Tuesday, October 19, 2010

Study Indicates California Public Employees Receive Total Compensation About Equal to Private Sector Equivalents

A UC-Berkeley study released recently indicates that California state and local workers receive roughly the same total compensation as private workers, once you standardize for various demographic variables and education via regression analysis. Taken together, public workers receive about 6% less in wages and salaries. But they get higher benefits so that the difference washes out, i.e., no statistical difference between public and private.

Although the authors don’t say so directly, nationally – as a table in the study shows – non-mandated benefits are about 30% of total comp for state and local workers. (Mandated or legally-required benefits are things like Social Security which are roughly the same in public and private jobs.) So to close the 6% gap, benefits must be approximately 20% higher in the public sector compared with the private (6/30 = .20).

Undoubtedly, critics will note that the authors evaluate the benefits at current employer costs. So if there are unfunded promises being made (pensions & retiree health), it could be argued that their estimate of benefit value is too low. But note that even if benefits are 50% underestimated (i.e., if the benefit premium were 40% instead of 20%, you would end up with overpayment in the public sector by only 6%.

The study is at

A press release from UC on the study is at

Finally, a news account is at

No, the authors do not break out UC employees and it probably could not be done using the database they had.

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