Economic Snapshot | Wages, Incomes, and Wealth

Public-sector workers are paid less than their private-sector counterparts—and the penalty is larger in right-to-work states

State and local government employees already earn less than similar private-sector workers. The wage and compensation gaps between public- and private-sector workers are significantly higher in right-to-work states, which allow “free-riders” to enjoy the benefits of collective bargaining without paying their fair share of fees to support the union’s ability to negotiate on their behalf. Friedrichs v. California Teachers Association could effectively render the entire public sector right to work, pushing down wages for workers in the public sector and beyond.

Economic Snapshot

Public-sector workers are paid less than their private-sector counterparts—and the penalty is larger in right-to-work states: Pay penalty for public sector workers compared with private sector workers by their state’s collective bargaining rights

Wages Compensation 
Fair share states (non-right-to-work) 5.2% 0.8% 
Right-to-work states 14.1%  10.4% 
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In right-to-work states, public-sector employees earn 14 percent less in wages than their private-sector counterparts. Factoring in compensation, public-sector employees suffer a 10.4 percent wage penalty compared to their private-sector counterparts.

In states that allow unions to collect fair-share fees (i.e., non-right-to-work states), the wage penalty for working in the public sector is significantly smaller, and it almost disappears when compensation is taken into account. In fair-share states, the public-sector wage penalty is only 5.2 percent—less than half the penalty public-sector workers face in right-to-work states. When compensation is factored in, the wage penalty falls to 0.8 percent.

The single largest factor suppressing wage growth for middle-wage workers over the last few decades has been the erosion of collective bargaining, which has affected both union and nonunion workers alike. When unions bargain for better wages and benefits, whether on behalf of public- or private-sector workers, they set higher labor standards for all workers. At a time when workers’ bargaining power in the labor market has been severely eroded, policymakers should not look to ways of further weakening collective bargaining rights.


See related work on Unions and Labor Standards | Wages | Public-sector workers

See more work by Jeffrey Keefe