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EconomicPolicyInstitute February 25, 2011

Widespread protests in Wisconsin over a bill that would strip public workers of their collective bargaining rights and impose sharp increases in employee contributions to health and pension benefits has raised more questions about public employee compensation in Wisconsin and elsewhere. EPI has produced an extensive body of research on the topic, showing that public workers typically see a compensation penaltyrelative to their counterparts in the private sector. This research, all available on EPI.org, has been widely cited in the media and by policy makers over the past week as the debate over public-sector compensation reached fever pitch.

Comparing public and private-sector compensation in Wisconsin

Three recent reports examine public-sector wages and compensation in Wisconsin. An EPI Economic Snapshot, Wisconsin public servants already face a compensation penalty, shows that these workers in Wisconsin, at all levels of education, earn less than comparable private-sector workers. The gap is particularly large among college-educated public-sector workers, who comprise close to 60% of the state and local workforce. Earlier this month, EPI also published the paper Are Wisconsin public employees overcompensated?, which examined compensation in the private and public sectors controlling for education, experience, and multiple other factors, and concluded that public employees are not overcompensated. Other EPI resources include a fact sheet on Wisconsin public employees and the policy memo Wisconsin public versus private employee costs: Why compare apples and oranges? This policy memo argues that reports suggesting public employees are overpaid fail to take into account variables such as level of education: Nationally, 54% of full-time state and local public-sector workers hold at least a four-year college degree, compared with 35% of full-time private-sector workers, and in Wisconsin, the educational differences are even greater.

This research has been cited by CNNBoston Globe, Ezra Klein’s Washington Postblog, and multiple other sources. In addition, EPI Vice President Ross Eisenbrey took part in a discussion about public worker pensions on the Diane Rehm Show on February 23.

Nationwide: A public-sector compensation penalty

This latest research on public-sector compensation in Wisconsin builds on a paper EPI published in 2010, Debunking the myth of the overcompensated public employee. EPI has more recently published state-level research on this topic focusing on OhioNew JerseyIndiana, and Michigan, in addition to Wisconsin. All of these papers and related fact sheets are posted on the page A public-sector compensation penalty, on EPI.org.

Inside the new budget

EPI has also produced extensive research on the proposed 2011 budget that President Obama released on February 14. EPI Research and Policy Director John Irons said the budget was flawed, but better than some of the alternatives proposed by Republican leadership in Congress. “The overall freeze in domestic discretionary spending all but ensures that the fight to create jobs and ensure future economic growth will be limited,” Irons wrote. More in-depth analyses of the new budget, from policy analysts Andrew FieldhouseEthan Pollack, and Rebecca Thiess, look at the tax policiespublic investments, and budget cuts contained in the new budget.

Rebecca Thiess’s analysis earlier this month, Republican proposal to “right our fiscal ship” throws more workers overboard, has drawn widespread attention. On February 21, House Minority Leader Nancy Pelosi cited the research during a debate over the proposed spending cuts.

The Recovery Act two years later

Shortly after President Obama took office two years ago, he signed the $787 billion American Recovery and Reinvestment Act, a series of investments designed to save jobs and create new ones. Economist Josh Bivens has written an analysis, An investment that worked, showing that the Recovery Act created or saved between three million and four million jobs, and boosted gross domestic product by as much as $560 billion.

Are employers discriminating against the unemployed?

Algernon Austin, director of EPI’s program on Race, Ethnicity, and the Economy, provided testimony to the Equal Employment Opportunity Commission on February 16 on the potential impact on minority workers of employers excluding the currently unemployed from consideration for hiring. Austin argued that this widely reported practice would significantly disadvantage African Americans, Hispanics, and American Indians, all groups with above average unemployment rates. The hearing received widespread media attention in the Wall Street JournalThe New York Times, and multiple other sources.

Also in the news

In his New York Times blog, Paul Krugman cited research from EPI President Lawrence Mishel showing widespread unemployment across all industries. The research, Krugman noted shows why the current unemployment crisis is not a structural problem reflecting inadequate worker skills, but rather results from a simple lack of jobs.

From the EPI Blog
Elise Gould
New Wages and Salaries Data from the Employment Cost Index Show Yet Again It’s Not Quite Time To Declare Mission Accomplished  
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Who Among African Americans is Counted in the Labor Market and in the Voting Booth?
Josh Bivens
Yes, GDP Is Up. But the Recovery Hasn’t Broken Through.
Joshua Smith
Myths and Facts About Corporate Taxes, Part 3: Are American Companies’ Profits Trapped Overseas?
Joshua Smith
High-income Households Pay a Large Share of US Taxes—But This Doesn’t Make Our Tax System Progressive
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