December 2012 Brief: Volume 19, Number 35
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Iowa's Privileged Class: State Government Employees
by Amy K. Frantz
Public Interest Institute first published an article highlighting the Pay Gap between Iowa’s private-sector workers and the state’s government workers in 1996. Since that time, we have periodically revisited this topic, providing updates with the latest economic data on the average annual wages of private-sector and government employees. Unfortunately, the results have remained the same throughout the years that the Institute has been publishing this information – Iowa has the largest Pay Gap in the nation. Iowa has held that status not only since 1996, but has held the top spot among states for the largest Pay Gap between government workers and private-sector workers for over two decades.
The Pay Gap is calculated using the data provided in the U.S. Department of Labor’s Bureau of Labor Statistics’ annual publication, “Employment and Wages, Annual Averages,” which gives the average annual wage of a state-government worker and the average annual wage of a private-sector worker for each of the 50 states and the District of Columbia. Our study uses these figures to determine the Pay Gap between the average state-government worker and the average private-sector worker in each state. We then rank the states from highest to lowest Pay Gap. We do not directly compare private-sector wages to state-government wages; rather we compare the differences between the two numbers, and use that to rank the states. We use data from the federal government, and the only calculation we perform is to determine the percentage difference between the two figures. As such, the data is not manipulated or skewed in any way. If anyone disputes the numbers, their dispute is with the U.S. Department of Labor, not the Public Interest Institute.
Iowa ranks as the number one state, with the largest Pay Gap between the average annual wages of state-government employees and the average annual wages of private-sector employees. In 2009, under then-Governor Chet Culver, the Pay Gap in Iowa reached a level higher than 50 percent for the first time. In that year, for every $1.00 an average private-sector worker earned in Iowa, an average state-government employee in Iowa was paid $1.54. In Table 1 you can see the Pay Gap in Iowa each year for the last 25 years.
Table 1. Iowa’s Pay Gap: How Much Higher Is the Average Wage of an Iowa State-Government Employee Than the Average Wage of an Iowa Private-Sector Worker? (1986-2010)
Source: U.S. Department of Labor, Bureau of Labor Statistics, “Employment and Wages, Annual Averages,” 1986-2010.
In 2010, which is the latest data available as of August 2012 due to the lag in the time it takes the federal government to collect and report wage data, Iowa’s state-government workers received an average wage that was 150.28 percent of what the average private-sector worker in Iowa was paid. Iowa’s Pay Gap was larger than in any other state and the District of Columbia. That is, state government employees in Iowa earned relatively more than private-sector workers anywhere in the United States.
Table 2 shows the Pay Gap over the last decade for Iowa – which has maintained its number one ranking throughout that time – and the state with the next-highest Pay Gap. Since 2001, the next-highest state has always been Rhode Island. Throughout much of the last decade, the difference in Iowa’s Pay Gap and the Pay Gap of the next highest state was in double digits!
Table 2. Pay Gap of Iowa and Next-Highest State, 2001-2010
Source: U.S. Department of Labor, Bureau of Labor Statistics, “Employment and Wages, Annual Averages,” 2001-2010.
The argument is often made that state-government workers are paid more because they are generally more highly educated than the average private-sector worker, and state-government workers are typically full-time employees. However, if this is true in Iowa, it is also true across the United States. Iowa’s state government may include judges and football coaches and university physicians – but so does every other state. If Iowa’s annual average wage for private-sector employees includes a larger number of part-time employees than does the state-government sector, this is also true in every other state. If Iowa has a Pay Gap because of these differences, every other state should have a Pay Gap of a similar size. But Iowa’s Pay Gap is larger by far than any other state. These differences may explain, in part, why there is a Pay Gap, but it does not explain why Iowa’s Pay Gap is so much larger than in other states, and is the largest in the nation!
Those attempting to justify the nation’s largest Pay Gap between state-government workers and private-sector workers in Iowa are often those who benefit from that Pay Gap – state government employees, or those they can convince to make their case for them, who obviously have a self interest in preserving the Pay Gap. Many have made false claims about what our study said, and then claimed that those falsehoods have been discredited, but no one has ever been able to discredit our actual study, based on the government’s own data.
Public Interest Institute'S POLICY STUDY, Iowa's Privileged Class: State Government Employees, can be viewed at http://www.LimitedGovernment.org/ps-12-8.html.
Amy K. Frantz is a Research Vice-President with Public Interest Institute, Mount Pleasant, Iowa. Contact her at Public.Interest.Institute@LimitedGovernment.org.
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