An analysis over 20 years shows the pay gap between public and private sector employees has widened in recent years.
- Wages and salaries of state and local employees are lower than those for private sector employees with comparable earnings determinants such as education and work experience. State workers typically earn 11% less and local workers 12% less.
- The pattern of declining relative earnings remains true in most of the large states examined in the study, although there does exist some state-level variation.
- Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, health care, and other benefits, state and local employees earn less than private sector counterparts. On average, total compensation is 6.8% lower for state employees and 7.4% lower for local employees than for comparable private sector employees.
- Jobs in the public sector typically require more education than private sector positions. Only 23% of private sector employees have completed college as compared to about 48% in the public sector.
“The picture is clear. In an apples-to-apples comparison, state and local government employees receive less compensation than their private sector counterparts,” said Keith A. Bender, report co-author and associate professor, Department of Economics at the University of Wisconsin-Milwaukee, in a news release. “These public sector employees earn less than they would earn if they took their skills to the private sector.”
The findings are contained “Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years,” that was undertaken for the Center for State and Local Government Excellence and the National Institute on Retirement Security. The study used U.S. Bureau of Labor Statistics data.
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