A favorite tactic of conservatives these days is to bash public employees – especially those who belong to unions – as overpaid and underworked, stoking resentment among workers in the private sector whose pay and benefits don’t measure up.
But a new study by the Economic Policy Institute blows a pretty big hole in the claim that public sector employees are overpaid. In fact, they’re actually a little bit underpaid in comparison with private sector workers with similar backgrounds.
“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,” the report states. “On average, full-time state and local employees are undercompensated by 3.7%, in comparison to otherwise similar private-sector workers.”
Public sector employees tend to be better educated than their private sector counterparts; 54% of full-time state and local government employees have four-year college degrees or better, compared to 35% in the private sector. Public employees at that education level receive 25% less in total compensation, on average, than private-sector employees with the same education level.
The more education the public employee has, the more underpaid he’s likely to be. Total compensation for private-sector employees with doctoral degrees averages $151,875, but in the public sector the average is only $120,642.
Less-educated workers, on the other hand, do make out a bit better in the public sector. Private-sector workers with only a high school diploma earn an average of $50,596 in total compensation, but those with the same education average $53,880 in public sector jobs.
The study found that public employees work somewhat fewer hours than their counterparts in the private sector. Even after adjusting for that, however, the study found that “wage differences remain large and significant.” Overall, the average private sector worker receives $71,109 per year in total compensation, while the average public sector employee gets $69,108.
As Oregonian blogger Jeff Mapes observes: “This is a national study, of course, so it’s not necessarily applicable to Oregon. Still, it’s an interesting take on the issue – one sure to infuriate critics who think public employees are increasingly a privileged class while pleasing state and local workers feeling unfairly under attack.”
This article appears in Sep 16-22, 2010.
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HBM, this report is interesting and you go out of your way to distort the results. Did you actually read it or just “mouthed” Jeff Mapes thoughts.
You constant reference to “public employees” or “public sector employees” leads one to believe that this report’s conclusions applies to all PUBLIC employees. But you fail to point out that the study specifically EXCLUDES federal employees, probably the highest compensated of all public sector employees. And don’t give me your BS excuse that the one quote that refers to state and local public employees is satisfactory. It is clear from your constant references to “public employees” that your intent was to convey the conclusions for all public employees – federal, state, and local.
You also did not point out that the private sector data used excluded the self-employed (i.e. the plumber), agricultural, and domestic workers that would drive the private sector averages lower. I’m sure the government data included maintenance workers, state park workers, and janitors.
The appendix also revealed that the sample used for private sector total compensation data was not sufficiently large enough to provide reliable estimates. Somehow you overlooked including that little tid-bit of info.
The study does try to compare compensation controlled for education levels. This assumes that bachelors/masters degrees are equivalent in the private and public sectors. This means that we should expect a valid comparison of the compensation of a government worker with a degree in social services or an education degree to a degreed engineer in the private sector; that the compensation of a college professor with a PhD teaching English is somehow comparable to the PhD in bio-engineering at a pharmaceutical company. The types of services provided by the state and local governments requiring degrees are more of the social service variety. To compare compensation generically based on a type of degree is bizarre.
In addition, the study does not capture the “consulting” income that is often a significant part of a professor’s income particularly if they are in a business or technical field. Lord knows they have the time and a cadre of graduate assistants to do much of the work.
The only valid comparison I could see was a “Professional Degree” which I interpret to be an attorney or CPA. Thank god government attorneys don’t work on a contingency basis.
The study says that 54% of state and local government workers hold a bachelors degree compared to 35% in the private sector and thus higher pay should be expected at the governemnt level. However the study never discusses or controls for the job being performed…whether a degree is really required to perform that job in the first place. Because the private sector has a check and balance in place called PROFITS (or “sustainability” to be PC), I suspect that the private sector does a better job matching skills, education, and thus cost. States and local governments don’t have a profit element to provide an immediate control or sustainability. Taxes are raised, or in the case of the federal government, it prints more money. Only now is there a push back by the electorate.
So while it is very interesting, the study is not detailed enough, doesn’t control for significant variables, and by its own admission uses inadequate sampling. It raises more questions than it answers. Nothing is debunked.
“And don’t give me your BS excuse that the one quote that refers to state and local public employees is satisfactory. It is clear from your constant references to “public employees” that your intent was to convey the conclusions for all public employees – federal, state, and local.”
So you claim you can read my mind now? It’s clearly stated that the study covered state and local employees. You had no trouble figuring it out, did you? This criticism is just nitpicking.
“You also did not point out that the private sector data used excluded the self-employed (i.e. the plumber), agricultural, and domestic workers that would drive the private sector averages lower.”
It’s hard to get reliable income data on the self-employed. A lot of them work partly or completely “off the books.” Also, the authors looked at compensation for employees of relatively large private-sector companies because their size and resources are more similar to those of state and local governments.
