Fact Sheet | Unions and Labor Standards

Michigan public‐sector workers underpaid

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Briefing Paper: Are Michigan public employees overcompensated?

Full‐time state and local government employees in Michigan are undercompensated by 5.3%, 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. Previous studies of Michigan used incomplete earnings data and failed to control for education levels and years of experience.

The facts:

• On an annual basis, Michigan’s full‐time state and local workers and school employees are undercompensated by 5.3%, in comparison with otherwise similar private‐sector workers. When annual hours worked are factored in, the gap remains but shrinks to 2.9%.

• Michigan state and local governments and school districts pay college‐educated workers, on average, 21% less than private employers. On the other hand, the roughly 1% of public‐sector workers without high school diplomas tend to earn more than their peers.

• Michigan public‐sector workers are more highly educated than private‐sector workers; 53% of full‐time Michigan public‐sector workers hold at least a four‐year college degree compared to 31% in the private sector. The public‐sector education data include teachers, attorneys, engineers, and other highly skilled workers, all of whom have at least a four‐year degree.

• In addition to having higher education levels, Michigan state and local employees, on average, are also more experienced (24 years) than their private‐sector counterparts (21.7 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 Michigan 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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