I told you I was underpayed...

The Myth of Overcompensated Public Employees

Two new studies debunk the idea, prevalent in these days of threatened austerity, that public employees are “overcompensated.” It only ever meant that they supposedly get better pay and benefits than their private-sector counterparts (though that could just mean that the private-sector undercompensates). But it turns out that it really isn’t true.

The first one is from the good folks at the Political Economy Research Institute–a new study called The Public Worker Wage Penalty in New England. Here’s the abstract:

The refrain that government workers are overpaid, and taxes support outsized benefit and salary packages returns with each state and local budget season. But in their new study, “The Wage Penalty for State and Local Government Employees in New England,” PERI’s Jeffrey Thompson and John Schmitt of the Center for Economic Policy Research demonstrate that in New England the reality is just the opposite. While the average state or local government worker does earn higher wages than in the private sector, this is because they are, on average, older and substantially better educated. In reality, there is a wage penalty for state and local government workers in New England of close to 3%.

And the Economic Policy Institute has a new briefing paper called Debunking the Myth of the Overcompensated Public Employee. Here’s the rather wonkish abstract:

The research in this paper investigates whether state and local public employees are overpaid at the expense of taxpayers.

This research is timely. Thirty-seven states are struggling with substantial budget deficits. Several governors have identified excessive public employee compensation as a major cause of their states’ fiscal duress. The remedies they propose include public employee pay freezes, benefits reductions, privatization, major revisions to the rules of collective bargaining, and constitutional amendments to limit pay increases, each as a necessary antidote to the public employee overpayment malady.

The data analysis in this paper, however, indicate that public employees, both state and local government, are not overpaid. Comparisons controlling for education, experience, hours of work, organizational size, gender, race, ethnicity and disability, reveal no significant overpayment but a slight undercompensation of public employees when compared to private employee compensation costs on a per hour basis. On average, full-time state and local employees are undercompensated by 3.7%, in comparison to otherwise similar private-sector workers. The public employee compensation penalty is smaller for local government employees (1.8%) than state government workers (7.6%).

Link:
http://beforeitsnews.com/story/180/072/The_Myth_of_Overcompensated_Public_Employees.html