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Are Ohio Public Employees Over-compensated?
Economic Policy Institute - Jeffrey H. Keefe
February 10, 2011
This paper investigates whether Ohio public employees are overpaid at the expense of Ohio taxpayers. The research is timely. Newly sworn-in Gov. John Kasich believes that public employees are overcompensated relative to private sector workers. He is promoting public employee pay cuts, changes in collective bargaining laws, major benefits reductions, and the elimination of interest arbitration for police and fire unions as key to reducing the Ohio’s budget deficit.
The research shows, however, that state and local government employees in Ohio are not overpaid. (When we refer to public employees, we are referring to state and local employees, not federal workers.) Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of state and local governments earn lower wages than comparable private sector employees. Average annual wages and salaries of full-time state and local public employees in Ohio are 5.9% lower than those of comparable private sector employees. However, some full-time public employees work fewer hours on average, particularly college-educated employees. When annual hours worked are factored in, full-time state and local employees earn 3.3% less in wages and salaries than similar private sector workers. Looking at total compensation (wages and nonwage benefits) Ohio public employees annually earn 6% less than comparable private sector employees and 3.5% less on an hourly basis than comparable private sector employees.
These comparisons account for important factors that affect earnings, the most important of which is level of education. Because occupations in the public sector require much higher levels of education, Ohio public sector workers, on average, are more highly educated than private sector workers; 49% of full-time public sector workers in the state hold at least a bachelor’s degree, compared with 26% of full-time private sector workers. Ohio state and local governments pay college-educated employees 25% less in annual total compensation, on average, than private employers.
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