Economy
4:32 pm
Tue August 23, 2011

Study: Differences in Pay Between Public and Private Employees "Statistically Insignificant"

A new study claims the difference in pay between Pennsylvania public employees and their private sector counterparts is "statistically insignificant."

When both wages and benefits are taken into account, public employees make about 2.1% less than private sector workers on an hourly basis, according to the study recently released by the Keystone Research Center and the Economic Policy Institute, working with Rutgers University.

However, the breakdown of how employees are compensated differs from government work to the private sector. The study's author, Rutgers professor Jeff Keefe, said public employees generally make less in wages, but have better benefit packages; private workers take more money home, but also contribute more to health care and retirement plans.

Keefe said the difference between public and private sector pay varies further, depending on the employee's level of education.

"The public sector pays the lesser-educated—high school, some college, and associate's degrees—slightly better than the private sector," said Keefe. "However, bachelor's and above, the public sector pays considerably less, in the range of 21% for a bachelor's degree to 57% in terms of a professional degree."

According to the study, the public sector has 20% more employees with bachelor's degrees than the private sector.

Keefe said public jobs are often more secure, despite recent efforts to privatize public services in Pennsylvania, such as House Majority Leader Mike Turzai's push to privatize state-run liquor stores.

"Many city managers, many agency managers are using the threat or the possibility of privatization as a way of disciplining that workforce," said Keefe.

The Rutgers Assistant Professor of Labor and Employment Relations said public agencies contribute about twice as much to employees' health and retirement plans as businesses. Keefe said it's difficult to tell if government pension funds will be able to cover retirement obligations in the future, as most of the assets are invested in the stock market, which varies radically.

The Keystone Research Center disagrees with Pennsylvania Governor Tom Corbett's remark in his March budget address that public sector wages are increasing faster than private sector pay.