'Earnings Penalty' for Iowa Public-Sector Workers

Report: Many Claims False About Worker Pay, Benefits

News Release

Posted February 22, 2011
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IOWA CITY, Iowa Many claims about public workers' compensation miss the mark on accuracy because they don't make apples-to-apples comparisons, according to a new report that reveals an "earnings penalty" for state and local government workers.

"Iowa faces a number of fiscal challenges in the months and years ahead," said Andrew Cannon, research associate at the nonpartisan Iowa Policy Project and author of a new report. "But none of these challenges result from excessive public employee compensation.

"Public employees in Iowa in general receive less compensation in total pay and benefits than do similarly qualified employees in the private sector. They really see an earnings penalty for working in the public sector, given education, experience and other factors."

Cannon's paper, "Apples to Apples: Private-Sector and Public-Sector Compensation in Iowa," examines wage and benefit research controlling for education, work experience, hours worked and other factors. He found, comparing compensation including wages/salary and benefits:
Male public-sector workers earn nearly 8 percent less and female public-sector workers 11 percent less than private-sector workers;
Male state-government workers earn 6 percent less than comparable workers in private industry, and women 8 percent less; and
The penalty for local government workers: 9 percent for men, nearly 13 percent for women.

"You cannot avoid the fact, if making comparisons, that not all jobs are the same. But that's what politicians are doing when they ignore education requirements and other differences for various positions in the public sector and private sector," Cannon said. "When average earnings are compared by education level, private-sector workers generally are compensated better. This is true even when you include benefits, which generally are a greater share of compensation in public-sector jobs."

Cannon's paper raises important questions about claims being made by many in the State Capitol, said David Osterberg, executive director of the IPP.

"Iowa's public employees are busy protecting our water and air, our neighborhoods and highways, and educating our children. The least we can do is make sure that discussions about their pay and benefits accurately reflect the marketplace," Osterberg said.

"We need to be focusing on how to make jobs in Iowa better, and keep Iowa out of a race to the bottom with states that don't treat workers well in either the public or private sector."

The Iowa Policy Project is a nonpartisan, nonprofit public policy research and analysis organization in Iowa City. Reports are on the web at www.iowapolicyproject.org.