Fact Sheet | Unions and Labor Standards

Indiana public‐sector workers are undercompensated compared with private‐sector counterparts

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Briefing Paper: Are Indiana public employees overcompensated?

Full‐time state and local government employees in Indiana are undercompensated by 7.5%, when compared with otherwise similar private‐sector workers.1 A rigorous analysis using a comprehensive monthly database2 that includes the necessary variables—education, experience, hours of work, organizational size, gender, race, ethnicity, citizenship, and disability—provides the most accurate comparison of public‐ and private‐sector compensation in Indiana.

The facts:

• On an annual basis, full‐time state and local employees and school employees are undercompensated 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 with 24% of full‐time private‐sector workers.

• College‐educated public‐sector workers earn 6% less in total compensation than private‐sector employees, a disparity that grows even larger, however, when comparing professional employees, such as lawyers and doctors.

• In addition to having higher education levels, Indiana state and local government employees, on average, are also more experienced (24.1 years) than their private‐sector counterparts (21.6 years).

• Public employees—like all other American workers—have 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 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.

1 See the 2011 EPI Briefing Paper, Are Indiana Public Employees Overcompensated?, by Labor and Employment Relations Professor Jeffrey Keefe, Rutgers University. 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. 2 U.S. Census Bureau and Bureau of Labor Statistics.

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