Employees of local government earn an average of 12% less than comparable private sector employees.
So concludes a new study, "Out of Balance? Comparing Public and Private Sector Compensation over 20 Years," written by University of Wisconsin-Milwaukee researchers Dr. Keith A. Bender and Dr. John S. Heywood and commissioned by the Center for State and Local Government Excellence (Center) and the National Institute on Retirement Security (NIRS).
This is nothing new. The usual comeback is that government workers have better benefits and more stable jobs. And, the study confirms that public benefits are better; however, even after accounting for the value of retirement, healthcare, and other benefits, local employees still earn 7.4% less than comparable private sector employees. I expect the differential to be even greater after the current round of local government reductions. The same is true for employment stability. Massive city worker lay-offs are occurring in once thriving cities like Phoenix and San Jose. Data from the Center as of December shows that over 40% of state and local governments have had lay-offs.
So what does one do with this information in the current economic environment? Most cities, counties, and towns couldn't pay their workers more regardless. In the short-term, local governments frankly cannot do much. The economy and local revenues still need to stabilize as we await the return to economic growth.
Currently, local workers are experiencing pay freezes and reductions, furloughs, and reduced benefits. They are picking up additional work from the lay-offs and hiring freezes. Still, local workers keep the businesses of local government working: social workers protecting children and the elderly, public health nurses controlling communicable diseases, libraries helping the unemployed apply for jobs on public access computers, inspectors ensuring that new buildings meet safety codes, repair workers that go deep into trenches in the middle of the night to repair water and sewer pipes, all of the people who answer the calls and show up at our homes any time we dial 911, and many others. Local government workers are the people on whom society depends every day.
Local governments may pare services, but most services simply cannot be stopped. Local governments cannot declare bankruptcy and walk away. Local governments also cannot print money or operate with a deficit. Thus, in today's economic environment, there is little capacity to increase compensation for public servants. Economic growth, however, will return, and when it does, there will be an opportunity to reward the staff of local governments who truly have been doing more with less.
Local workers may never have compensation fully comparable to the private sector, but the disparities should be minimized. When the recovery comes, a financial "thank-you" to local workers would mean a lot.