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Introduction

Over the years, the issue of how well public employees are compensated relative to their private sector counterparts has often been raised in state legislatures and the media. As the public workforce has been upgraded and professionalized to replace cronyism and political favoritism, government has struggled with the need to offer salaries and benefits that can compete with those in the private sector. At all levels of government, efforts have been undertaken to insure that compensation in the public sector is competitive with the private sector to insure a good supply of high quality workers to deliver public services.

As the nation moves in and out of recession, it sometimes appears that workers in the public sector experience less volatility than their private sector counterparts. Where there are multi-year collective bargaining contracts, public workers may receive pay increases when some industries in the private sector are not receiving any or may settle for one or more years without pay increases even though the economy is doing quite well. Moreover, the mix of salaries and benefits (health insurance and pensions) can be quite different between the two sectors, with the conventional wisdom being that public workers have lower salaries but better benefits than their private sector counterparts.

In recent years, groups like the American Legislative Exchange Council (ALEC), an arm of the Heritage Foundation, have fueled the perception that public sector workers are "over compensated" by issuing a report that is periodically updated concluding that public employees are a "protected class."¹ This report was initiated at a time when the national job market was very soft and many people were either losing jobs, receiving no wage increases, or even negotiating wage reductions in order to keep their jobs. Thus, the notion that government workers were somehow getting ahead of private sector workers was used to infuriate taxpayers and feed the overall anti-government sentiment that lingers still. But are these reports accurate?

¹Wendell Cox and Samuel Brunelli, "America's Protected Class: The Excess Value of Public Employment", The State Factor, Volume 20, Number 7 (June 1994), American Legislative Exchange Council (Washington, DC)

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