A news service for the people of Michigan from the Mackinac Center for Public Policy

A 2009 study co-written by Michigan State University economist Charles Ballard reports that the state saved $3.7 billion in wage, pension and health care expenditures and that Michigan state employee wage growth was close to zero between 2001 and 2008. But James Hohman, fiscal policy analyst for the Mackinac Center for Public Policy, said the data does not back Ballard’s figures.

The Detroit News reported on Jan. 3 about Gov. Snyder’s plans to “target” public employee pay and benefits as part of an effort to balance the state budget.  The newspaper began by noting that the Mackinac Center’s work on the subject has been influential in driving debate in the direction of where the new governor is going.  Ballard’s figure was presented as evidence that not all policy analysts agree that this is a worthwhile direction.

Hohman calls the Ballard study incomplete and inaccurate.

According to the Michigan Department of Civil Service, the state spent $3.9 billion on employee pay and benefits in 2001 and $4.7 billion in 2008. That’s an $800 million increase despite there being an 18 percent drop in the state work force. There were 62,057 full-time state of Michigan employees in 2001 and 50,799 full-time employees in 2008.

So how did compensation increase $800 million with about 11,200 fewer state employees?

The average employee costs much more now than in 2001, despite any concessions, Hohman said.

The average cost of a state employee was $63,474 per year in 2001. By 2008, this had gone to $93,039. That’s an increase of 46.5 percent over the seven years and more than $15,000 per employee above the rate of inflation.

“It tells me that the state is not addressing the reason why government costs so much - salary and benefits,” Hohman said.

This past spring, a 3 percent pay hike was approved for state employees. The total additional cost to taxpayers for this fiscal year is estimated to be $77 million.

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See also:

The Plain Language of the Law: Senate Fails to Reject Government Pay Hike

$5.7 billion in Public Employee Benefit Savings - Is it Real?

What Can $5.7 Billion Get You in Michigan?

Why the Legislature Should Oppose a State Employee Pay Hike

Why a Democrat Voted Against a State Employee Pay Hike

Analysis: Government Employee Political Clout Obstructs Budget Reform

Michigan Teacher Pay 16.5 Percent Higher Than Indiana

State Pension Funds: Evidence of Public Class’s Overcompensation

School Pensions Sucking Up Per Pupil Cash

Michigan Public Employee Pay and Benefits Growing

Michigan Public Employees Compensation Growing Despite Concessions Claims

Reality Check: Did State Workers Already Give at the Office?

Government Unions: The Real Wealth in American Politics

The School Employee Concession Myth

Michigan Falls to Bottom 10 in Key Economic Measure

Schools Buying Bigger Pension Payouts for Employees

St. Lawrence University economist Steven Horwitz discusses how the minimum wage was used to block immigrants from taking scarce jobs during the depression era. See more at "Raising the Minimum Wage, Lowering Opportunity."


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