News Story

Government Pay Outpaces Private Sector

Local government and state workers’ average weekly pay surpassed that of private sector workers in Michigan in 2009, according to an analysis done by the Mackinac Center for Public Policy.

From 2001 to 2009, state workers have seen their average weekly pay jump 33 percent from $796 to $1,058. Local government workers had a 29 percent increase from $647 to $837. Meanwhile, the private sector workers had a 14 percent increase from $722 to $824.

James Hohman, a fiscal policy analyst with the Mackinac Center, did the analysis using data from the U.S. Bureau of Labor and Statistics.

“The private sector has been struggling this decade. That’s not news,” Hohman said. “The public sector keeps increasing. … The public sector compensation is growing beyond the private sector’s ability to pay for it.”

“You might expect wages to decrease given the state’s poor economy. But wage rates have been robust. Indeed, they’ve even increased in this past decade while the state has lost nearly a million jobs. But the growth of Michigan’s public sector employee wages has outpaced those of the private sector,” Hohman wrote in an e-mail.

Charles Owens, state director of the National Federation of Independent Businesses, said state and local government compensation grows even more than the private sector if benefits are included in the equation. Hohman’s analysis just looked at pay.

“I think one of the characteristics of a third-world country is when everyone wants to work for the government because that is where the money is,” Owens said.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.