Gov. Scott Walker argues that public employees can sacrifice more of their paychecks for health insurance and retirement because they pay so little for those benefits compared to workers at private companies.
Walker is correct about the disparity, but a new report by the liberal Economic Policy Institute suggests that looking at benefits alone is misleading.
The study looks at total compensation — pay and benefits together — and found that public workers earn 4.8 percent less than private sector employees with the same qualifications and traits doing similar jobs.
Average compensation for public workers is higher because the jobs they do — such as teaching — require a relatively high level of education, and a higher education is one of the main factors that drives wages up, said Ethan Pollack, a senior policy analyst at the institute.
Yet the typical Wisconsin public sector employee with a bachelor's degree makes less than $62,000, compared to more than $82,000 in the private sector, Pollack said.
Public employee groups such as teachers have made concessions on wages in order to keep solid benefits, said Andrew Reschovsky, UW-Madison professor of public affairs and applied economics. Now politicians are focusing on those benefits as they look for spending cuts.
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Greg Gelbach of Lancaster said that today he's questioning his 1995 decision to trade money for security. Gelbach said he quit working for a plumbing and heating company and took a job at the Wisconsin Secure Program Facility prison in Boscobel, absorbing a $6 an hour pay reduction, because he wanted solid state benefits and job security,
"Now Walker is trying to take that away, it seems," Gelbach said.
To compare private and public compensation fairly, the Economic Policy Institute took into account not only education but other factors that affect compensation rates, including workplace size, employee experience, hours of work, gender, race, ethnicity, citizenship, and disability.
The study concludes that another important factor is missing from Walker's public-private comparison, said the report's author, Jeffrey Keefe, an associate professor in Rutgers University School of Management and Labor Relations. While public workers receive more in paid benefits, their wages are a smaller slice of their total compensation than in the private sector because for decades public unions have negotiated packages favored by their more experienced members, Keefe said.
"Older more experienced workers, they want health benefits for their families and retirement benefits," Keefe said. "Younger workers or low income workers, they want cash."