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Citizens Against Government Waste: Virginia Overpays State Employees

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A report recently released by Citizens Against Government Waste gives Virginia a “D” for its large gap between state and private sector compensation.

Although that may sound bad, the main point of the study for CAGW by John Dunham & Associates, a New York-based economic research firm, isn’t that some states have a terrible problem. Rather, it’s that all state governments, when both salaries or wages and benefits (including pensions) are considered, pay more than private employers within those states for the same jobs. Even in Utah and Montana, where the public-private gap is the smallest, the state government pays higher wages-plus-benefits on the whole.

There are job categories, such as managers, computer scientists, and lawyers, in which private-sector people in Virginia and elsewhere do much better, on average, than those working for the state government. But when it comes to many of the more common occupations, in which exceptionally high “star” salaries aren’t really available, states are substantially more generous to their employees than the private sector.

For instance, in Virginia, building and grounds maintenance workers earn $17.56 an hour if they work for the state, compared with $14.07 in the private economy. The state’s office and administrative support employees earn $23.55 versus $20.35 for their private-sector counterparts. Health-care support workers make $23.97 if they work for the state and a much lower $15.90 if they’re privately employed. In community and social service work, the compensation is $30.96 versus $24.49. State employees in “construction and extraction” earn $27.47 as opposed to $24.84.

Virginia ranks a remarkably high fourth among the 50 states in the size of its public-private gap. Its “D” grade (which is based on a similar but slightly different criterion) puts it in company with states like Illinois, Massachusetts, Michigan, and New Jersey. In addition, at least two states with more liberal politics and policy than Virginia, notably Vermont and Rhode Island, actually earned an “A.” According to the Dunham & Associates study, among the several “F” states, the two where public compensation most exceeds that in the private sector are—no surprise—California and, more surprisingly, Texas.

The study should be cited with caution for a few reasons. Unlike the nationwide study by economists William Even and David Macpherson cited in recent issues of the Jefferson Policy Journal, which considered state and local-government employees as a whole, the study for CAGW did not consider data for comparable individuals, controlling for their education, work experience, and number of hours on the job.

Also, the greatest gaps by far in the Dunham study tend to be in just two fields—education/training/library work and protective services including law enforcement. The large overcompensation, if that’s what it is, in those fields doesn’t describe state employees as whole. Also, police officers (including those who work for the state) have no real equivalent in the private sector, so comparisons are especially questionable in the “protective services” category.

Still, the report merits special attention because the less dramatic but significant gaps in many other lines of work, such as secretarial and health-care support, add up in a state budget.

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