Conventional wisdom suggests that state jobs don't pay as well as those in the private sector, but the benefits are great. In NH, though, state employees are actually paid about the same, on average, as those in the private sector. Even when you take benefits out of the equation, such as health care insurance and pensions, the average difference in pay between state and private workers is small. Depending on the type of work and level of experience, some state workers take home bigger paychecks than comparable private sector workers.
According to 2009 data, the latest available from the NH Department of Employment Security, the average private sector worker made $21.01 per hour while the average state worker in NH made $21.71.
Depending on the job, the differences in hourly wages can be greater. The average private worker in a management position in NH makes $51.95 per hour (not including benefits), while comparable managers in state government make $35.08. Those in private practice in legal occupations bring in $36.64 per hour, compared to the average of $24.69 for state workers in legal occupations. Health care practitioners in private practice also fare better, making $35.09 per hour versus an average of $27.27 per hour for state workers in comparable positions.
But state community and social service workers make $22.19 per hour, 25 percent more than comparable private sector wages of $17.56 per hour. Education, training, and library occupations within state government are also paid well-$30.39 per hour compared to $25.21 in the private sector. Government protective service jobs (like police and fire) make $20.70 per hour, compared to $13.99 in the private sector.
Private sector workers and state government workers start at almost the same hourly rate. According to the 2009 data, an entry-level hourly wage for a private sector manager averaged $27.33, compared to $24.89 in state government. Entry-level health care practitioners pull in $18.26 in private industry, compared to $20.14 if employed by NH.
Experience plays a role, and there the advantage tends to go to the private sector. The average hourly wage for an experienced manager in the private sector is $64.26, versus $40.17 in state government. The hourly wage for an experienced computer or mathematics person is $45.46 in the private sector and $30.81 in state government.
In legal occupations, the average hourly wage (without benefits) for an entry-level worker is equivalent: $18.28 in the private sector compared to $18.23 in state government. However, the hourly wage differential for experienced legal professionals in state employment and private industry is large-$45.82 in private establishments compared to $27.93 in state government.
On the other hand, for occupations in community and social service, education and training, and protective services, experienced workers make more working for the state.
The Benefits Split
Part of the difference between private and public pay can be explained by the choice of occupation and time on the job. Where state employees have a clear advantage is in health care coverage, a guaranteed pension and access to retirement health insurance-benefits that are disappearing from the private sector.
According to the U.S. Bureau of Economic Analysis, non-wage compensation per state government worker was $12,268 annually, compared to $6,935 for the average private sector employee. What's more, non-wage compensation for state employees increased 66 percent from 2001 to 2009, while non-wage compensation rose only 34 percent in the private sector for the same period.
Here's another way to look at it. In 1993, non-wage benefits added 17 percent to the salaries of those in both the private and public sectors. By 2009, non-wage benefits still represented 17 percent of private sector salaries, but had spiked to 24 percent of state and local government worker salaries. (Non-wage compensation includes health insurance and retirement benefits.)
An Unfair Comparison?
Other differences between public and private employees make comparisons difficult. Some economists point out that government work tends to be highly skilled, so it is misleading to compare the groups as a whole. Public employees are also more likely to be unionized, which sometimes translates into better pay.
And there are other distinctions. National research suggests state and local workers voluntarily quit at low rates. The Bureau of Labor Statistics has a Job Openings and Labor Turnover Survey. Economists agree you are less likely to quit if you feel you are well paid. Given the survey shows that private sector workers are more than three times more likely to quit their jobs, some economists argue that this confirms public sector workers are overpaid.
Public workers are also fired at lower rates. By estimating the income loss before fired workers find new jobs, some argue that a low rate of job separation is a benefit worth as much as 15 percent of public employee pay.
In the end, comparisons are tricky. For some, work in the public sector has a clear advantage, even before calculating non-wage compensation. For others, the limits to wage growth inherent in the state system means private employment is a better option.
Dennis Delay is an economist at the NH Center for Public Policy Studies in Concord. For more information, visit www.nhpolicy.org or e-mail ddelay at nhpolicy.org or call 603-226-2500.
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