Public Employees vs. Private Sector Employees: Some Facts

Public employees in Iowa in general are paid less than their private-sector peers in comparable jobs, according to a new study by the nonpartisan Iowa Policy Project.

Even if benefit packages are accounted for, Iowa’s public workers still are compensated less than those who work for private businesses, said Andrew Cannon, author of a new report.

For state government workers, male employees earned wages or salaries that were 9 percent less than comparable workers in private industry when taking into account education, experience and hours worked.
Women in state government earned 13 percent less, the study found.

For local government, men earned 14 percent less and women about 19 percent less than private counterparts, it says.

A battle in Wisconsin over collective bargaining rights there has put the spotlight on labor costs and worker rights in Iowa.

The study was timed for release today to coincide with a rally at the Iowa Capitol on workers’ rights and the first public meeting on a Republican bill in the Iowa House that would make significant changes to the state’s collective bargaining law.

Gov. Terry Branstad, a Republican, thinks unions should no longer have any say over their health insurance. Instead, government managers should exclusively decide how much employees contribute.

“It makes no sense for us to have health insurance as a mandatory bargaining item,” Branstad said in a telephone interview last week. “The result of it is we have an absolutely dinosaur system which is extremely expensive. That has got to change.”

Branstad has also called for changes to the state pension system. State and local government should no longer be entirely responsible for promised benefits in the future. Instead, benefits would depend more on how much workers contributed to their plans over time, he has said.

It’s true that such benefits comprise a larger share of public employees’ overall compensation than for most private-sector workers, Cannon found.

But even after adding in benefits such as health insurance and pension contributions, total compensation for Iowa’s male and female public employees was lower than for their private-sector counterparts, he said.

Public employees received 11.6 percent of their compensation in the form of health and other insurance benefits while workers at small, medium and large private firms received 7.2 percent, 8.4 percent and 10 percent.

Similarly, they receive a larger share of their compensation in the form of retirement benefits (6.4 percent) than private-sector workers (3.3 percent for small firms, 3.6 for medium firms and 5 percent at large private firms).

Almost one-sixth of all Iowa jobs — 234,400 of Iowa’s 1.47 million total non-farm jobs — are in either state or local governments.

David Osterberg, executive director of the Iowa Policy Project, said: “We need to be focusing on how to make jobs in Iowa better, and keep Iowa out of a race to the bottom with states that don’t treat workers well in either the public or private sector.”

The study used data from the U.S. Census Bureau and Bureau of Labor Statistics and took into account education, work experience, hours worked and other factors.