University of Illinois Study Suggests That State Workers are Underpaid
By: Scott Picken
Updated: March 11, 2013
CHAMPAIGN -- Is it possible that Illinois state workers are underpaid? That is exactly what University of Illinois Professor Robert Bruno with help from research associate Frank Manzo IV argues in "Working in Illinois' Public Interest, A Comparitive Study of Earnings, Impacts, and Benefits.'
The 31 page report uses extensive data to refute claims that Illinois state workers are overpaid, stating in a news release,
"We felt that what passes for public discussion around the cost of government in the state of Illinois has been partisan and not really data-driven or well informed."
Bruno claims that state workers are underpaid in part because because Illinois is a 'high wage state' with a highly educated state workforce, and taken in those contexts, taxpayers are getting a relative bargain from state workers. "When you control for education and other demographic variables, it turns out that public sector workers suffer a wage penalty," Bruno writes. "So it's a myth that state workers in Illinois are overpaid, and to lay the blame for the state's budget woes and underfunded pensions on state workers is just plain false."
An independent analysis of his data, however, could produce different conclusions, such as:
-Illinois ranks behind only New York and California (of those states surveyed) in terms of average salary and health care benefits.
-Public pension costs in Illinois are well above the national average.
-Overall, Illinois has some of the most generous benefits for state employees in the nation.
Other conclusions Bruno makes can also be open to interpretation. For example, his study found that state and local government workers in Illinois earn incomes that are 13.5% less on average than workers in the private sector with a comparable education. He points out that the average real wage and salary income for someone with a Bachelor's degree in the private sector is $63,937 while in Illinois' state public sector, it's just $41,088 before benefits. Yet when he calculates median income for all workers, state workers do far better: $40,288 versus $31,469 for Illinois workers in the private sector.
Why the difference? Because high ranking executives in the private sector can make incomes public sector employees cannot. Bruno's numbers show the top 1% of the private sectorin Illinois earns on average $278,478 while the top 1% in the public sector earns $123,768. That's a deficit that likely exists in every state, and few would argue that the state's top public employees should be paid the same as private-sector for-profit corporate CEO's or high level executives.
The study also finds that Illinois has among the highest public salary-to-benefit costs in the nation. Compared to neighboring Wisconsin, for instance, state workers in Illinois make less in income ($42,016 vs. $48,152 in Wisconsin) but substantially more in health care benefits ($18,276 vs. $7,481) and more in total compensation. Bruno even concedes that, "The average annual cost of health premiums for Illinois state government employees (paid by taxpayers) is higher than for any other state selected for our analysis." He adds, however, that the analysis is not a true apples-to-apples comparision because of differences in how various states compensate their workers.
So are state workers underpaid? Data included in the study suggests that rather than underpaying state workers, Illinois may be 'mis-paying' them, and that one possible solution to the state's pension crisis may be to negotiate reductions pensions and benefit obligations in exchange for increases in state worker pay.
You can read the full study here:
http://www.ler.illinois.edu/labor/images/Working%20in%20Illinois'%20Public%20Interest_Bruno%20&%20Manzo.pdf
