No matter how you slice it, government workers have the best compensation deal, plus overall better job security and less rigorous performance criteria. And, about 90% have a pension as well.
Total employer compensation costs for civilian workers averaged $41.86 per hour worked in September 2022, the U.S. Bureau of Labor Statistics reported today.Bureau of Labor Statistics 12-15-22
Wages and salaries cost employers $28.88
and accounted for 69.0 percent of total costs, while benefits cost $12.98 and accounted for the remaining 31.0 percent.
Total employer compensation costs for state and local government averaged $57.02 per hour worked.
Wages and salaries averaged $35.29 per hour worked and represented 61.9 percent of total
compensation costs, while benefit costs averaged $21.73 and accounted for the remaining 38.1 percent.
Total employer compensation costs for private industry workers averaged $39.61 per hour worked in September 2022.
Wage and salary costs averaged $27.93 and accounted for 70.5 percent of employer costs, while benefit costs were $11.68 and accounted for 29.5 percent.
Total compensation costs for union workers averaged $53.20 per hour worked in September 2022.
Wage and salary costs averaged $31.95 and accounted for 60.1 percent of total compensation costs, while benefit costs averaged $21.24 and accounted for 39.9 percent.
Total compensation costs for nonunion workers averaged $38.37 per hour worked.
Wage and salary costs averaged $27.56 and accounted for 71.8 percent of total compensation costs. Benefit costs for nonunion workers averaged $10.81 and accounted for 28.2 percent of total compensation.
The concept of progressivity in Social Security benefits via the bend points is known to most Quinnscommentary readers, if not so much to the general public. The “average” SS benefit can be very misleading. Lower income retirees get a much higher income replacement.
Likewise with public worker compensation. The average pay (and benefits) are misleading. Table four (linked) is nationwide averages. Some states, according to Biggs (and Richwine) are much more “overpaid” than this average: New Jersey, California, Rhode Island, Illinois, New York, Pennsylvania, and Connecticut. About twenty other states (flyover?) are considered “market level”, neither over nor underpaid. And another twenty some are “moderately” overpaid. According to Biggs.
But the salient point here, IMHO, is that higher “average” compensation is driven by those two lower groups, high school education or below, and “some college”. If you want to cut public sector pay/benefits, that is where the cuts will come from. I just don’t think there is the public demand or political will for cuts in those areas.
Look at the 19 percent public sector advantage in the “HS Diploma” category. Keep in mind that this entire table is divided into six groups for ease of comprehension/calculation. It could be divided into 26 groups. It is actually a curve, or an infinite number of groups. 19 percent is the average for that one group. At the lowest end are workers who are forty, fifty, or more percent “overpaid”, like an unskilled laborer with pension and family health coverage. His benefits may be more than his wages. That’s the guy/gal who’s driving the average. Don’t cut you. Don’t cut me. Cut that man behind the tree. Nothing personal, it’s math.
“No matter how you slice it, government workers have the best compensation deal, plus overall better job security and less rigorous performance criteria. And, about 90% have a pension as well.”
It’s not all bad. Sometimes you’re the bug, sometimes you’re the windshield. In 1979, California legislators overrode a Gov. Brown veto to give state workers a 16 percent raise (albeit after 3 years with no COLA.)
After the 2008 crash, CA state workers went 5 years with no raises. Private salaries recovered much more quickly. At the same time, public pensions were reduced almost everywhere to pre-1999 levels.
It is sporadical, and countercyclical. But consistently, lower level public workers earn more than their private counterparts and all others are equal or underpaid.
“At one time, government pay was less than civilian pay, and benefits/job security made up the difference. Now government wages and benefits are greater than those paying for them.”
Clichè. I’ve heard it for years. Not supported by empirical data. Not now, not ever. The taxpayers have much tougher rows to hoe.
Probably the biggest problem with government pensions is they are not covered by PBGC or a similar agency. They were, with a few exceptions, allowed to get seriously underfunded. Similar problems with Multi Employer Pensions (unions). These may be under PBGC, but with less stringent rules than for single employers.
About 15 percent of the American workforce work directly for government, roughly 1 out of 7.
