State and Local Workers Retain Advantage

The Bureau of Economic Analysis has released its annual data on employee compensation by industry. (See tables 6.2, 6.3, 6.5, and 6.6).

The new data for 2006 show that the nation’s 16 million state and local government workers earned an average $61,727 in total compensation (wages plus benefits). That is 11 percent more than the $55,470 average earned by U.S. private sector workers.

Looking just at wages, state and local workers earned an average $46,937, which is similar to the $45,995 average earned by private sector workers. Thus the primary state and local advantage is the generous fringe benefits.

The figure below shows that the state and local worker advantage has remained fairly constant since at least 1990. Private pay boomed in the late-1990s, but state and local pay has grown faster this decade.

Source: Chris Edwards, Cato Institute, based on Bureau of Economic Analysis data

For those interested in the welfare of teachers, the BEA data shows that teacher compensation has closely tracked the overall state and local average since 1990. The average compensation in state and local education in 2006 was $62,371

State and local workers are not paid as well as federal workers, on average, but they usually receive similar generous fringe benefits including high job security, and lucrative pension and health care plans.