A study indicates that state workers are getting generous benefits that more than offset pay packages that are lower than comparable jobs in the private sector.
Click on the link below for a copy of the study.
Tbe study refutes the widely accepted claim from state employee unions that concessions in health care benefits are unfair, since paychecks are far below the scales for private sector workers.
The study released Monday by the Delaware Public Policy Institute, an organization affiliated with the Delaware State Chamber of Commerce.
The study found that Delaware state government employees receive salaries that that are about 12.4 percent lower than those of similarly-qualified private sector workers, after taking into account education, experience and other factors.
But state government employees receive a benefits package that is approximately 53 to 102 percent more generous than those going to private sector workers. In particular, health coverage, retiree health plans, and pension benefits are substantially more generous for state employees than for Delaware employees working in the private sector, the study claimed.
The findings are as follows:
- Salary and Benefits. The average Delaware state government employee in the Census data sample earned an annual salary of $48,967 plus annual benefits, either received in that year or accrued toward retirement, worth between $36,563 and $48,230, depending upon the method used to value the accrual of future pension benefits. A private sector employee with similar education, experience and other characteristics would receive about $55,039 in annual salary, but only about $23,775 in additional benefits.
- Total Package. In total, the average Delaware state government employee receives between $88,530 and $97,197, while a comparable private sector employee would receive total pay and benefits of about $78,814 per year.
- On average, Delaware state government employees receive total pay and benefits that are between $6,716 and $18,383 per year higher than those employees would be likely to receive in private sector positions, a difference of between 8.5 percent and 23.3 percent. Were Delaware to compensate state government employees at market rates, it would save between $260 million and $720 million in annual compensation costs.
“Pensions, health coverage and retiree health care programs are the three key elements of compensation that are most generous relative to the private sector; they are also growing rapidly.” DPPI Interim President Bill Osborne said, “We offer this study to inform current discussions in Dover by providing the facts needed to make sound public policy.”
The study was conducted by Andrew G. Biggs, Ph.D., a resident scholar at the American Enterprise Institute. Biggs studies public sector pay and benefits, Social Security reform and state and local government pensions.
The report specifically excludes local government employees, public school teachers and public safety workers, since those workers have different salaries and may participate in different health and pension plans.
The institute noted that decisions related to salary and benefit plans for state employees are under discussion in the Delaware General Assembly. Two recent studies – the Delaware Expenditure Review Committee established by Governor Markell and the Delaware Business Roundtable’s Study of State Finances – identified personnel costs as a major cost driver of the state budget.
Both studies noted that the significant areas of expenditure growth associated with personnel are in employee health care, pension and retiree health care.
Markell has proposed that state employees pick up a large chunk of health care costs, but has received little support from legislators, including a few Republicans.
The study could provide cover for moderate legislators without close ties to unions to go with Markell’s plan.
The author of the report, the American Enterprise Institute, is often linked to neoconservatives best known for their influence in the administration of George W. Bush and their counsel on the conduct of the Iraq War. That affiliation that is certain to be noted by critics of the report.
The complete report entitled Unequal Pay: Comparing State & Private Sector Employee Compensation in Delaware was delivered to the governor, his cabinet and all members of the Delaware General Assembly. It is available to the public online at the link below
The Delaware Public Policy Institute was established in 1990 to conduct research and encourage study and discussions of policy, programs and issues affecting the State of Delaware and its citizens.
