Government Pay, Benefits Soar

Published February 1, 2006

Public employee unions have so successfully used their political muscle that whereas public-sector compensation once lagged behind the private sector, now the reverse is true. The average state and local government employee now collects 46 percent more in total compensation (salary plus benefits) than the average private-sector employee, according to the nonpartisan Employee Benefit Research Institute.

Wages average a hefty 37 percent higher in the public sector, but the differences in benefits are even more dramatic. Local governments pay 128 percent more, on average, than private employers to finance workers’ health care benefits, and 162 percent more on retirement benefits.

Although the private sector’s heavier concentration of low-wage service employment accounts for some of the wage and benefit gap, public-sector employees do better these days even when you compare similar jobs. Total compensation among professional workers in the public sector is on average 11 percent higher than for similar jobs in the private sector, for instance.

Other comparisons of public- and private-sector pay illustrate the same gap. The Citizens Budget Commission, a New York City fiscal watchdog, found the average public-sector worker in the metropolitan region received 15 percent more in pay (not including benefits) than the average private-sector worker. The gap was greatest in service-sector jobs, such as security guards, health care workers, and building maintenance workers, where government on average paid 94 percent more than private firms.

A 2001 Rhode Island Public Expenditure Council comparison of private- and public-sector average wages across the nation found the average public-sector wage was higher in 35 states.

— Steven Malanga