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Friday, July 8, 2011

Selected Characteristics of Private and Public Sector Workers

Gerald Mayer
Analyst in Labor Policy

An issue for Congress and state and local governments is whether the pay and benefits of public workers are comparable to those of workers in the private sector. To deal with budget deficits, many policymakers are looking at the pay and benefits of public sector employees as a way to reduce government spending. This report provides a comparison of selected characteristics— including age, education, and occupation—of public and private sector workers.

From 1955 to 2010, employment in the private sector increased by 64.1 million jobs (from 43.7 million to 107.8 million), while the number of jobs in the public sector (including federal, state, and local governments) grew by 15.5 million (from 7.0 million to 22.5 million). Since 1975, however, the percentage of all jobs that are in the public sector has fallen from 19.2% to 17.3%.

Union coverage has declined among all workers, but the decline has been greater in the private sector than in the public sector. In 2009, for the first time, a majority of employees covered by a collective bargaining agreement were employed in the public sector. Private sector workers who are covered by a collective bargaining agreement are generally paid higher wages and receive more or better benefits than workers who are not covered by a union contract. In the federal government, except for the Postal Service and some smaller agencies, employees do not bargain over wages.

Differences in the characteristics of full-time workers in the private and public sectors that may affect their relative pay and benefits include the following: 

  • Age. Workers in the public sector are older, on average, than private sector workers, and this difference has grown. Workers who have more years of work experience may earn more than workers with less experience. 
  • Education. On average, public sector employees have more years of education than private sector workers. The percentage of workers with a post-graduate degree (i.e., an advanced or professional degree) has increased more in the public sector than in the private sector. Generally, workers with more education earn more than workers with less education. 
  • Occupation. A larger share of public sector workers than private sector workers are employed in “management, professional, and related occupations” (55.4% and 36.9%, respectively). Workers in these occupations generally earn more than workers in other occupations. Occupational comparisons between private and public sector workers may be difficult. Comparisons that use broad occupational categories may miss differences between detailed occupations. On the other hand, comparisons that use detailed occupations may be complicated if workers are concentrated in either the private or public sectors. For example, in 2010 13.0% of full-time jobs in the private sector and 7.8% of jobs in the public sector were in management. But, 95.2% of chief executives, 99.2% of first-line supervisors of retail sales workers, and 97.7% of first-line supervisors of nonretail sales workers were employed in the private sector. On the other hand, virtually all first-line supervisors of police officers and detectives were employed in the public sector. 
  • Union coverage. In most occupations, union coverage is higher in the public sector than in the private sector.

Date of Report: July 1, 2011
Number of Pages: 35
Order Number: R41897
Price: $29.95

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