Do Government Workers Make More than Private Sector Workers?

Jason Richwine / February 24, 2011

The Heritage Foundation has posted a new working paper that considers whether public workers in California are overpaid compared to their private sector counterparts. The paper’s findings are summarized today in a Wall Street Journal op-ed, coauthored by myself and AEI’s Andrew Biggs. We argue that previous public-private comparisons at the state level have undercounted important fringe benefits. While existing studies claim that pay is roughly comparable between the sectors, we find that California workers could be overpaid by as much as 30 percent. The working paper has all the gory details, including how we quantified the value of job security. Comments are welcome.

The paper comes at an important time, when even the political bloggers have been debating the statistical nuances of pay comparisons. Over at NRO’s The Corner, Jim Manzi critiqued a pay comparison published by the Economic Policy Institute:

…Consider Bob and Joe, two hypothetical non-disabled white males, each of whom went to work at Kohl’s Wisconsin headquarters in the summer of 2000, immediately after graduating from the University of Wisconsin. They have both remained there ever since, and each works about 50 hours per week. Bob makes $65,000 per year, and Joe makes $62,000 per year. Could you conclude that Joe is undercompensated versus Bob? (more…)