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. In addition, policymakers are looking at the pay and benefits of public sector employees as a way to reduce budget deficits.
From 1955 to 2011, employment in the private sector increased by 65.5 million jobs (from 43.7 million to 109.3 million), while the number of jobs in the public sector (including federal, state, and local governments) grew by 15.1 million (from 7.0 million to 22.1 million). Since 1975, however, the percentage of all jobs that are in the public sector has fallen from 19.2% to 16.8%.
Union coverage has declined in both the private and public sectors. But, the decline has been greater in the private 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. In 2011, 52.1% of full-time public sector workers were between the ages of 45 and 64, compared to 42.8% of full-time private sector workers. Federal workers are older than employees of state and local governments. In 2011, 55.8% of federal workers were between the ages of 45 and 64, compared to 51.9% of state employees and 50.8% of employees of local governments. 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. In 2011, 53.7% of workers in the public sector had a bachelor’s, advanced, or professional degree, compared to 34.0% of private sector workers. 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.” In 2011, 56.3% of public sector workers and 37.1% of private sector workers were employed in these occupations. Workers in management and professional occupations generally earn more than workers in other occupations. Comparisons in the compensation of private and public sector workers that use broad occupational categories may miss differences between detailed occupations. But, many detailed occupations are concentrated in either the private or public sectors. Many detailed occupations may require similar skills, however.
• Union coverage. In almost all major occupational categories, union coverage is higher in the public sector than in the private sector. .
Date of Report: March 14, 2012
Number of Pages: 32
Order Number: R41897
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