of politicians to make the contributions that are required every year.”

The group added, “rather than treat pensions as an obligation, many elected officials failed to make some or all of the actuarially required contributions during the bull market years of the last decade.”

The gap between public and private compensation also has been in dispute at the federal level. This summer, the Government Accountability Office concluded that comparing public and private sector pay at the federal level is difficult and opposing conclusions are reached depending on the data used and the bias of the group conducting the study.

(Image via Maciej Walczak/

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