Fact Sheet | Unions and Labor Standards

New Jersey public‐sector workers are undercompensated compared with private‐sector counterparts

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Briefing Paper: Are New Jersey public employees overpaid?

Full‐time state and local government employees in New Jersey are undercompensated by 4.1%, 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 New Jersey.

The facts:

• On an annual basis, full‐time state and local employees and school employees are undercompensated by 4.1% in New Jersey, in comparison with otherwise similar private‐sector workers. When comparisons are made for differences in annual hours worked, the gap actually grows to 5.9% because New Jersey’s public employees have fewer opportunities to work overtime.

• On average, New Jersey public‐sector workers are more highly educated than private‐sector workers; 57% of full‐time New Jersey public‐sector workers hold at least a four‐year college degree compared with 40% of full‐time private‐sector workers.

• For college educated labor, New Jersey’s state and local government pay on average 10% less than private employers. The earnings differential is greatest for professional employees, such as lawyers and doctors.

• In addition to having higher education levels, New Jersey state and local government employees, on average, are also more experienced (24 years) than their private‐sector counterparts (22 years).

• State and local government employees receive a higher portion of their compensation in the form of employer‐provided benefits, and the mix of benefits is different from the private sector. Public employers underwrite 34.1% of employee compensation in benefits, whereas private employers devote 30.8% of compensation to benefits.

1 See the 2010 EPI Briefing Paper, Are New Jersey 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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