“This means that we should expect a valid comparison of the compensation of a government worker with a degree in social services or an education degree to a degreed engineer in the private sector; that the compensation of a college professor with a PhD teaching English is somehow comparable to the PhD in bio-engineering at a pharmaceutical company.”
Don’t colleges have engineering and chemistry and math and biology professors as well as English professors? Don’t state and, to a lesser extent, local governments also employ people with scientific and technical backgrounds?
“The types of services provided by the state and local governments requiring degrees are more of the social service variety.”
That’s an unproven assumption, and one I would seriously question.
“I suspect that the private sector does a better job matching skills, education, and thus cost.”
Again, an unproven assumption.
“It’s clearly stated that the study covered state and local employees.”
Clearly my X#*. Not in your blog. I bet most of your readers thought it to include federal workers. BTW, you’re biases are easy to read and see through.
The study clearly equates the types of degrees (bachelors, masters, etc.) as if any bachelors degree in the public sector can be compared to any bachelors degree in the private sector without regard to the differing mix of fields of concentration (degree majors) inherent with each sector. Are you going to tell me that you don’t believe there is any significant difference in this mix? Or are you the type that needs an in depth study to prove the obvious.
“Don’t state and, to a lesser extent, local governments also employ people with scientific and technical backgrounds?”
Not nearly in the same proportion as the private sector. And if you claim this is an unproven assumption, then you’re more out of touch than I thought. Really, it doesn’t take too much common sense to figure out the flaws in this study.
“Are you going to tell me that you don’t believe there is any significant difference in this mix? Or are you the type that needs an in depth study to prove the obvious.”
I don’t know whether there is or not, but if it’s so obvious you should easily be able to produce some evidence. Or are you the type who believes what he wants to believe with or without evidence?
“And if you claim this is an unproven assumption, then you’re more out of touch than I thought.”
Instead of insults, how about some proof? Again, if it’s so “obvious” there should be plenty of evidence for it.
HBM: “I don’t know whether there is or not” in reference to whether there is an inhereent difference in the type of college degrees more prevalent in public sector or the private sector. “Produce some evidence.”
Geez HBM, do you need a study to tell you everything? You can’t observe and deduce things for yourself? Don’t you trust yourself to read, compare, and question? Sounds like if it’s in a “study”, it must be correct.
Let’s try this. Do you need a study to determine whether there are more education degrees (teaching degrees) required in the public or private sector? Do you need a study to determine if there are more criminal justice degrees required in the public or private sector? Do you need a study to determine if there are more public administration degrees required in the public or private sector? Do you need a study to determine if there are more social service degrees required in the public or private sector?
What sector do you think would require more marketing degrees, public or private? What sector do you think would require more mechanical, electrical, chemical, industrial, or manufacturing engineering degrees, public or private?
If you want proof, look at Table 2 in the study. The author presumes that the compensation for anyone with a college or advanced degree in the private sector can somehow be comparable to the same education level in the public sector. The study does nothing to control for the fact that the market values and compensates the same level of degree very differently depending on the course of concentration. The person with a bachelors degree in chemical engineering in the private sector is paid much more than a public school teacher with a bachelors degree in education. Yet the study does not control for this variable of market value and would have you believe the that the public sector employee with a bachelors degree is thus paid less than the comparable private sector employee with a bachelors degree.
This study has been utterly debunked. So HBM, take a step back, re-read the study and apply some common sense. Don’t live your life in constant need of a study to determine how you should think. Think for yourself.
And don’t give me your crap about insults. You hurl them constantly, although you’re still my pal.
“The study does nothing to control for the fact that the market values and compensates the same level of degree very differently depending on the course of concentration. The person with a bachelors degree in chemical engineering in the private sector is paid much more than a public school teacher with a bachelors degree in education.”
What the authors of this study did was look at what the AVERAGE public employee with a high school diploma, bachelor’s degree, master’s degree, or doctorate earns and compared it with what the AVERAGE private sector employee with the same level of education earns.
What you’re claiming, as I understand it, is that it is impossible to make any valid comparison between public-sector and private-sector employee compensation unless we do it degree by degree, occupation by occupation. Such a comparison would be interesting, but I’m not aware of one that has been published.
Meanwhile, you seem to be assuming that if somebody did such a study, it would show that people with comparable degrees in the same fields — bachelor’s degrees in English, let’s say, or doctorates in math — are paid more in the public sector than in the private sector. In the absence of such a study, though, that assumption is unproven.
“Don’t live your life in constant need of a study to determine how you should think,” you say. I would reply that basing one’s beliefs on actual evidence is preferable to simply believing whatever fits one’s prejudices or political ideology. You subscribe to the right-wing dogma that public employees are overpaid; therefore you will not accept even the possibility that they are not overpaid. Your “common sense” tells you it must be wrong.
And, BTW, you are not my “pal.”