Public Versus Private Sector Workers: Who Gets More?

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A big question has come up in the debate over Wisconsin’s public sector employees. Do they — and other government employees — get a better deal than private sector workers?

Dan Bobkoff of Changing Gears took a look at the subject this week for NPR’s All Things Considered. There are rallies planned this weekend are planned in all 50 state capitals in support of Wisconsin’s employees, even as the state legislature gets closer to a vote that would strip them of collective bargaining rights.

Here’s what Dan reported.


At the heart of Republican rhetoric in Wisconsin, as well as in Ohio and Indiana, is a contention about finances. The Republicans say public-sector workers are overcompensated compared to private-sector workers. But is that true?

Dan Bobkoff is with the reporting project Changing Gears, about the industrial Midwest, and he explains it depends on whom you ask.

DAN BOBKOFF: Okay, just to be clear, were not talking here just about wages, but retirement, healthcare and other benefits. Gary Chaison is a labor relations professor at Clark University.

Professor GARY CHAISON (Labor Relations, Clark University): A large part of what were hearing out of Wisconsin now is about shared sacrifice and equality of sacrifice, the feeling that the public-sector workers unions havent really done their share.

BOBKOFF: Call it jealousy or resentment. Many think that those who work for the government get too generous a deal. With high unemployments and years of recession, its governors and legislatures who now have the political capital to try to seek concessions.

But is it true that many government workers have a cushy gig? On one side, there are researchers like Jeffery Keefe of Rutgers University who says when you add up all the pay and retirement plans and other benefits, public sector workers are…

Mr. JEFFREY KEEFE (Rutgers University): For the most part paid at market or slightly below market.

BOBKOFF: Precisely 3.7 percent less by his calculation. But these are just averages because there are a lot of jobs in government that just dont exist in the private sector, like say, prison warden. So apples-to-apples comparisons arent easy.

And, people like E.J. McMahon of the Manhattan Institute disagree with Keiths claim.

Mr. E.J. McMAHON (Manhattan Institute): I think the research is pretty clear that total compensation in the public sector is greater than total compensation in the private sector.

BOBKOFF: McMahon says a guaranteed pension is a whole lot better than a risky 401k. Public sector workers also tend to get much cheaper and better health plans, even in retirement. That leads many government workers to retire earlier, which has another effect on these comparisons: It drives down average public-sector salaries as younger workers replace the retirees.

Of course, theres also more job security in government. Its hard to put a dollar figure on this kind of intangible, but Jeffrey Keefe says its often a tradeoff.

Mr. KEEFE: Yeah, job security has some benefit to it. But at the other time, you have to work in a large, bureaucratic organization, which is probably a negative.

BOBKOFF: Union membership in America has been declining for years, especially in the private sector. Today, about 36 percent of the public sector is organized versus under seven percent in the corporate world. That varies wildly across the country, though.

According to Professor Barry Hirsch of Georgia State University, nearly half of Wisconsin and Ohios public-sector workers are in a union. Now, compare that to a state like North Carolina where that number is under 10 percent.

Donald Grimes of the University of Michigan says from 2000 to 2009, public-sector compensation went up about 42 percent versus 32 percent in the private sector. But there was a surprise.

Mr. DONALD GRIMES (University of Michigan): Its not particularly pronounced for Wisconsin or Ohio or Indiana, at least among Great Lakes states. Their wages and benefits have not gone up that much.

BOBKOFF: So, the states that are ground zero now for this battle over unions and compensation buck the national trend. Private-sector salaries actually rose more in Wisconsin than government pay.

In Ohio, there wasnt much difference between public and private compensation over that period. But Grimes says no matter what numbers you believe or what study you cite, taxes paid by private-sector workers just cant support all these pensions and retiree health plans.

Mr. GRIMES: In some sense, it almost doesnt matter if youre getting paid more or less than you deserve. If theres just no money there, youre going to get paid less.

BOBKOFF: And thats one reason why everything is bubbling over now.

For NPR News, Im Dan Bobkoff.

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