Michigan's new Republican Gov. Rick Snyder is pushing to cut state employee compensation, arguing that the state work force is overpaid relative to what private sector workers earn. Late last month his office released a 25-page document on state spending, "Dollars and Sense: How State and Local Governments in Michigan Spend Your Money." Click here to download it.
The booklet includes a brief section, starting on page 12, about the the cost of local and state government employees and public school teachers, then narrows the compensation focus to state employees versus private sector employees and concludes:
In 2000, average public sector compensation was 55% higher than average private sector compensation. In 2009, state classified employee compensation was 113% higher, on average, than the private sector. However, this analysis does not compare private and public sector employees with similar jobs, years of experience or education.
While the first sentence seemed to get all of the attention for a few days, the second sentence can't be ignored. A few days later, a study released by Jeffrey H. Keefe, associate professor of labor and employment relations at the School of Management and Labor Relations at Rutgers University. drew a different conclusion. Here's the intro to "Are Michigan State Workers Overcompensated?"
The research shows that state and local government employees (which includes school employees) in Michigan are not overpaid. Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that public employees of state and local governments earn less than comparable private sector employees.
Of course, both sides of the debate will cite political motivations behind the studies. Snyder wants to add momentum to making budget cuts, including what Michigan pays its employees. The Economic Policy Institute is a pro-public labor Washington, D.C. think tank founded by, among others, Democrat economist Robert Reich.
Several e-mails to this blog have asked where we stand on this. It seems to your humble blogger that the topic of private vs. public sector compensation is too complex an issue to argue with the admittedly simplistic numbers that Snyder is using. If a governor thinks his or her state can't afford to pay its employees what they earn now, it's more honest to make that argument straight up than to rely on a flawed compensation comparison that poorly serves the debate.