Private Employees vs. Public Employees w. Labor Unions

There is a fair amount of public information  on the impact of public employee labor unions on the cost of state and local governments and comparisons of wages and benefits (pensions and health care) of private and public workers.

Here are some ideas about public employees and local and state labor unions.  (Remember, these is based on national and state-wide information, not Coral Gables in particular.)

  • Pensions and health plans are very underfunded (or “over promised”, if you will) across the nation in state and local governments;
  • On average, public employees’ wages and benefits are as much as 8 percent higher than the private sectors wages, but these are just average for all age groups and education levels;
  • Public employees on average are older as a group and have higher education attainments–so the reported wage and benefits difference are not that  great, although underfunded benefits are under-reported so you are not getting true measures of benefits for public employees.
  • And, to be fair, data across the nation show public employees receiving about 4 percent lower wages and benefits than private employees.  There is a small difference of 1% in favor of  private employees for the same age and education groups;
  • The rise of public sector unions in the last 20 to 30 years, and their ability to negotiate that has been extended by national and state laws and helped to increase salaries and benefits;
  • Labor unions have been large contributors to candidates for state and local government, and this has helped them leverage more local power into salaries and benefits;
  • A big difference between public and private employees is that public employees have much better pensions programs than private employees; they retire at an earlier age than the private sector (this allows for double dipping); they work fewer hours than in the private sector (isn’t that nice); and they often have inflation protection for their pension.
  • Some jobs in the private and public sectors are not comparable, especially, for public security.
  • Public employees have much better health plan coverage than private employees.
  • All benefits to public employees are really higher than the apparent budgeted values because the pension and health care funds are hugely underfunded.

What can we conclude:  public employees are well paid on average; their benefits are exceptional; they have great flexibility to retire early and take up another career; unions have had a disproportionate impact on wages and benefits for some groups like public security; taxpayers will be stuck with unfunded liabilities for a long time for no good reason; they have great health benefits; and they are politically resistant to reducing salaries and benefits.

I plan to report in more detail on some of these conclusions in coming days.

About Stephen E. McGaughey
International consultant in economic development programs and projects

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