March 01, 2011
USA Today ran an article highlighting a difference in pay between government workers and private sector workers in Wisconsin and 40 other states. The methodology used in the article simply takes average compensation per worker without adjusting for their education, experience or other factors that typically affect pay. (Most people expect a cardiologist with 25 years of experience to earn more than a 20-year old counter person at McDonalds.)
The gap in compensation (pay and benefits) highlighted in the USA Today article could be eliminated if governments made a point of replacing work that is often contracted to outside businesses (e.g. cafeterias in government buildings, custodial work in government buildings and groundskeeping on government properties) with government employees. By increasing the ratio of less educated workers to more highly educated workers (e.g. teachers, nurses, and doctors) state governments can eliminate the sort of pay gap that concerns USA Today.
Analyses that do control for education, experience and other factors in ways that are standard within economics consistently find that public sector workers receive somewhat lower compensation than comparable workers in the private sector. This article does cite Jeffrey Keefe, an economist who has done such analyses, pointing out this fact, but it is unlikely that many readers will pick up this point.
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