Gov. Mitch Daniels calls them the privileged elite, the most powerful special interest in America today.
Wall Street bankers? Oil companies? The pharmaceutical industry?
No, it’s public school teachers, highway workers and prison guards, according to the Indiana governor, and they’ve used their muscle to secure feather-bedded payrolls, very expensive salaries and benefits.
Daniels is not alone in targeting public employee unions. But the Indiana governor and other political leaders mislead the public in painting teachers and other public-sector workers as beneficiaries of a rigged system. The wages and benefits they receive are dictated by contracts negotiated in good faith and approved by management – in the case of schools, that often means elected school boards.
And compared with private-sector employees, Indiana public employees come up short, according to one analysis. The Economic Policy Institute, a Washington-based think tank that focuses on the issues affecting low- and middle-income workers, contrasted Indiana public-sector compensation with private-sector earnings in a 2010 report. It also examined whether government workers were overpaid to the detriment of Hoosier taxpayers.
Its findings: Comparisons controlling for education, experience, hours of work, organizational size, gender, race, ethnicity, citizenship and disability reveal that public employees in both state and local governments earn less than comparable private-sector employees, according to the report. On an annual basis, full-time state and local employees are under-compensated by 7.5 percent in comparison to otherwise similar private-sector workers.
It’s important to adjust for variables because the comparisons tend to fall into apples-to-oranges territory:
When the governor calls out Indiana teachers for earning on average 22 percent more than the taxpayers who pay their salary, he neglects to mention that, on average, public-sector workers are more highly educated. According to the EPI report, about half of full-time public workers have at least a bachelor’s degree, compared with a quarter of those in the private sector.
For Indiana employees with a master’s degree, the average annual wage in the private sector is $63,027; in the public-sector, it’s $42,537 or 33 percent less.
Over time, public employees have sacrificed wages in favor of health insurance and other benefits. Public-sector workers’ much more generous benefits, as described by the governor, make up 26.7 percent of the total compensation package. For private-sector workers in Indiana, non-wage benefits fall somewhere between 18.9 percent and 22.8 percent of their total compensation. The latter take more in earnings and less in benefits.
The governor has rightly called for Hoosiers to earn more college degrees and for the state to raise its low per-capita earnings relative to other states. But portraying schoolteachers as a privileged elite threatens Indiana’s ability to do both. Misrepresenting professional employees as overpaid and coddled only serves to discourage bright, young students from entering education and mid-career professionals from bringing their talents to the classroom.