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Education, experience are two primary factors that determine earnings

Would you say workers at Google or IBM are overpaid because they make more than workers at a grocery store? Matt Di Carlo, a senior fellow at the Albert Shanker Institute, asked this question to a packed audience attending a workshop titled “Are Public Employees Overpaid?” at the joint conference of AFT Public Employees and AFT Healthcare March 31-April 2 in Las Vegas.

Di Carlo’s point: A standard tactic among the politicians, think tanks and talking heads who have declared public sector wages are unsustainable is to calculate the salaries of a broad group of private sector workers and compare their wages with an equally broad group of public employees. The approach is fundamentally flawed, resulting in an apparent pay advantage for public employees of about 8.6 percent, even when teachers and other education workers are removed from the analysis.

The problem is that public employees have more education and experience, work longer hours, and are disproportionately located in states with higher costs of living. When you account for these factors, the comparison shows that the private sector workers have a 13 percent salary advantage over public employees. Education is particularly important when it comes to earnings, said Di Carlo, noting that the pay difference between people with a bachelor’s degree and those with only a high school diploma “is gigantic.” More than 34 percent of non-education workers in the public sector have a bachelor’s degree or higher, compared with 28 percent of private sector workers. [Kathy Walsh]

For more information, check out these posts on the Shanker Blog:

“Meet the Bureaucrats”

“Public Apples, Private Oranges”

“Public Apples, Private Oranges: A More Ripened Look”

“Are Public Employees Unions to Blame for States’ Budget Crises?”