By MICHAEL LUO and MICHAEL COOPER
And in Wisconsin, where Gov. Scott Walker’s face-off with unions has thrust public sector compensation into the national spotlight, the state pays janitors a median wage of nearly $27,000, about the same as they would make in the private sector.
The wide range in this single job category shows how hard it can be to answer one of the basic questions at the heart of the budget skirmishes that are now spreading across the country: Are state workers overpaid?
An analysis of recently released census data compiled for The New York Times by demographers at Queens College of the City University of New York yields a complicated picture, one that highlights the variation in pay from state to state and occupation to occupation, and one that does not fit neatly into a one-size-fits-all approach to cost cutting.
The clearest pattern to emerge is an educational divide: workers without college degrees tend to do better on state payrolls, while workers with college degrees tend to do worse. That divide has grown more pronounced in recent decades. Since 1990, the median wage of state workers without college degrees has come to surpass that of workers in the private sector. During the same period, though, college-educated state workers have seen their median pay lag further behind their peers in the private sector.
The census data analyzed by The Times do not include information on pensions and other benefits, which is crucial for a fuller comparison because public sector workers typically receive more in benefits than workers in the private sector do. California’s corrections officers, for instance, can retire at 50 with pensions worth 90 percent of their salaries, an option open to very few private sector workers. New Jersey pays 92 percent of the cost of health care for its workers, much more than private companies typically pay. Studies have regularly found that state and local governments offer more valuable retirement and health benefits than the private sector. And many state workers enjoy harder-to-calculate nonmonetary benefits like greater job security and shorter work hours.
Still, an examination of wages alone is useful in informing the debate. For one thing, public sector workers have long contended that their enviable benefits make up for paltry pay rates.
The Times analyzed data on workers on the payrolls of state governments — not localities, which are the bigger employers of firefighters, police officers, teachers and some others — from the Census Bureau’s American Community Survey, which is conducted among more than three million households. The large survey allows for a more detailed understanding of differences among states. Previous analyses have mostly used the Current Population Survey, a monthly poll of 65,000 households. But the relatively limited sample makes state-by-state comparisons more difficult.
The Times’s analysis found that over all, median wages for state workers exceeded that of private sector workers in all but three states — Indiana, Missouri and New Hampshire. Those numbers, however, can be deceptive. State workers tend to be more highly educated than those in the private sector: More than half of state workers have college degrees, compared with just over one-quarter of those in the private sector. Researchers have also said that states tend to employ few high school dropouts.
“Because the public sector is much more likely to be highly educated, we would fully expect them to earn more on average because of that, just like we would expect somebody with a master’s degree to earn more than somebody with a high school education,” said Keith A. Bender, an economics professor at the University of Wisconsin-Milwaukee, who has studied compensation in the public and private sectors.
When workers are divided into two groups — those with bachelor’s degrees and higher and those without — a very different pattern emerges. State workers with college degrees earn less, often substantially less, than private sector workers with the same education in all but three states — Montana, Nevada and Wyoming.
Less educated workers on state payrolls, however, tend to do better than their counterparts in the private sector. The median wages of state workers without bachelor’s degrees are higher than those in the private sector in 30 states. California, New York, Connecticut and Nevada lead the way, each paying workers without degrees at least 25 percent more than the private sector pays those workers.
Certain states, however, are clearly more generous than others, at least relative to the private sector. California, Iowa, Nevada, New York and Rhode Island are at the upper end of the spectrum for both college-educated workers and those without college degrees.
Meanwhile, others states, like Kansas, Missouri, New Hampshire, Tennessee and Texas, are much more frugal with both groups.
The disparity can be attributed to a number of factors: the power of unions in different states, the strength of the private sector, local political traditions, education levels.
In Wisconsin, for instance, where Governor Walker, a Republican, is trying to sharply curtail collective-bargaining rights and to limit yearly raises for state workers to no more than the Consumer Price Index, the median wage for state workers exceeds that of the private sector by 22 percent. But more than 60 percent of state workers are college educated.
