Monday, February 21, 2011

Wisconsin public workers already under-compensated

A new report from the Economic Policy Institute concludes that Wisconsin public employees are under-compensated.
Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of both state and local governments in Wisconsin earn less than comparable private sector employees. On an annual basis, full-time state and local government employees in Wisconsin are undercompensated by 8.2% compared with otherwise similar private sector workers. This compensation disadvantage is smaller but still significant when hours worked are factored in.
Conservatives love to point out that the average compensation for public workers typically exceeds that of private workers. This is no different in Wisconsin where the report indicates that full-time public workers cost their employers just over $63,000 per year on average compared to just under $62,000 for full-time private workers.

However, public workers tend to have significantly more education (the proportion of public workers with college degrees is double the proportion of private sector workers with degrees). Within education groups, the report finds that public sector employees in Wisconsin receive less compensation than private employees, except for those with less than a high school education.

The report also uses regression methods to adjust for other measurable differences between employees, including education, experience, gender, race, citizenship, and employer size. Once those controls are included, average annual compensation for public workers is 8.2 percent less than for comparable private workers. Average hourly compensation is 4.8 percent less.

Like many other states, Wisconsin faces serious and real budget problems. Difficult and painful choices are required. One problem, however, that Wisconsin does not face is over-compensated public employees. Describing them as such is misleading, and treating them as such will ultimately be self-defeating.