How earnings for unionized public employees compare with private sector

In the fight for balanced budgets vs. benefits for public employees, what's fair and what's politics?

Max Gersh/The Rockford Register-Star/AP
Protesters filled the State Capitol in Madison, Wis., on Feb. 18 in response to the governor’s proposed bill to eliminate collective bargaining rights for many state workers

How much is a civil servant worth?

With state and local budgets now stretched like bubble gum, governors and legislators are asking how much they can spend on their workers. Many lawmakers are reassessing benefits such as pensions and free health care. Such issues especially took off in Wisconsin, where the governor has challenged the power of the unions to engage in collective bargaining over benefits.

Some surveys indicate the time could be ripe for change. Sixty-four percent of voters oppose public employee unions, according to a poll by Clarus Research Group, which is based in Washington. For many people taking that stand, it goes hand in hand with aims of reducing government budget deficits and instituting more fiscal responsibility.

IN PICTURES: Wisconsin protest signs

"It's becoming increasingly clear public workers' benefits are out of touch with the private sector and need to be modernized and right-sized," says Mark Zandi, chief economist at Moody's Analytics in West Chester, Pa.

The unions and their supporters push back by saying they are not overcompensated and are mainly just middle-class people trying to make a living.

"What you are seeing in states like Wisconsin and New Jersey is the governors talking of shared sacrifice. But by that, they mean sacrifice by the nurses, the firefighters, the policemen, not the extremely wealthy among us," says Alison Omens, a spokeswoman for the AFL-CIO in Washington.

Unions and their supporters also see themselves being made scapegoats for bad management, such as unfunded pension funds. "The politicians have not lived up to their end of the bargain. That is the real problem," Ms. Omens says.

Yet those opposed to public employee unions include not only Republicans and independents, but also some Democrats, says Ron Faucheux, president of Clarus.

"So when you add that up, it seems like a big opportunity for the Republican side," Mr. Faucheux says. "It seems tailor-made to be a big part of the 2012 dialogue."

The 2012 election could be affected by unions in several ways. In 2008, they supplied get-out-the-vote troops, helping secure Barack Obama's victory.

Now, three of the states considering legislation to diminish public employees' bargaining power – Michigan, Ohio, and Wisconsin – are swing states, points out Ruben Garcia, a professor at the California Western School of Law in San Diego.

"To the extent it takes away the unions' voice in the next election, it will have political ramifications," he says.

Women and minorities make up a significant part of the government workforce. So any paring of government compensation could exacerbate the pay gap with white males, some say.

Still, many voters are appalled by the salaries and benefits that some government employees receive. Last year in Nassau County, N.Y., the average salary, plus overtime and benefits, for a police officer was $182,678. In Wisconsin in 2009, one electrician at the State Fair Park earned $123,213. In California last year, the chief sergeant-at-arms in the state Senate grossed $155,904.

In New York City, it's not so much the wages as the benefits, says Stephen Goldsmith, deputy mayor for operations. "Our fringe benefits can come to 100 percent of pay," says Mr. Goldsmith, who is a former mayor of Indianapolis.

He also notes, "One of the things we're dealing with here is [that] the definition of compensation is too narrow: The city sets the pay, and the state sets the pension."

But these are the exceptions, say some studies, which find that public employees are paid less.

Last summer, Jeffrey Keefe, an associate professor in labor and employment relations at Rutgers University in New Brunswick, N.J., looked at the compensation for public servants on a national basis, using data from the Bureau of Labor Statistics. After accounting for factors such as education, gender, and hours of work, he concluded that civil servants are not overpaid and in many cases make below the wages earned by their counterparts in the private sector.

"Where there is collective bargaining, they are close to the market in terms of wages," he says. "But in areas where there is no collective bargaining, like in the South and Southwest, people are paid less than the market."

In Wisconsin, currently ground zero for these issues, public employees are paid less than the private sector, says Ethan Pollack of the Economic Policy Institute, a nonpartisan but left-leaning think tank. Public workers in the Badger State with a bachelor's degree or more – which make up 60 percent of the state workforce – are compensated between $20,000 less and $82,000 less than the private sector, Mr. Pollack writes in a recent report.

Nevertheless, cash-strapped states and cities are finding it fairly compelling to take a hard look at total employee remuneration as they try to plug budget gaps. In Wisconsin, for instance, Gov. Scott Walker (R) is trying to patch up a $137 million hole in the current budget and a $3.6 billion shortfall that's projected for fiscal year 2012, which begins in July. Worker concessions, he says, will save the state $30 million this fiscal year alone. One of his proposals: Employees will increase their contribution to their health-care fund from 5 percent to 12 percent.

Pension benefits – another big problem in Wisconsin – are eating into the budgets of many other states, as well as of cities.

Take Atlanta. The city will spend about $556 million from its general fund, which pays for most city operations except water, sewer, and sanitation. However, 28 percent of that budget, or $150 million, is earmarked as both required and catch-up contributions to the pension fund. So more than 63 percent of the city's budget goes toward employee salaries and benefits.

"It has been stated around town, and I have stated it: This is just not sustainable to make that kind of pension contribution every year," says Michael Bell, chief financial officer of Atlanta in the early 1990s.

On top of this, cities and states, along with the private sector, are facing another big reality: Baby boomers are in the process of retiring. "As the baby boomers retire, the cities are going to have huge costs," says Goldsmith. "It requires public officials to be much more alert."

IN PICTURES: Wisconsin protest signs

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