Old Topic Update: Is CA a Welfare State for Govt Employees?

No, it turns out.  This notion keeps coming up, including in a colloquy between Lace and Gary last week.

Today I came across this study that explains why govt salaries are typically higher than private sector salariesIt’s because they are apples to oranges comparisons.  According to the study:

  • Jobs in the public sector typically require more education than private sector positions. Thus, state and local employees are twice as likely to hold a college degree or higher as compared to private sector employees. Only 23% of private sector employees have completed college as compared to about 48% in the public sector.
  • Wages and salaries of state and local employees are lower than those for private sector employees with comparable earnings determinants such as education and work experience. State workers typically earn 11% less and local workers 12% less.
  • During the last 15 years, the pay gap has grown – earnings for state and local workers have generally declined relative to comparable private sector employees.
  • Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, healthcare, and other benefits, state and local employees earn less than private sector counterparts. On average, total compensation is 6.8% lower for state employees and 7.4% lower for local employees than for comparable private sector employees.”
  • In California, state workers make 10% less than their private sector counterparts when adjusted for job type, and local govt workers make 6% less. (see table at link.)

    To be sure, one blogger who I respect a lot said this might be a faulty study.  At the least, he wondered, much of the difference could be just that govt workers at the highest salary levels (doctors, lawyers) make much less than their private sector counterparts.  Still, this provides at least some useful evidence on the subject.


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