Is There A Public-Sector/Private-Sector Pay Gap?

Published September 4th, 2013 -  - 09.04.131

A major theme in the debate over public-sector unions has been the idea that public-sector workers get paid more than their counterparts in the private sector.  Joe Slater has an important new paper that sheds helpful light on this question.  Slater reviews the findings of a number of studies on the question of whether public-sector workers get paid more (or less) than their private-sector analogues and he reaches the following three conclusions:

One, a majority of the studies find that “public workers are paid somewhat less than comparable private-sector employees,” but a number of studies find the opposite.  Two, there is near consensus that workers at the lower-end of the pay scale (janitors, for example, and landscapers) do better in the public sector than in the private sector.  On the other hand, workers at the upper-end of the pay scale (lawyers, for example) do substantially better in the private sector than in the public.  Three, public-sector workers get less in take-home pay than private-sector workers, but they “generally receive more generous health and pension benefits” and are also more likely to enjoy some type of job security.

Slater also usefully points out, however, that while public sector workers have better pensions than do their private-sector counterparts, pension levels are not the product of collective bargaining.  As Slater writes, “in the overwhelming majority of jurisdictions . . . public-sector pension benefit formulas are not legal subjects of collective bargaining.  Rather, almost everywhere, public-sector pension benefit formulas are set by a separate statute governing pensions, and those formulas cannot be changed through collective bargaining.”

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