Public employees pay versus private employee pay in Wisconsin

However, the data indicates that state and local government employees in Wisconsin are not overpaid. Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of both state and local governments in Wisconsin earn less than comparable private sector employees. On an annual basis, full-time state and local government employees in Wisconsin are undercompensated by 8.2% compared with otherwise similar private sector workers. This compensation disadvantage is smaller but still significant when hours worked are factored in. Full-time public employees work fewer annual hours, particularly employees with bachelor’s, master’s, and professional degrees (because many are teachers or university professors).
When comparisons are made controlling for the difference in annual hours worked, full-time state and local government employees are undercompensated by 4.8%, compared with otherwise similar private sector workers. To summarize, our study shows that Wisconsin public employees earn 4.8% less in total compensation per hour than comparable full-time employees in Wisconsin’s private sector.

These compensation comparisons account for important factors that affect earnings, the most important of which is the educational levels of public employees. When comparing public and private sector pay it is essential to consider the much higher levels of education required by occupations in the public sector. As a consequence of these requirements, Wisconsin public sector workers are on average more highly educated than private sector workers; 59% of full-time Wisconsin public sector workers hold at least a four-year college degree, compared
with 30% of full-time private sector workers. Wisconsin state and local governments pay college-educated employees 25% less in annual compensation, on average, than private employers. The compensation differential is greatest for professional employees, lawyers, and doctors. On the other hand, the public sector appears to set a floor on compensation, which benefits less-educated workers. The 1% of state and local government workers without high school diplomas earn more than comparably educated workers in the private sector.

A policy memo was released earlier this week by the Economic Policy Institute in Washington, D.C., that compared Wisconsin public and private employee costs. It concluded that comparing public and private employee is like comparing "apples to oranges".

The report states that:

• "When we compare apples to apples," Wisconsin public employees earn 4.8 percent less in total compensation than comparable private sector workers.

• Wisconsin public employees receive "considerably better" benefits than their private sector counterparts.

• Public employees earn lower wages and get less in total compensation, including benefits, than comparable private sector employees.

The Economic Policy Institute is a progressive nonprofit think tank that focuses on economic policy and the interests of low- and middle-income workers. Its board of directors is dominated by union representatives including Trumka, Andrew Stern, former president of the Service Employees International Union, and Randi Weingarten, president of American Federation of Teachers, AFL-CIO.

The research shows, however, that state and local government employees in Ohio are not overpaid. (When we refer to public employees, we are referring to state and local employees, not federal workers.) Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of state and local governments earn lower wages than comparable private sector employees. Average annual wages and salaries of full-time state and local public employees in Ohio are 5.9% lower than those of comparable private sector employees. However, some full-time public employees work fewer hours on average, particularly college-educated employees. When annual hours worked are factored in, full-time state and local employees earn 3.3% less in wages and salaries than similar private sector workers. Looking at total compensation (wages and nonwage benefits) Ohio public employees annually earn 6% less than comparable private sector employees and 3.5% less on an hourly basis than comparable private sector employees.

These comparisons account for important factors that affect earnings, the most important of which is level of education. Because occupations in the public sector require much higher levels of education, Ohio public sector workers, on average, are more highly educated than
private sector workers; 49% of full-time public sector workers in the state hold at least a bachelor’s degree, compared with 26% of full-time private sector workers. Ohio state and local governments pay college-educated employees 25% less in annual total compensation, on average, than private employers.