The public-private debate: what do the data show? (EXCERPT), Monthly Labor Review Online, May 1996

The public-private debate: what do the data show?

Michael A. Miller

From the 50 State capitols to the 80,000 local government entities, the level of public employees' pay is a much-discussed issue. Payroll costs are a big-ticket item in State and local governments, amounting to more than 60 percent of all expenditures. Citing average pay rates and quit rates, critics such as Wendell Cox and Samuel A. Brunelli argue that public employees are overpaid compared with private sector employees and that public agencies are overstaffed.¹ Others, such as Dale Belman and John Heywood, argue that State and local governments provide services requiring a better educated and higher skilled work force than exists, on the whole, in the private sector.² In addition, citizens expect government to lead by example, and studies indicate that State and local governments have outpaced the private sector in remedying wage discrimination against women and minorities.³

This article examines the current literature and then uses occupational pay data from the BLS Occupational Compensation Survey Program (OCSP) to compare wages and salaries in State and local governments with pay in nonfarm private industry. For the occupations studied, the major findings include the following:

At the low end of the pay scale, State and local governments generally paid better than private industry did.
Among white-collar jobs, private industry usually paid better than State and local governments did.
Among white-collar jobs, within occupations, as pay rose with the level of duties and responsibilities, the private sector paid increasingly better wages.
State and local government pay lagged far behind that of private industry for professional and administrative occupations.
Patterns were mixed for technical, clerical, and blue-collar workers.
Comparisons across occupations revealed that of workers in lower paying jobs were more likely to be paid better in the public sector. Workers in higher paying jobs were more likely to be paid better in private industry.

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Footnotes
¹ Wendell Cox and Samuel A. Brunelli, "America's Protected Class III, the Unfair Advantage of Public Employees," The State Factor, April 1994, pp. 1-34.

² Dale Belman and John Heywood, "The Truth about Public Employees: Underpaid or Overpaid?" Briefing Papers, Economic Institute, April 1993, pp. 1-23.

³ Ibid.

Related BLS programs
National Compensation Survey
Occupational Compensation Survey

Related Monthly Labor Review articles
Cost of employee compensation in public and private sectors. May 1993.

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