Do public employees get a better deal? It depends
The headlines feed a stereotype of fat-cat public workers with the kind of cushy benefits that most private-sector workers can only dream about. With the economy still wobbly, governors are looking hard at employee pay and benefits, and taxpayers are asking whether state and local governments can remain so generous to public workers.
The issue has risen to national prominence as Republican governors in Wisconsin and Ohio have sought not only to make public employees pay more for their benefits but also prohibit many aspects of collective bargaining for the unions that represent them.
Just how accurate is the portrayal of lavish compensation and benefits for public workers?
Researchers disagree over whether public workers in different states do better when it comes to the larger picture of total compensation — that is, earnings plus benefits. But there's little debate that when it comes to benefits alone, it's better on the public side.
"Because of the economic problems, we've suddenly hit upon the fact that public workers have better benefits. But they've always had them, even previous to collective bargaining. That was one of the reasons people took a government job," said Jeffrey Keefe, a labor and employment relations associate professor at Rutgers University in New Jersey, who argues that state and local workers are generally undercompensated.
The workers cashing in on excessive benefits are not the norm, and average annual benefits for the nation's rank-and-file public work force are relatively modest. Public safety employees, who risk their lives or can be seriously injured on the job, can make a persuasive argument for top-notch benefits. It's one reason Wisconsin Gov. Scott Walker exempted them from his crackdown on public employee unions.
Still, most state and local government workers are not engaged in arresting criminals or saving people from burning buildings and generally receive better benefits than their counterparts in the private sector. They typically receive better pensions, better health care insurance deals and are much more likely to get retiree health benefits.
They also receive other perks not typically matched in the private sector, such as more paid holidays and the ability to cash out accrued sick time.
For every dollar the average private employer pays in benefits per hour, state and local governments pay $1.71, according to federal Bureau of Labor Statistics data.
However, those national averages don't show how public worker benefits vary from job to job and from state to state. And benefits are only part of the compensation picture, along with salary. There is disagreement over whether the public-private benefit gap is offset by higher private-sector salaries.
The most politically combustible public benefits are the ones that have drawn so much attention as states' budget deficits have widened — lifetime pensions and retiree health care. Many states face tens of billions of dollars in unfunded liabilities because they have contractually promised retiree benefits they now cannot afford.
New Jersey Gov. Chris Christie became a Republican star last year by taking on teachers unions over benefits. This year, a new crop of governors has followed his lead.
Pension payments account for roughly 3.8 percent of state and local expenditures, but that share is expected to grow, according to the Center for Retirement Research at Boston College.
In California alone, an independent government watchdog agency published a report this year that estimated a $240 billion shortfall for the state's 10 largest public employee pension plans. Some cities will have to devote from one-third to one-half of their budgets to support retiree benefits in the near future.
Most public workers get "defined benefit" pensions from the time they retire until the day they die, along with health care. By comparison, only about one in five private-sector workers has a defined benefit pension plan. More have 401(k)-style "defined contribution" plans, which put the burden of saving and investing entirely on the employee.
Public employees can receive more than twice the pension benefits of their private-sector counterparts. The Little Hoover Commission, the California watchdog agency that issued the recent pension report, found that retirees with more than 30 years in the state's public employees' retirement system average almost $67,000 a year in benefits, or more than double the state's per-capita income.
It's notably better on the public side for health care benefits, too.
Some states cover the full tab for at least some of their workers' health plans, although that number appears to be shrinking. Governments are more likely to provide health care coverage for dependent grandchildren and part-time employees, and are three times more likely to provide retiree health care coverage, according to the latest employee benefit survey by the Society for Human Resource Management.
Very few private workers get employer-paid health care once they retire.
Retirement and health insurance can account for more than half the value of benefits received by state and local workers. But public employees hold an edge in some other perks, too.
— Researchers peg the U.S. retirement age around 63. Meanwhile, the average teacher retirement age is 58, according to Michael Podgursky, a professor of economics at the University of Missouri-Columbia who studies teacher quality issues. It's common for police officers and firefighters to be able to retire after 20 years of service, although those jobs can be among the most demanding and dangerous. Some states are considering higher retirement ages or have negotiated that change for future employees.
— State and local workers average 11 sick days after a year on the job, compared to private workers' eight, according to the U.S. Bureau of Labor Statistics. Some public workers can "cash out" unused sick days, a rarity in the private sector.
— State and local workers average 11 paid holidays a year, compared to eight in the private sector, according to the bureau. The holiday mix varies. Louisiana gives a day off for Mardi Gras, Massachusetts celebrates Patriots Day as a state holiday, and Georgia is among the states that mark Confederate Memorial Day.
— State and local workers also are less likely than private-sector workers to be fired or laid off, according to federal data.
Private workers do hold an edge in overtime pay and bonuses. The public-private benefit gap also narrows when looking at larger companies — think of benefits for a clerk at a mom-and-pop store versus an engineer at Google. The largest private companies actually pay more per worker for vacation and holiday time, according to the latest per-hour Bureau of Labor Statistics data.
Also, public employees in some states — including teachers in California — are not in the Social Security system, meaning they rely more heavily on their government pensions for retirement security.
While the benefit packages are being targeted in many statehouses, pro-union voices counter that the government employees society relies upon to patrol the streets, rush into burning buildings, teach the next generation or issue driver's licenses deserve to be decently compensated. They say public employees are being unfairly scapegoated for the fiscal crisis afflicting most states.
In New York City, Patrolmen's Benevolent Association President Patrick J. Lynch said police officers' hard-fought benefits are earned, given the perilous nature of their jobs.
"The reality is that when they take that last step off their stoop in the morning, they may not return in the evening," Lynch said. "So we're different, and we need to be treated differently. And that's the thin line that keeps everything working."
Last updated: 4:58 pm Thursday, December 13, 2012