(Warner Todd Huston/The Union Label) – Many government employees are paid up to 30% more than those in the private sector.
Leaders across the country are proposing restrictions on public employees’ pay and benefits in order to put their budgets on a more sustainable path. The political left’s counterattack is that government workers aren’t overpaid compared to those in the private economy. Who’s right?
Consider a study released last October by the Center on Wage and Employment Dynamics at the University of California, Berkeley, which concluded that Golden State public employees “are neither overpaid nor overcompensated.” The Economic Policy Institute has generated reports arguing that government workers are underpaid.
These studies are misleading. Public-private pay comparisons vary from state to state, but a full accounting shows clearly that large, union-dominated states tend to overpay their workers. California is a good example.
The Berkeley study begins by studying salaries, where its methods are solid. Using individual-level data from the Census Bureau’s Current Population Survey, it compares public and private wages while controlling for differences in age, education and other earnings-related characteristics. Using essentially the same methods, we found that California state and local government employees receive wages about 4% lower than those received by similarly skilled workers in large private firms, which offer the most generous pay and benefits. But if we compare public employees to all private workers, the 4% penalty becomes statistically zero….
Read the rest at the Wall Street Journal…