Public vs. Private Sector Compensation in Ohio
Public workers make 43 percent more in total compensation than their private-sector colleagues

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Ohio’s Senate Bill 5, which increases the health and pension contributions of certain public‐sector workers and narrows the scope of collective bargaining, goes before voters in a statewide referendum on November 8. The wisdom of the bill depends crucially on how the current compensation of Ohio’s public employees compares to the compensation of similar private‐sector workers. Proponents of SB 5 believe that public compensation is already higher than the market, and climbing at an unsustainable rate that must be slowed in order to bring public spending to competitive levels vis‐à‐vis other states. Opponents of SB 5 argue that Ohio public workers currently receive less compensation than they could receive in the private sector, and that SB 5 would worsen the problem. This report compares current public‐ and private‐sector compensation in Ohio, focusing on how the wages, benefits, and job security of public employees compare to those of private‐sector workers with similar skills. We conclude that:

• Ohio public employees receive nearly the same wages as comparable private workers (2.5 percent less), but

• Fringe benefits for Ohio public workers are more than twice as generous as those paid in the privatesector, meaning that when pay and benefits are taken into consideration public workers receive 31.2 percent more in total compensation than private‐sector counterparts.

• Ohio Public employees enjoy significantly greater job security than private‐sector workers. That job security has an economic value equal to approximately 10 percent of compensation.

• In total, considering wages, benefits (including retirement), and the value of job security, Ohio public sector workers are paid 43.4 percent more than those in private‐sector employment.

• Even if the provisions of SB 5 were implemented in full, it is very likely that Ohio public‐sector workers would continue to enjoy a substantial compensation premium over private‐sector Ohioans.

Andrew G. Biggs is a resident scholar at AEI. Jason Richwine is a former National Reserch Initiative fellow at AEI.

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About the Author

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

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