Comparing Compensation: State-Local Versus Private Sector Workers

Alicia H. MunnellJean-Pierre AubryJosh Hurwitz Laura Quinby

SLP#20

The brief’s key findings are:

  • Critics claim that the compensation of state-local workers is overly generous.
  • Previous studies have found mixed results.
  • Our analysis finds that compensation of state-local and private sector workers is roughly similar:
    • state-local workers earn 9.5 percent less than comparable private sector workers; but
    • this wage gap is mostly offset by higher pension and retiree health benefits.
  • Thus, before making major changes to public compensation, policymakers should carefully consider the specifics of their state or locality.