May 2010, John Schmitt
State and local government budgets are under severe strain. Rather than blame the recession, which has simultaneously slashed tax revenues and increased the demand for social services, some conservatives have argued that excessive pay for public employees is the real cause of the financial woes. Several recent reports in the media have reinforced this view by emphasizing that, on average, government employees earn more than workers in the private sector. The problem with these analyses is that state and local government workers have much higher levels of formal education and are older (and therefore generally more experienced) than workers in the private sector. When state and local government employees are compared to private-sector workers with similar characteristics, state and local workers actually earn 4 percent less, on average, than their private-sector counterparts. This paper examines the wage penalty for working in the state-and-local sector.
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Related Issue Brief: The Benefits of Local and State Government Employees