Government employees now take higher salaries than private workers

by Byron Schlomach, Ph.D.
Goldwater Institute
When I worked for a state legislator in Texas, his policy was his legislative offices were open any time his private business was open. I spent many a lonely day in a largely abandoned Texas Capitol on government holidays that were ignored by the world in general. I also enjoyed marvelous health insurance benefits. The birth of my third child cost me personally a total of $20.

Wonderful benefits, extra holidays, and job security for government employees are often justified as relatively inexpensive perks that compensate for comparatively low government pay. That justification, however, no longer applies.

The Cato Institute recently pointed to data from the U.S. Bureau of Labor Statistics that show just how well state and local government employees are paid. On an hourly basis, government employees receive salaries that, on average, are 34 percent higher than private workers. Benefits are even better, with government paid leave worth 77 percent more and health insurance valued at 118 percent higher. Most government workers enjoy a lifetime claim on taxpayers’ wallets when they retire, too.

State-level statistics are not as easy to break down. However, the Tax Foundation has shown that in 2007, Arizona’s average state and local government employee made $300 a year more in total compensation than the average private worker. The latest federal statistics show that in 2008, the margin had grown to more than $1,000.

Considering today’s budget problems,  it’s time to get government employee pay and benefits under control, including paid leave, health insurance and retirement pensions. We could start by moving government employees to high-deductible health insurance plans coupled with tax free Health Savings Accounts. This could save the state millions in annual premium increases. We should also convert government pensions to defined contribution plans–like a private sector 401k–instead of defined benefits. This won’t be a huge short-term money saver, but it will keep the state solvent in the long-run.

Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.


  1. It is my understanding that AZ government employees have their own pension plan that is not funded by taxpayers.

  2. More bad information being passed around by the Goldwater Institute. What Cato has done is used the BLS data to take the total payroll of the public sector and divide by the total number of public sector employees. They also did the same for private sector. This is the ‘average’ they are using. What the Cato institute study does not show is that workers in the public sector doing similar jobs as those in the private sector make more. I bet this is the impression that most come away with after reading the post from Schlomach but what you don’t hear is that government work is skewed to require more advanced degrees and education than the large pool of service sector jobs which get lumped into this numbers.

    In fact studies of this issue have shown that when one does this comparison the differences are all over the map with government employees in apples to apples comparison often making significantly less than private sector employs at the same level.

  3. Nope. Especially in rural and smaller communities across the nation, government salaries are noticeably ABOVE the local average, and they don’t fluctuate the way local business income does. If business is flat, the owner may have to reduce hours for employees or lay off one by one, but the government salaried employee putters along untouched.

    And the “growth” in “new jobs” has been almost exclusively public sector, not private sector.

    It’s a PONZI scheme. As long as there were enough private employment, – that is taxes to take, the government workers who were fewer could keep getting rising pay scales, the many supporting the few.
    Now what? Government employees have health care insurance like COngress kept for it self, gov’t TSP pensions, and stil have the 2 weeks annual vacations, sick leave and maternity leave while small businesses owners are struggling, working 6-7 days, longer hours and the small business mother works with her baby next to her.

    THe better paid are increasing in number while expecting their salaries and benefits to be paid by a shrinking base of private citizens, many of whom will be losing their own health insurance, maybe their businesses and their homes, thanks to the Democrats.

  4. Wanumba – care to back up your claims about pay with any actual data. Or is this just based on a special feeling you have.

  5. wanumba – ponder this before going on about public sector workers. From the same BEA data the Cato ‘report’ is from. Between 1984 to 2008 the number of private sector fulltime equivalent workers went from 74.4 million to 108 million. Government workers (all levels, excluding military because Cato does) went from 13.9 million to 18.8 million. The growth rate of private sector workers has actually been higher over the past 24-25 years than the public sector. Private sector growth was 45% , public sector 35%.

  6. How many state employees are on the AHCCS system?

  7. kralmajales says

    The Goldwater Institute’s only expertise is about making faulty measures and extrapolating blatantly false arguments from them. Their so called work would never pass peer review. This is no different. And Cato is no different either.

  8. …………………..
    todd Says:
    April 29th, 2010 at 7:50 pm
    Wanumba – care to back up your claims about pay with any actual data. Or is this just based on a special feeling you have.

    I am what the researchers call “a primary source.” In the humanitarian field, I am what is called, a “field person.” People collect info from people like me to find out what’s going on, to better interpret the data. There are millions of people like me, so there’s nothing special about me at all.

    I could link to studies and data, but you reject out of hand anything that isn’t what you approve, so what’s the point? Why do I have to link to a study from a guy who had to talk to people like me to get his data? He’s in an office, it’s all intellectual to him. Like many others, I’m out there.

