Report | Unions and Labor Standards

Are Missouri public employees overcompensated?

Briefing Paper #301

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This paper investigates whether Missouri public employees are overpaid at the expense of Missouri taxpayers. The research is timely. Legislative battles are under way in several state capitals in the Midwest, as governors seeking to close state budget gaps propose restricting not only government workers’ wages and benefits but their collective bargaining rights. Proponents of such measures argue that they are justified because public employees are overpaid compared with workers in the private sector. While such drastic measures are not heading for a vote in Missouri, other actions being taken imply that public employees are overcompensated. For example, Gov. Jay Nixon plans to reduce the state workforce again in 2011, after cutting 3,300 state jobs in 2010 (Noble and Kraske 2011). Additionally, a pension reform bill passed last summer now requires newly hired state workers to contribute 4% of their salaries to the state pension system (Hemingway 2010).

However, the data indicate that state and local government employees in Missouri are not overpaid. Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of both state and local governments in Missouri earn less than comparable private sector employees. On an annual basis, full-time state and local government employees in Missouri are undercompensated by 15.7% compared with otherwise similar private sector workers. This compensation disadvantage is just slightly smaller but still significant when hours worked are factored in. Full-time public employees work fewer annual hours, particularly employees with bachelor’s, master’s, and professional degrees (because many are teachers or university professors). When comparisons are made controlling for the difference in annual hours worked, full-time state and local government employees are undercompensated by 15.6%, compared with otherwise similar private sector workers. To summarize, our study shows that Missouri public employees earn 15.6% less in total compensation per hour than comparable full-time employees in Missouri’s private sector.

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