The Associated Press looks at the confusing and contentious question of public sector pay - are state and local government workers paid comparably to private sector employees? The answer really depends on who you ask.
The AP talked to Jeffrey Keefe, a Rutgers University professor and author of a series of papers for the Economic Policy Institute arguing that state and local workers are on average undercompensated. If so, this undercuts the case for reducing public employee pay and benefits as a way to put government budgets back on track.
But as Jason Richwine of the Heritage Foundation and I have pointed out, these studies have a number of significant flaws. They significantly underestimate public sector pension benefits, omit retiree health coverage entirely and don't count the value of better job security in the public sector. In this Heritage paper and this Wall Street Journal op-ed, we showed how correcting for these flaws can show that California government employees are compensated up to 30 percent above market levels.
Keefe was apparently unconvinced, calling these arguments "desperate." Somebody may be desperate, but it's not us. In our response, we analyzed the issues and highlighted a few choice examples - for instance, that the California government itself advertizes that public employees could expect to receive almost half a million dollars in government-provided retiree health care, a benefit that Keefe's and other public sector pay studies ignore. We're confident in our results and are continuing to work on the issue, but it's also important to get the word out at the state and local level that claims of public employee undercompensation should be taken with a grain of salt.
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