Report | Unions and Labor Standards

Wisconsin public versus private employee costs: Why compare apples to oranges?

Policy Memorandum #173

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Inaccurate comparisons of national and Wisconsin public employee compensation with private sector compensation are circulating in Wisconsin. These faulty comparisons, showing that public employees in Wisconsin are dramatically overpaid, seem to support legislative efforts to increase benefit contributions by public employees. These increased benefit contributions would subject them to a pay cut greater than 10% and eliminate their collective bargaining rights.

But when we compare apples to apples, we find that Wisconsin public employees earn 4.8% less in total compensation than comparable private sector workers. The comparisons—controlling for education, experience, hours of work, organizational size, gender, race, ethnicity, citizenship, and disability—demonstrate that full-time state and local public employees earn lower wages and receive less in total compensation (including all benefits) than comparable private sector employees.

Why does it appear otherwise?  Both nationally and within Wisconsin, public sector workers are significantly more educated than their private sector counterparts. Nationally, 54% of full-time state and local public sector workers hold at least a four-year college degree, compared with 35% of full-time private sector workers. In Wisconsin, the difference is even greater: 59% of full-time Wisconsin public sector workers hold at least a four-year college degree, compared with 30% of full-time private sector workers.

These stark educational differences arise for two reasons.  First, many public employees are professionals and teachers in positions that require higher levels of education. Second, the movement to privatize public sector work has been accomplished in great part by moving low-skilled work from the public to private sector, where benefits are often more modest.

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