The Center for State and Local Government Excellence reports on a research study commissioned by the National Institute on Retirement Security (NIRS). The study determined that the pay gap has increased between employees in private, public sectors.

The pay gap between state and local government, and private sector employees has widened in recent years, with private sector workers’ wages and salaries outstripping those of their public sector counterparts, according to a report released April 28 by the Center for State and Local Government Excellence and the National Institute on Retirement Security.

Among the findings in the report, which looked at two decades of Bureau of Labor Statistics data, are that:

• 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 employees typically earn 11 percent less and local employees 12 percent less.
• During the last 15 years, the pay gap has grown as earnings for state and local workers generally have declined relative to comparable private sector employees. The pattern of declining relative earnings remains true in most of the large states examined in the study, although there are some state-level variations.
• Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, health care, and other benefits, state and local employees earn less than their private sector counterparts. On average, total compensation is 6.8 percent lower for state employees and 7.4 percent lower for local employees than for comparable private sector employees.
• 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 compared to private sector employees. Only 23 percent of private sector employees have completed college, as compared to about 48 percent in the public sector.

‘Picture Is Clear.’

“The picture is clear. In an apples-to-apples comparison, state and local government employees receive less compensation than their private sector counterparts,” Keith A. Bender, a report co-author and economics professor at the University of Wisconsin-Milwaukee, said in a joint statement from the center and NIRS.

“Jobs in state and local governments consist disproportionately of occupations that demand more education and skills. Indeed, accounting for these differences is critical in understanding compensation patterns,” according to John S. Heywood, a report co-author who also is a professor of economics at the University of Wisconsin-Milwaukee.

Elizabeth K. Kellar, president and chief executive officer of the center, added that in a recent survey of government hiring managers, the center was told that, despite the economy, managers were finding it difficult to fill vacancies for highly-skilled positions such as engineering, environmental sciences, information technology, and health care professionals. “The compensation gap may have something to do with this,” she said.

Beth Almeida, NIRS executive director, said that the new report showed that the pattern of public sector jobs offering better benefits but with lower pay has continued. “What’s striking is that on a total compensation basis looking at pay and benefits, employees of state and local government still earn less than their private sector counterparts,” she said.