LANSING – Public employees in the state are generally paid about market wages, but most state employees are below those market rates, according to a study released Thursday by Citizens for Accountability and Reform and the union-backed Economic Policy Institute.
The study, done on the heels of a report from Governor Rick Snyder on Monday that said public employees are compensated more than double private sector workers, showed that after correcting for education levels, state workers have total compensation 9.67 percent less than their private sector counterparts.
Jeffrey Keefe, a Rutgers University economics professor and author of the study, and of several others recently showing public employees around the nation are paid on par with or less than private sector, said the key failing of most studies showing otherwise is not correcting for education level.
“The single most important factor in determining somebody’s level of earning in the U.S. is their level of education,” he said. For Michigan public employees, 53 percent have at least a bachelor’s degree and 17 percent have no more than a high school diploma. Among private sector workers, only 31 percent have a bachelor’s degree or higher and 37 percent have no more than a high school diploma.
And those higher levels of education pay off less in public employment in the state. The average worker with a bachelor’s degree makes 21 percent less in total compensation than someone with the same education level in the private sector. Those with professional degrees can expect 43 percent less in public employment.
Bryan Grochowski, an analyst with the Department of Natural Resources and Environment for about 11 years and one of several state employees who attended the unveiling of the study, said he knows private consultants in his field who make twice his $55,000. But he said he is not ready to make the jump. “I prefer to serve the public,” he said.
Other groups also heralded the report.
“Governor Rick Snyder has made clear that he will make decisions based on the facts, and the facts show Michigan’s public employees have made sacrifices and continue to make sacrifices to save taxpayer dollars,” said David Holtz, executive director of Progress Michigan. “Michigan’s public employees are among the first to help reform and streamline government so our citizens get good services and value for money. To effectively and fairly fix government, Governor Snyder must ask everyone to share in the sacrifices, not just state employees.”
Snyder press secretary Sara Wurfel said the report would be added to the discussions, but that it had a different purpose from the information Snyder released last week. “There’s actually nothing in the report today that actually contradicts or refutes any of the reports in the guide,” she said.
She said a finding that current wages are below market still does not change the state’s fiscal reality. “We’re facing a dire budget situation; we can’t afford the status quo anymore,” she said.
Wurfel also said none of the discussions were meant to devalue state employees. “State employees do some amazing important work,” she said.
Keefe acknowledged some benefit to state employment for those with lower education levels. An associate’s degree will earn 14 percent more in public employment and not graduating high school means 11 percent more as a public employee.
He said in large part the difference was the health and retirement benefits provided to public employees that are often not provided to lesser-educated private sector employees.
Benefits, he said, are the primary difference between government and private employment. While overall public employees are paid 5.31 percent annually less than comparable private sector workers, their wages are 11.1 percent less. And for state employees, the difference is greater, with total compensation 9.67 percent less and wages 15.25 percent less, he said.
Local government workers in the state he said are actually about at market rates with total compensation 3.03 percent less than private sector.
Keefe acknowledged that cutting state employee pay further right now would not likely create an exodus. “At this point, I’m not sure what they would find,” he said of state employees looking for work.
But he said the economy will change. “Cutting their wages and benefits may in the long run hurt Michigan,” he said. “If you under invest in your public employees, when the economy recovers you may lose them.”
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