Wage penalty in the public sector

With the recession, state and local government budgets have been buffeted by lower tax revenues and higher demand for social services. In a paper from the Center for Economic and Policy Research (CEPR), economist John Schmitt responds to arguments that "excessive pay for public employees is the real cause of the financial woes."

Schmitt found three important differences between state-local and private workforces:

1. State and local employees are substantially better educated than workers in the private sector--over half of state and local employees have a four-year college degree or more, compared to about 30 percent in the private sector.
2. State and local employees are about four years older than private-sector workers.
3. Sixty percent of state and local workers are women compared to less than half of private sector worker.

When the two sectors are compared, especially when matched by age and education, public workers earn 4 percent less on average.

According to 50-state charts in the report measuring state and local public employees, ages 18-64 in 2009, Hawaii has 70,742 such employees (55,725 state and 14,747 local) comprising 13.8 percent of all employees.


The Wage Penalty for State and Local Government Employees (pdf, 20pp/257kB), May 2010
      Press Release, May 12, 2010

Related Issue Brief: The Benefits of State and Local Government Employees (pdf, 2pp/78kB), May 2010