How many more work indirectly? Contract employees or private sector workers employed by defense contractors, infrastructure, etc.? I have heard as much as 50 percent. Can’t verify it, but it’s not unreasonable. I worked for Caltrans (Dept of Transportation) Last I heard, Caltrans budget was about 10 percent of the annual budget. Only 10 percent of that was the public workers salaries, equipment, and materials. The rest was contractors. Most likely in that BLS group of “500 or more employers”.
How does that make the average taxpayer feel?
I am an average taxpayer and retired from a government job. Should I be ashamed of that even though I provided a necessary service? I wholly appreciate the benefits received but is that my fault? A co-worker once responded to someone who complained to him about his ‘cushy’ job and his response was that this person could have applied for the job too. So maybe the title of your story is spot on.
Never be ashamed that you got a government job.
But we can be ashamed about how our government is either blacked mailed or is buying votes by the pay they give out and using the claim that the government workers are underpaid.
So, we should all seek a job that includes generous benefits funded by taxpayers while government goes more into debt every day?
BLS says state and local workers average $57.02 per hour in total compensation costs.
Wages and salaries averaged $35.29 per hour worked and represented 61.9 percent of total
benefit costs averaged $21.73 and accounted for the remaining 38.1 percent
Private industry workers
Organizations of over 500 employees:
Total compensation costs average $57.25/hour
Wages and salaries averaged $37.24 per hour worked and represented 65 percent of total
benefit costs averaged $20.02 and accounted for the remaining 35 percent
According to BLS data, generous benefits were almost exactly offset by lower wages and salaries. The classic paradigm of:
“Higher public benefits offset by lower salary.”
“Pay me now or pay me later.”
Where’s the beef?
The PDF version of ECEC always carries this disclaimer, page 3:
“Comparisons: Compensation cost levels in state and local government should not be directly compared with levels in private industry. Differences between these sectors stem from factors such as variation in work activities and occupational structures. “
Yes. If you’re doing average work, you should get average wages and benefits. At one time, government pay was less than civilian pay, and benefits/job security made up the difference. Now government wages and benefits are greater than those paying for them. It’s disgusting, and you should be ashamed.
Caveat, the disparity varies greatly from state to state, by level of government, etc., but overall, public and private wages respond to different stimuli. During recessions, overall private wages fall while public wages are more stable, but in recoveries private wages grow more quickly. The two are counter cyclical.
As mentioned elsewhere in this thread, at lower level public jobs, with benefits, workers do earn much more than equivalent private workers, but the advantage gradually decreases and becomes a compensation deficit at the professional levels. At the same time, pensions and benefits have increasingly been reduced, particularly since the 2008 great recession.
Hardly ashamed. For 37 years I literally left blood, sweat, and tears on California roadways and am proud of my career. I gave as good as I got.
Total compensation costs for private employees with an establishment size of 500 workers or more is $57.25/hr.
Most state and local establishments are 500 or more workers.
Large private sector establishments actually have more paid time off than public workers , on average. 9.2 percent of compensation vs. 7.4 percent for state and local workers.
How does that make you feel?
The flaw of averages, again…
“In budget terms, Connecticut could save around $2 billion a year if it provided total pay and benefits that were at the market level rather than paying that roughly one-third premium that it currently provides,” Andrew Biggs
What Biggs did not say is where that savings* comes from.
Biggs 2014 study agrees with other major studies in that…
1. Lower level, less educated state employees earn wages similar to equivalent private sector . Their much higher total compensation is a result of the higher pensions and healthcare.
3. Higher level, professional state employees earn much lower salaries, and their higher benefits do NOT compensate for lower wages.
2. In the middle, logically, and empirically verified, is a range of public employees whose lower wages ARE roughly compensated by their higher benefits. “Just right”… the Goldilocks syndrome.
Number 1 is where your $2 billion savings has to come from, cutting from groups 3 and 2 will reduce the ability to attract and retain qualified employees.
*If the savings comes from the lowest paid Connecticut public employees, is it really savings, or will it be offset by higher health and welfare costs from other state social services departments?
There is a reason, several actually, that these employees are paid more, in healthcare and pensions. Think before you cut.
