Study: Minn.'s public workers earn less than private workersby Tim Nelson, Minnesota Public Radio
St. Paul, Minn. — A new study concludes that Minnesota's government employees are getting paid an average of nearly 8 percent less than their private-sector counterparts, in terms of total compensation.
The focus on pay and benefits for public sector workers has intensified in the past few weeks, as the dispute between Wisconsin's governor and that state's public employee unions continues.
The study of Minnesota workers' compensation was commissioned by the Economic Policy Institute, a group that is supported by labor unions. It was conducted by economist Jeffrey Keefe at Rutgers University in New Jersey.
The typical Minnesota public employee earns about 7.9 percent less than a comparable private-sector employee, the study concluded.
"The difference is greater in state government, where they earn 13.3 percent less than the typical private-sector employee, and local government employees earn about 4.7 percent less," Keefe said.
The Minnesota study is one of seven Keefe has done for the institute. He has also looked at Wisconsin, New Jersey, Ohio, Indiana, Missouri and California.
Two of those states -- New Jersey and California -- basically have pay equity between private and public employers, Keefe said. But in the Midwest, the gap is consistent.
He found compensation for public sector workers in Wisconsin lags by about 5 percent. In Ohio, it's 4 percent, and in Indiana it's 6 percent. The widest gap is in Missouri, where Keefe found public compensation lagged private pay by nearly 16 percent.
Keefe credits most of the difference to the fact that more public workers in Minnesota have more education.
"Thirty-seven percent of the private sector workforce holds at least a college degree in the state of Minnesota," he said. "That's contrasted with the public sector, where over 60 percent of the workforce holds a college degree."
Differences like that have been fueling debate about public workers across the country -- in Michigan, Ohio, Tennessee and Idaho, as well as the best-known battle in Wisconsin.
Wisconsin Gov. Scott Walker threatened to begin layoffs of state workers as soon as Friday, as a result of the political impasse there.
In Minnesota, the Legislature is considering a pay freeze, a 15 percent cut in the state workforce, and other labor restrictions.
Eliot Seide, executive director of the state chapter of American Federation of State, County and Municipal Employees, said the study puts the lie to the myth that public workers -- many of them unionized -- are paid a premium. AFSCME represents 43,000 public sector employees in Minnesota.
"Cheap labor conservatives like to pit private workers against public workers," Seide said. "Their real agenda is to drive down wages and benefits for all workers."
Minnesota's Republican lawmakers, though, aren't convinced.
State Rep. Keith Downey, R-Edina, said the government needs to look at the actual value of the work being done, not at the education or experience of the people doing it. He cites studies by the Chamber of Commerce and other groups that reach a different conclusion.
"They showed the reverse correlation, that in fact public sector employees are making quite a bit more when you filter out these variables that don't have much to do with the amount of work or the level of complexity of the work being performed," he said.
Downey is sponsoring a bill that would commission a market-based study of state work.
The Economic Policy Institute's board also includes executives from the Steelworkers, the United Autoworkers -- as well as AFSCME, the nationwide public sector union.
Still, independent economists say studies like the EPI's consistently show that public employees aren't overcompensated.
"Specific economists might quibble about individual control variables, but this is exactly the approach that everyone would take," said John Budd, an economist and professor at the University of Minnesota's Carlson School of Management.
Budd says the numbers don't justify blaming public employees for fiscal woes around the country.
"It is a political fever. It's really not data driven," said Budd. "You have a lot of ideological beliefs in search of facts, and why let the facts get in the way of a good story?"
The EPI study is based on data from the Current Population Survey from the U.S. Census Bureau, and the Bureau of Labor Statistics.
- All Things Considered, 03/03/2011, 5:20 p.m.