Report Finds RI Government Workers Out-Earn Private Sector

Thursday, November 29, 2012


According to data recently compiled as part of a national study for the Rhode Island Center for Freedom & Prosperity, government workers in the Ocean State collect significantly higher compensation than their private sector counterparts.

Among the findings in the Center's report, Ocean State public sector employees enjoy compensation levels that are 26.5% higher than their private sector counterparts. This rate is 41% higher than the New England average and 78% higher than the national norm with the results being calculated via a statistical regression analysis after controlling for factors such as education and experience. On average Rhode Island government workers receive 58% more in 'benefits' than private works in the Ocean State.

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Within the New England region, Rhode Island public employees are unique in collecting a higher base pay than private employees while working the fewest total hours, receiving a higher paid time off value than in the private sector and benefitting from a 41% higher total compensation premium than the national average.

"Rhode Islanders want a government that works for all citizens. But it may not be so much that state and municipal employees are grossly overpaid, but more that our state's private sector has such shockingly low compensation levels," said Mike Stenhouse, CEO for the Center. "This is yet another clear indication of how public policy in the Ocean State has favored certain groups while severely harming our economy and our business sector."

Through the study conducted by economists William Even of Miami University and David Macpherson of Trinity University, data shows that Rhode Island government workers on average collect $100,217 in total compensation versus $83,419 for private employees. Respectively, base-pay breaks out to $61,046 as compared to $58,664 along with benefits breaking out at $39,171 versus $24,755. A prior review of the effects of Rhode Island's 2011 pension reform showed its effect to be minor at best when based on these comparisons.

The information obtained from Even and Macpherson's study raises serious questions about the sustainability of a system where a low-paying private sector is supporting a high-pay public sector. "Are we heading towards a Central Falls type of situation where pension benefits have to be cut dramatically, or even much, a Scranton, PA situation where city worker pay was cut to a minimum wage?" inquired Stenhouse. "It is evident that new policies that promote economic growth and increase our tax base are the best way to ensure that we can afford to maintain current public employee compensation levels", concluded Stenhouse.


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