    You didn’t know Obama was in Kenya in 2006, you didn’t know what he was up to when he was there, and I informed you, then you spent the rest of the time trying to discredit ME personally for INCONVENIENT reporting. You didn’t like what you heard so instead of demanding an explanation from Obama, I was attacked, my credibility has become a repetitive chant – if one says it enough it becomes the “reality.”
    Nope, it’s just a lie.

    So, I don’t talk to YOU, I use the points raised to inform anyone who’s READING. Open their minds to possibilities and information they hadn’t know existed or had considered. They can follow up researching without anyone holding their hands, if they are motivated enough.
    You can stew and froth, closed to new inputs, pushing a political agenda that requires discrediting other people to be even remotely viable – so artificial it needs constant life-support, in a steady state of an offensive defensive pomposity, “I have declared, they don’t know anything!”

    The local country fair just started right next to the soccer field and the league guys were NOWHERE. The place looked abandoned. Hmm.

  9. “I could link to studies and data, but you reject out of hand anything that isn’t what you approve, so what’s the point? ”

    Since you never do, how do you know?

    “You didn’t know Obama was in Kenya in 2006, you didn’t know what he was up to when he was there, and I informed you, then you spent the rest of the time trying to discredit ME personally for INCONVENIENT reporting.”

    Ah, no. I knew Obama had gone to Kenya in 2006. I have no idea where you are getting this from. You are simply wrong about ‘what he was doing there’ and I pointed that out with all sorts of documentation.

    ‘I am what the researchers call “a primary source.”’

    There is a reason why researchers interview many primary sources, because they know individual perceptions can be completely off base and they need to talk to many people to get a clear picture.

  10. Stephen Kohut says


    You will notice that when todd and kralmajales bash any conservative think tank they wax poetic on how terrible the analysis is and then throw out figures they like without links, sources or backup. Reminds me of talking with most liberals, full of sound and fury signifying nothing (other than giving me a laugh).

  11. …………..
    “I pointed that out with all sorts of documentation.”

    You sure did. googled copious “data” against someone who was there.
    You tossed a “primary source ” in favor of loads of “third party sources” and “speculation.”
    Because you just couldn’t accept the news. Not the correct narrative. Pesky reality will do that.

    “You can lead a horse to water but you can’t make it drink.”

  12. Stephen Kohut Says:
    April 30th, 2010 at 1:13 pm

    Terrible insecurity. Too invested in the narrative, not enough in the truth.

  13. Stephen Kohut says


    Have to remember their mantra “Tell a lie often enough and it becomes the truth.”

  14. When it gets right down to it, you two essentially argue that your beliefs are right not because of facts or reason but because you are better people. Quite arrogant.

  15. Stephen Kohut says


    No todd, we provide facts with links and backup. You lambast GWI and never provide any backup for your “facts”. See my post above.

  16. Uh no, Stephen. There are no facts provided by you or wanumba in this discussion, nor in most others. Try again.

  17. ……………..
    todd Says:
    April 30th, 2010 at 7:43 pm
    you two essentially argue that your beliefs are right not because of facts or reason but because you are better people.

    Are your seriously trying to argue that the root of all this is you feel inferior?

    There’s an easy fix for that. Get outside, add two decades life experience and you’ll feel much more confident.

  18. Stephen Kohut says

    I spent most of today with the founder of and the group who is fighting the tax increase in Gilbert. Per Gilbert’s own data average pay for a salaried city employee is $81K, hourly city employee is $51K. The average hourly Gilbert city worker makes more than a skilled CNC machinest and the average salaried employee makes more than most engineers/managers in manufacturing. I can see where public employees are paid so poorly compared to the private sector.

  19. No wanumba, I am arguing you are arrogant to believe that your views are more correct because you think you are a better person.

  20. Stephen, does Gilbert employ CNC machinists? If not, I fail to see what you think the comparison means unless you are comparing to specific jobs. The average salary in the Police department is $58K. Is that too high? In Fire it is $60K. How about that?

    Stephen, do tell – what is the average salary for a skilled worker in Gilbert – just so we can compare.

  21. UFC 114 will have a bunch of suits, but none at the magnitude of the bout in between Quinton Jackson and Rashad Evans. This is a single of the most anticipated match-ups, which will finally take position this 30 days.

  22. By chance given that their feud in UFC 107 in December, there have been multiple situations, where it was thought that Evans and Jackson might collide against 1 another. Nonetheless, Jackson announced a retirement, which did not last for often, but set the match on hold. Now, with the star announcing a return, fairly very much recently, the feud has been reignited. Each of them will get an chance to settle their variations the moment and for all when they go head-to-head towards one particular yet another in UFC 114 on May perhaps 29.

  23. keith schulz says

    Let’s cut salaries 10% and see if any bureaucrats quit. If any do, 10 others stand in the wings to take the jobs. This is the market proof that these folks are overpaid by their unfair influence over politicians.

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