In other places where the median wage for state workers is higher than that of the private sector, there is a relatively undereducated private sector work force. In Alabama, where the median wage for state workers is 23 percent higher than that of private sector workers, fewer than 20 percent of employees in the private sector have college degrees.
The education split complicates choices for policymakers. An across-the-board pay cut for state workers in a place like California, which is confronting a $26.6 billion budget hole, for example, would help bring workers without college degrees, whose median wages exceed the private sector’s by 35 percent, more in line with the private sector. It would impose, however, a steeper wage penalty on state workers with college degrees, whose median wage is 12 percent below the private sector’s.
Unionization levels are another critical factor. In some of the more generous states relative to the private sector, like California, New York and Rhode Island, public employees are among the most heavily unionized in the country.
The opposing trends in public-private pay among college- and non-college-educated workers have generally widened over the last two decades. This is seen in the most recent data available, from 2006 through 2008, before many states cut pay through furloughs and other measures. For that period, the median wage of all state workers without college degrees, working 35 or more hours a week and at least 40 weeks a year, exceeded that of private sector workers by 6 percent. For those with college degrees, the median wage for state workers was 20 percent less than their private-sector counterparts.
In 1990, according to census data, the median wage for private-sector workers without college degrees exceeded that of state workers by 2 percent, in contrast with today. Among those with college degrees, the median wage for state workers was 14 percent less, leaving them even further behind the private sector.
At the local level, the phenomenon is similar: the median wage for college-educated workers trails that of their private-sector counterparts by about 20 percent, while local workers without college degrees earn 10 percent more than their private-sector peers.
Adding benefits into the analysis is not easy to do. Many college-educated state and local workers are teachers and professors, who have several months off each year. Some public-sector workers can retire after 20, 25 or 30 years of work and begin drawing pension checks long before they reach what most people consider retirement age. In the private sector, meanwhile, most companies have phased out their traditional defined-benefit pensions altogether.
Nevertheless, some of the more generous states when it comes to what they pay their employees — notably, New York and California — also stand out for having among the most generous pension plans, according to data put together by Sylvester J. Schieber, a former chairman of the Social Security Advisory Board and now an independent consultant on retirement benefits.
Using financial statements, Mr. Schieber calculated an average wage for workers covered by state pension plans and then the percentage of that wage that would be replaced by the average annual pension benefit in the state.
Based on those figures, New Hampshire, Tennessee and Kansas, whose wages for state workers relative to the private sector are at the lower end of the scale, also have among the least generous pension benefits for state workers.
Other states are harder to assess. Georgia, for instance, is one of the more frugal states when it comes to pay but has some of the most generous pension benefits; Iowa is the opposite.
Drilling down to specific occupations yields some glimpses of just how large the differences among states really are.
Secretaries without bachelor’s degrees on the Iowa payroll have a median wage of about $35,000, 19 percent more than the median wage in the private sector. In contrast, in Indiana, secretaries with the same level of education working for the state have a median wage of $25,000, which is actually 16 percent less than the private sector.
Arizona pays professors at its state colleges and universities a median salary of about $61,000, 40 percent more than professors at private nonprofit colleges in the state earn. Iowa, on the other hand, pays its professors a median of about $43,000, which is 22 percent less than their peers at nonprofit institutions.
Of course, there are limits to comparisons between public and private pay scales. Some well-paying public sector jobs, like police officers, simply have no private sector equivalent. Some low-paying private sector jobs, like migrant farm workers, have no public sector equivalent.
But even among jobs that are relatively unique to the public sector, like corrections officers, there is a wide range of pay. After adjusting for cost-of-living differences using an experimental state-by-state price index produced by the Bureau of Economic Analysis, the data show that corrections officers in California, Michigan and Oregon are among the highest paid in the country, with median wages of at least 60 percent more than those at the bottom end, in places like Virginia, Tennessee and Louisiana.
MICHAEL LUO and MICHAEL COOPER NYTimes
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