While state employees earnings are on par with the private sector, their benefits far outpace their public counterparts. The discrepancy is at least 25 percent and could reach 46 percent.
That’s the findings of a study commissioned by the Yankee Institute, a Connecticut think tank that favors smaller government. Andrew Biggs, a resident scholar at the American Enterprise Institute, conducted the research.
The study compares similar government and non-government workers – excluding public-safety – while controlling for education, work experience and other factors. Although the average private-sector worker in Connecticut earns a slightly higher salary ($71,112 vs. $70,970), the average state employee receives benefits worth nearly twice as much as the non-government worker ($54,561 vs. $29,371).
The Yankee Institute said the study values state retirement benefits using cautious assumptions versus more realistic assumptions. Under the most cautious assumptions (those used by state actuaries), state workers receive 25 percent more compensation. It claims the more realistic assumptions put the number as high as 46 percent more than non-government workers.
“Bringing state compensation in line with non-government earnings would save the state between $1.4 and $2.5 billion, depending on the assumptions used,” said Carol Platt Liebau, president of the Yankee Institute, in a statement.
Suzanne Bates, policy director for the Yankee Institute, said the state could achieve more sustainable budgets if its retirement policies were drastically revamped from the current pension system. “We should start moving toward high-deductible health plans and 401(k)-style retirement accounts right away. This will put us back on the path to sustainable budgets,” she said.
