Public Sector Employees Really Do Make More

That is the conclusion of policy analysts Andrew Biggs and Jason Richwine.  Actually Biggs and Richwine have been making that claim for several years, but now they have the agreement of the Federal Reserve, the Bureau of Economic Analysis, and the Congressional Budget Office.  The reason that public employee unions have been successful at debunking this claim in the past is that accounting for the value of public employee compensation has been based on upfront public contributions to retirement benefits, not the government’s actual liabilities once those benefits come due.  Contributions have been based on a projected (and guaranteed) return of 8% on public employee retirement fund investments.  At actual returns of 2-3%, private sector retirement contributions with the same expected yield would have to be dramatically higher then they are in fact.  The difference between actual public employer contributions and actual public sector employee retirement benefits accounts for much of the previously unaccounted for difference between private and public sector employee compensation.

Read Biggs’ and Richwine’s commentary in today’s Wall Street Journal here.

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Filed Under: Budget and GovernmentLabor Unions

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