PA Public Sector Earnings on Par with Private Sector

New study provides apples-to-apples comparison of compensation

Full-time state and local government employees in Pennsylvania earn about the same or less in wages and benefits as their private-sector counterparts, according to a new report from the Economic Policy Institute (EPI), co-released with the Keystone Research Center. Controlling for other factors that influence compensation—most importantly, education—this study provides an “apples-to-apples” comparison showing that the hourly compensation costs of Pennsylvania public-sector employees are a statistically insignificant 2.1% lower than that of private-sector employees. When compared on an annual basis, full-time state and local employees are undercompensated by a statistically-significant 5.4%.

The analysis, Public Versus Private Employee Costs in Pennsylvania: Comparing Apples to Apples, by Labor and Employment Relations Professor Jeffrey Keefe of Rutgers University controls for education, experience, organizational size, gender, race, ethnicity, citizenship and disability. The study uses data collected primarily from a comprehensive database that is updated monthly by the U.S. Census Bureau and Bureau of Labor Statistics. In accordance with standard survey practice, the study focuses on year-round, full-time public and private-sector employees.

Other major findings of the study include:

• Pennsylvania public-sector workers are more highly educated than private-sector workers: 53% of full-time Pennsylvania public-sector workers hold at least a four-year college degree, compared to 32% of full-time private-sector workers.
• Pennsylvania state and local governments and school districts pay college-educated workers on average 21% less than do private employers.
• Public-sector compensation is a model for the private sector, not the reverse, when it comes to promoting American values and improving productivity.

Pennsylvania public employees—like most other American workers—have in fact been victims of the worst national recession since the Great Depression. Severe financial problems as a result of the Great Recession have forced state, county and municipal elected officials in Pennsylvania and other states to make large cuts in spending. As a result, public-sector employment has been slashed by 3,400 jobs in Pennsylvania in the last year, with thousands more workers at risk of job loss in the years ahead.

Want to learn more?

Read the full EPI report

Read a two-page fact sheet