And yes, “The main cost driver ^^^BY FAR^^^ for SERS is the unfunded liability from legacy costs and funding shortfalls…”
New York State has better compensation and lower pension costs because they are required by law to fully fund their pensions. Every. Year.
The distribution of pay for public employees in Connecticut is the same in virtually every state, and most OECD countries.
That’s not what BLS data show. You can’t have lower pension costs because you fully fund a plan each year- fund now or later. Not to mention states have continued defined pensions while they have virtually been eliminated in the private sector.
State pensions are designed so most of the benefits are paid by earnings, returns on investment. If not fully funded, contributions by the state and/or individual (annual costs) have to increase. Most states (and many multiemployer) plans were near 100 percent funded until about 1999-2000. Now only a handful are.
If it is true, and I believe it is verifiable, that on average (that word again)* public workers higher benefits are offset by lower wages, that is a good thing. Not just for the employer, but for the economy in general. It is basically enforced retirement savings, and at no additional cost to the “taxpayer”. If it is true.
Consider government as “model employer”. Government dictates equal opportunity employment, non discrimination by sex, race, religion, or physical handicap. It then, logically, leads by example. Government encourages living wage. It leads by example. Government encourages saving for retirement. Properly run pension systems are much more efficient than single plans. Mostly due to shared risks, as I recall.
*Average; most people, I think, are not aware of the redistribution of compensation I described, where lower paid public workers are paid much better, mostly via pensions and Healthcare, than equivalent private sector workers. I assure you it is real. I strongly recommend Biggs and Richwine
“Overpaid or Underpaid? A State-by-state Ranking of Public-employee Compensation” 2014
1. For lack of a better word, government employment is more egalitarian. There is less income disparity.
2. Market forces means higher compensation for public sector janitors or gardeners tends to raise wages for similar private sector jobs.
3. Ironically, the biggest complaints about public sector pensions are for those over $100,000/year. These are usually the most —underpaid— public workers; doctors, attorneys, CPAs, mid level managers, etc. The “underpaid” professionals to some extent subsidize the lower paid public workers.
4.5 IMHO, the remarkable thing about this distribution of public sector compensation is that it appears to be unintentional. If most people are unaware of it, how could they have planned it? It seems to have organically evolved simultaneously. In every state. And in every OECD country.
Comparing the average public worker to the average private worker is futile.
I would also like to know the average private industry paid days off as a measure of productive.
In New Jersey there are 14 paid holidays, plus anytime the governor feels like it such as a snow flake falling or the day after Thanksgiving on occasion. The federal government has 11 holidays, while those who work out of most union halls (A-locals) get only 6 paid holidays. When I worked as a non-union printer I only got 6 holidays paid.
B-local unions can get a few weeks of vacation through contract negotiations, and government employees can earn up to several weeks of vacation even a month of vacation, while retail workers are lucky to get a vacation. (*note; some B-locals have benefits and time off that comes close to matching governmental employees.)
Now add in the months of sick time that government employees get verses and the week or so for non-government employees (if any) which that a lot of people wrongly use as extra vacation days.
Supposedly, more employers are only hiring parttime employees to avoid having the company paying any benefits. Apparently this is common in retail and the fast food industries. These industries do not have to pay money out for any non-productive or time off hours.
A government worker can easily get paid for 12 months of work but only has to show up 11 months or less. They are making more money for doing less work and are being scheduled to work less than non-government employees. I just don’t know by how much.
That grass does look greener, doesn’t it?
If you think that’s bad?
“Civilian workers” includes all non-farm private workers —and state and local government workers— (but not federal)
“Private sector” workers average comp is lower, only $39.61, not $41.86.
Average again. Damned averages.
It’s pulled down by “small employers”.
Private employers of 500 or more workers average $57.25
Private employers of 1-49 workers average $31.99.
The good news is, as I recall, “500 or more workers” is about half the American workforce.
For what it’s worth, I like to say…
Most government workers are not government workers.
They are private sector workers in just one of many different jobs they will hold in their career. They have a slightly longer average tenure (damn average again), but will likely be one of 6 to 10 jobs in their career.
Of those who do receive a pension, only about 20 percent are career employees (30 yrs or more). Half of “public workers” don’t even stay long enough to vest (usually 5 years).