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Government jobs not so cushy

By Chavon Sutton, staff reporter

NEW YORK (CNNMoney.com) -- State and local workers earn less than their private sector counterparts and the pay gap is widening, according to a report released Wednesday.

Public workers earn 11% to 12% less than workers in private companies, according to a joint study from the Center for State and Local Government Excellence and National Institute on Retirement Security.

The report, which analyzed 20 years of data from the Bureau of Labor Statistics, also found that the pay gap has generally widened over the last two decades, as private compensation moved higher while earnings for state and local workers fell.

"The big divergence began to occur in the late 1990s," said John S. Heywood, a professor in the economics department at University of Wisconsin-Milwaukee and co-author of the report. "It's an issue."

Researchers say the make-up of public workers could be a primary driver for the gap. According to the study, because state and local employees tend to be older, they're less likely to leave their positions, which could keep salaries stagnant.

"The kinds of employment relationships in the public sector tend to be long term," said Keith A. Bender, associate professor of economics at the University of Wisconsin-Milwaukee and co-author of the report. "People in the private sector are more likely to turn over, looking for the highest return."

Still, while public sector workers are better educated -- 48% have college degrees versus 23% in the private sector -- the hard cash hasn't followed. Public employees, instead, see more in the way of benefits.

According to the study, benefits such as healthcare and retirement programs, comprise 32.7% of total compensation for public sector workers, compared to 29.2% in the total private sector. Larger private companies tend to be more in line with the public sector.

Even when accounting for these benefits, though, total compensation is still 6.8% to 7.4% lower on average for state and local employees.

"For a long time, there has been a compensation trade-off in public sector jobs --better benefits come with lower pay as compared with private sector jobs", said Beth Almeida, executive director of NIRS. "This study tells us that is still true today."

As the jobs market slowly improves, a brain drain to the private sector, potentially out of state, coupled with the recently passed $17.7 billion jobs bill, which includes tax incentives for businesses that hire, could make it harder for public sector employers to attract top talent.

The Center for State and Local Government Excellence's president, Elizabeth Kellar, said that there is a "looming workforce crisis" in the public sector, as a wave of retirement and low pay collide, leaving holes in many highly skilled slots.

"Hiring managers told us that, despite the economy, they find it difficult to fill vacancies for highly skilled [public sector] positions such as engineering, environmental science, information technology and health care professionals," said Kellar. "The compensation gap may have something to do with this."  To top of page

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