Press Releases | Wages, Incomes, and Wealth

News from EPI EPI study finds, Indiana public-sector workers under-compensated

For Immediate Release: Thursday, February 10, 2011
Contact: Phoebe Silag or Karen Conner, 202-775-8810

A new Economic Policy Institute study released this week finds that full-time state and local government employees in Indiana are undercompensated by 7.5%,when compared to otherwise similar private-sector workers.  By using a comprehensive database that is updated monthly by the U.S. Census Bureau and Bureau of Labor Statistics, the study provides an accurate comparison of public- and private-sector compensation in Indiana.

The analysis, Are Indiana Public Employees Over-compensated? by Labor and Employment Relations Professor Jeffrey Keefe of Rutgers University, controls for education, experience, hours of work, organizational size, gender, race, ethnicity, experience, citizenship and disability. The study uses data collected primarily from the National Compensation Survey, and in accordance with standard survey practice, focuses on year-round, full-time public and private-sector employees.

Major findings of the study include:

· On an annual basis, full-time state and local employees and school employees are under-compensated by 7.5% in Indiana, in comparison to otherwise similar private-sector workers. When comparisons are made for differences in annual hours worked, the gap remains, albeit at a smaller percentage of 5.9%.

· Indiana public-sector workers are more highly educated than private-sector workers; 49% of full-time Indiana public-sector workers hold at least a four-year college degree, compared to 24% of full-time private-sector workers.

· College-educated public-sector workers earn considerably less than private-sector employees. On the other hand, the roughly 1% of public-sector workers without high school diplomas tend to earn more than their peers in the private sector because the public sector sets a floor on earnings.

· In addition to having higher education levels, compared to Indiana private-sector employees, Indiana state and local government employees on average are more experienced (24.1 years compared to 21.6 years).

The study makes clear that public employees—like every other American worker—have in fact been victims of the worst recession since the Great Depression.  In fact, severe financial problems as a result of the Great Recession have forced state, county and municipal elected officials across the country to make massive cuts in spending. As a result, tens of thousands of public-sector employees have been laid off and thousands more have been subject to forced furloughs, pay freezes and cuts in benefits.