BLS Data: Government Workers Make 40% More Than Private-Sector Workers
State and local budgets are feeling the squeeze and a belt-tightening is happening, but don't expect compensation costs to take the hit.
By Peter List, Editor | June 26, 2024
At a time when certain states face huge budget deficits, data released by the Bureau of Labor Statistics (BLS) last week shows that total compensation for state and local government workers was nearly 40 percent higher than that of private industry workers in March.
Although wages and salaries were more closely paired—government workers’ wages and salaries are only 23.2 percent higher than private industry workers—the difference in benefits costs is more pronounced.
Benefit costs for government workers, according to the BLS data, is more than 79 percent richer than that of private industry workers.
Total employer compensation costs for private industry workers averaged $43.78 per hour worked in March 2024. Wages and salaries averaged $30.76 per hour worked and accounted for 70.3 percent of employer costs, while benefit costs averaged $13.02 per hour worked and accounted for the remaining 29.7 percent. Total compensation costs for private industry workers were $16.94 at the 10th wage percentile, $31.81 at the 50th (median) wage percentile, and $84.97 at the 90th wage percentile. (See tables A and 1.)
Total employer compensation costs for state and local government workers averaged $61.27 per hour worked in March 2024. Wages and salaries averaged $37.90 and accounted for 61.9 percent of employer costs, while benefit costs averaged $23.37 and accounted for 38.1 percent. Total compensation costs for state and local government workers were $26.22 at the 10th wage percentile, $57.94 at the 50th (median) wage percentile, and $102.36 at the 90th wage percentile. (See tables A and 1.) [Emphasis added.]
Government compensation costs are primarily financed through taxes, and the percentage varies by state. Some states and localities have higher costs, which may impact certain state budgets more urgently, and some have lower costs.
States and municipalities struggle.
As federal funds that padded state coffers during the pandemic now run dry, and people migrate from states noted for higher taxes and higher deficits, the problem will be further exacerbated.
Now, reported Politico earlier this year, “state policymakers now face the politically challenging task of tightening the pursestrings.”
The most eye popping example of this economic reversal is California: A nearly $100 billion surplus in 2022 has morphed into a deficit projected to be as high as $68 billion over two years.
As state and local officials are loathe to cut wages and benefits of government workers, the deficits are more likely to be addressed through program cuts, layoffs and hiring freezes.
The California Teachers Association, for example, is fighting the layoffs of almost 2,000 CTA members in 106 local associations statewide.
Though only somewhat related, the existing $1.3 trillion pension debt for state workers crosses the political divide, impacting both “red states” and “blue states.”
In Abilene, Texas, the city council is considering raising property taxes and shutting down two recreation centers, which has angered some residents.
"This is not a revenue problem," David Crane, president of Govern for California, a nonprofit that seeks to oppose the influence of labor unions on state government, told the Los Angeles Times last week. "The deficit is a result of expenditures."
While that may be accurate, finding a solution won't be easy, and any decision made by policymakers will likely upset the groups most affected.
