October 26, 2012

U.S. Senate
Washington, D.C. 20510

Dear Senator,

Citizens Against Government Waste (CAGW) recently unveiled a new report, Public Servants or Privileged Class: How State Government Employees are Paid Better than Their Private Sector Counterparts. CAGW was joined at the news conference by San Jose City Councilman Pete Constant and John Dunham, managing partner of John Dunham & Associates, the research firm that conducted the survey. The release of the report was accompanied by a video, a fact sheet, and a State Grade Map. The Washington Times published an op-ed on this issue on October 24, 2012.

The report analyzes state government employee wages and benefits in all 50 states, and, for the first time, provides a detailed comparison of compensation for public and private-sector workers in the same job categories, from architecture and engineering to transportation. The report found that state governments pay on average 6.2 percent more per hour in wages and benefits, including pension benefits, than the private sector for the 22 major occupational categories that exist in both sectors.

Additionally, the report found that no state government pays its employees on par or below what the private sector pays, that the largest percentage difference in pay between the public and private sector is 40 percent, and that the highest difference in pay is $61 per hour. This disproportionate public-sector compensation is a major driver of unfunded state and municipal pension liabilities across the country, which have been accurately described as looming financial crises by pundits and experts of all political stripes.

Generations of elected officials have made promises to public employees that are simply unsustainable. Politicians should not be asking hard-working taxpayers in the private sector to pay more for the pay and benefits of their better-compensated public sector counterparts while making devastating cuts to essential services such as police, fire protection, and basic infrastructure. Serious reform of public sector compensation is critical in order to prevent additional cuts in spending by governments at all levels.

Addressing any serious problem requires knowledge of its underlying causes. This report, the first of CAGW’s new public pension education project, is intended to spur debate and action on public sector employee compensation reform. Please feel free to contact me if you would like additional information about this critical issue.

Sincerely,

Tom Schatz
President, CCAGW