Are public sector workers overcompensated? What impact does a higher standard of living for unionized public sector workers have on the economy? Public.
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Slide 1
Are public sector workers overcompensated? What impact does a
higher standard of living for unionized public sector workers have
on the economy? Public versus Private Sector Workers : A Look at
Earnings, Compensation, and Economics
Slide 2
Unions and Earnings On average, union workers earn more than
their nonunion counterparts. 2010 Weekly & Annual
Union/Nonunion Earnings Bureau of Labor Statistics
OccupationUnionNonunionDifferential All
workers$917/$45,850$717/$35,850 1.28
Production$801/$40,050$569/$28,450 1.41
Education$1,008/$50,400$811/$40,550 1.24 Health
Care$1,098/$54,900$967/$48,350 1.14
Management$1,187/$59,350$1,231/$61,550 0.96 * Annual earnings
estimated by multiplying weekly earnings by 50.
Slide 3
Public versus Private Sector Workers The public sector is much
more likely to be unionized compared to the private sector (36.2 v.
6.9%). Does that mean that public sector workers earn more? In
2010, the BLS reports that the median weekly earnings for a private
sector worker was $864. For the public sector, it was $961 (a ratio
of 1.11). Chris Edwards, from the Cato Institute, reports even
higher differentials. Using 2009 BLS state and local data, Edwards
reports a 1.34 differential for salaries and a 1.45 differential
for total compensation.
Slide 4
Public versus Private Sector Workers BUT: Jeffrey Keefe,
Rutgers University & Economic Policy Institute (2010):
Controlling for employer size, education level, experience, and
work schedule, private employees make 11% MORE in wages and 2% MORE
in total compensation than public workers. Keefes Findings on Total
Compensation Data Source: 2009 IPUMS Current Population Survey
PublicPrivate College Degree$56,641$89,041 Lawyers$79,330$175,141
High School Degree$44,000 Less than High School$41,000$27,719
Slide 5
Public versus Private Sector Workers BUT: Peter Orszag,
Congressional Budget Office (2007): Using 2005 data from the Office
of Personnel Management, Orszag concludes that it is all about the
training and experience. Public Sector Workers generally have more
education. About of all federal workers have a college degree; 1/3
of the private sector does. 82% of the pay differential between
federal and private sector workers is explained by the difference
in education alone. Public Sector workers have more training within
occupations. Nurses working for the federal government are twice as
likely to have a college degree as those employed in the private
sector( 24 v. 11%). Federal database administrators are twice as
likely to a post-baccalaureate degree compared to their private
sector counterparts (31 v. 16%). Public Sector workers are older
and therefore have more experience (45 v. 40 years of age).
Slide 6
Are Ohio Public Sector Workers Overcompensated? Keefe on Ohio
(2011): Ohio public sector workers earn 5.9% LESS than their
private sector counterparts in salary and 3.3% LESS in total
compensation. Ohio state and local governments and school districts
pay college- educated workers on average 25% less than do private
employers. Ohio public sector workers are more educated (49 versus
26% with a college degree) and more experienced than their private
sector counterparts (23.2 versus 21.7 years).
Slide 7
Are Public Sector Workers Overcompensated? 2009 Employee
Compensation Costs by the BLS: State & LocalPrivate 500+
employers Total Compensation$40.32$40.01 Wages (%)65.5%66.4%
Benefits (%) of which: health retirement 34.4% 11.6% 8.1% 33.6%
8.7% 5.1% Social Security & Medicare 4.6%5.7%
Slide 8
What about economic well-being? GDP per capita Median Family
Income Poverty Rates Gini Coefficients
Slide 9
Right-To-Work States Source: National Right-To-Work Legal
Defense Foundation
Slide 10
Real GDP per capita growth rates 2006-2009 GDP is measured as
the expenditures of households on goods and services plus business
investment, government expenditures, and net exports. GDI is
measured as the factor incomes earned (labor and capital income)
and other costs incurred in production.
Slide 11
Personal Income: Percent Change 2010II-2010III Personal income
can be defined as the sum of wage and salary disbursements,
supplements to wages and salaries, proprietors income, dividends,
interest, and rent, and personal current transfer receipts, less
contributions for government social insurance.
Slide 12
Median Family Income Source: 2005-09 American Community
Survey
Slide 13
Poverty Rates 2009 Source: US Census Bureau
Slide 14
2009 Gini Coefficient Data source: US Census
Slide 15
Final Thoughts 1. Should we include future values for pension
benefits in the calculations? a. Defined benefit versus defined
contribution plans. b. Implied contract. 2. What are the long-term
effects of reducing public employee pay and compensation? a. Social
responsibility attitudes and public sector work. b. Incentives
matter!!!