Overpaid or underpaid? A state-by-state ranking of public-employee compensation

Article Highlights

  • A remarkably large variance exists in the way that different states pay their employees.

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  • Merely because public pay could in theory differ from private levels doesn't constitute evidence that it does differ.

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  • We have produced the first comprehensive state-by-state comparison of public- and private-sector compensation.

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Abstract

This paper ranks all 50 states according to how costly their public-employee
compensation packages are relative to private-sector standards. Each state’s package is
placed into one of five categories: modest penalty, market level, modest premium, large
premium, or very large premium. The results show that national-level analyses obscure
significant differences in compensation from state to state. Connecticut, for example,
pays its state employees 42 percent more than what similar private-sector workers
receive, but Virginia pays its state workers about 6 percent less. State-by-state political
interest in public-sector pay aligns fairly well with our results: In states where publicsector
pay is an active political issue, state government employees appear to be better
compensated than similarly-skilled private sector workers. In states where state
government compensation is at or below market levels, pay for public employees is
generally less controversial.

 

 

 

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Andrew G.
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