Public Employers Shelling Out Much More for Total Comp
A news release from the Employee Benefit Research Institute (EBRI) said the total compensation costs among state and local government employers were $39.50 per hour worked, compared to $26.09 among private-sector employers, as of September 2007.
EBRI said state and local government employers’ costs were higher for both wages and benefits than those of private-sector employers. They were 42.6 % higher for wages and salaries and 72.8% higher for employee benefits, the study said.
The study found that major reasons for the differences in total compensation costs between state and local government employers and private-sector employers are the different compositions of their respective workforces and the different nature of public- vs. private-sector work.
State and local government jobs include education and public safety functions (teachers, police, and firefighters), which involve high levels of education, training, physical fitness, or risk, and largely do not exist in the private sector. Unionization rates also are higher in the public sector than in the private sector.
The two most important voluntary benefit programs an employer provides are health insurance and a retirement and savings plan, according to the study, and a great disparity exists between the cost of these two benefits for state and local government employers and for private-sector employers.
In September 2007, the average cost per employee per hour worked for health insurance benefits for state and local government employers was $4.35, compared to $1.85 for private-sector employers - a difference of 135%. The disparity was even larger for retirement and savings plans. These cost state and local government employers $3.04 per hour worked in September 2007, compared with $0.92 for private-sector employers - a difference of 230%.
EBRI said one of the primary reasons for the difference in benefit costs is that state and local government workers are more likely than their private-sector counterparts to participate in employee benefit programs. For example, health insurance participation rates among all employees in state and local governments (72% in September 2007) were significantly higher than rates among all employees in the private sector (52% in March 2007).
The disparity in participation levels was even larger for retirement and savings plans. In September 2007, 86% of all employees in state and local governments participated in some type of retirement or savings plan, compared with 51% of all employees in the private sector in March 2007.
The study is published in the June EBRI Notes , available at www.ebri.org