Study: ‘Apples-to-apples’ comparison shows public workers paid less

A study released Tuesday found Iowa's public sector employees make less than private sector employees when educational levels, work experience, occupation and hours worked are considered.

The Iowa Policy Project study claimed that male public sector workers earn nearly 12 percent less and female public sector workers earn 16 percent less than than private sector workers with comparable occupations, hours, experience and education.

The disparity was more pronounced for local government workers such as school teachers than for state government employees. The study found that male state government employees earn 9 percent less than comparable workers in private industry, while male local government employees make 14 percent less. For women, the study found earnings 13 percent lower for state workers and 19 percent lower for local workers than for private-sector.

Iowa Policy Project leader David Osterberg said the study's release was timed to influence the call in Des Moines for bringing public sector salaries and particularly benefits in line with  the private sector. Gov. Terry Branstad has employed a labor consultant to help  reduce the state's payroll costs. He has singled out the health insurance costs of public sector employees as one particular concern, saying their contribution to private sector health coverage should be more in line with private sector employees.

Some of the major factors that drive the different salaries in state government and the private sector are the education levels required for state government workers, their experience, and the type of occupations held by state government workers, the study said.

Research Associate Andrew Cannon, who authored the report, said almost one-third of the public sector employees are teachers, who have high educational requirements. He said two-thirds of state government workers could be classified as administrative and professional, versus about one-half of private sector employees.

The report looked only at employees who worked full-time – at least 1,600 hours per year. It factored in the value of pension benefits, health insurance and other benefits, Cannon said.

About one-sixth of Iowa jobs are in the public sector, the report said. It said the ”activities” of public sector employees contribute to prosperity in other sectors of the economy, and efforts to drive down public sector compensation can undermine it.

One study cited in the report found the average job tenure of public sector workers is twice as long in the public sector as in the private sector.

Data used in the study came mainly from the integrated Public Use Microdata Sample of the March Current Population Survey, which is a monthly survey conducted by the U.S. Census Bureau and the Bureau of Labor Stattics of American households.

The compensation data was not specific to Iowa, but used data from the entire West North Central census division. March data collected over a 10-year period was used to create an acceptable sampling size and adjusted for inflation to present value, Cannon said.

Cannon said the seven states included in the West North Central census division have compensation levels similar to Iowa, Cannon added. Data for Iowa alone was not available.

The study compared state government employee compensation only to compensation at large employers.

Cannon said he wanted the study to look at overall compensation because critics of public sector compensation have focused on benefits alone. He believes total compensation is a more realistic comparison because of the tradeoffs considered in employment decisions.