Public vs. Private Sector Compensation in Connecticut

Commentary

Public vs. Private Sector Compensation in Connecticut

Connecticut has one of the worst government debt-to-state GDP ratios, as well as one of nation’s most poorly funded pension plans. Despite large tax increases since 2011, the state’s funding woes are growing thanks in large part to ample public pensions and health programs.

Generous public pension benefits are often justified on the grounds that public sector employees receive lower salaries than private sector employees. However, new research from Andrew Biggs at the Yankee Institute shows that state employees in Connecticut not only earn comparable salaries to similarly qualified private-sector workers, but also receive significantly greater benefits.

After controlling for education, experience, and other factors, the study finds that the average Connecticut state employee earns between $125,531 and $146,611 in total compensation that includes both salaries and benefits, compared with $96,177 received by an equivalent private worker. If state employees were compensated at market levels, the state would save between $1.4 billion and $2.5 billion in annual compensation costs.

To read the paper, go here.

Truong Bui is a policy analyst at Reason Foundation, where he works on the Pension Reform Project.