Do Ohio’s Public Workers Earn More Than Private Sector Workers? — “No,” Says “Policy Matters Ohio” — “Yes,” Says “Americans For Prosperity”

In the discussion about Ohio SB5 — whether abolishing collective bargaining for Ohio’s public workers is a good idea — there is sharp disagreement as to whether Ohio public employees, at present, earn more than their private sector counterparts.

Two opposite groups have lined up:

• Americans for Prosperity — an 501 C(4) group founded in large part by oil billionaires David and Charles Koch — urges passage of SB5 and says Ohio public employees make far more in wages and benefits than Ohio’s non-public workers in similar jobs. The State Director for Americans for Prosperity is Rebecca Heimlich. Here she explains to a group of supporters that Ohio needs collective bargaining “reform” because state workers make too much.
• Opposing Americans for Prosperity is Policy Matters Ohio — an Ohio-based nonprofit, nonpartisan policy research organization funded by such groups as Sisters of Charity Foundation, the New World Foundation, the Annie E. Casey Foundation, the Heinz Endowment, the Open Society Institute, the Catholic Campaign for Human Development, KnowledgeWorks, the Public Welfare Foundation — urges defeat of SB5 and says that Ohio public employees make less in wages and benefits than Ohio’s non-public workers. The State Director of Policy Matters of Ohio is Amy Hanauer. I found no video of Ann speaking specifically about SB5, but here she discusses the goals of her organization.

On Americans for Prosperity web-site, I could find no explanation for Heimlich’s claim that public workers earn more in wages and benefits than their private worker counterparts.

But at the Policy Matters web-site, there is a PDF of the testimony given by Hanauer in which she says, “We’ve worked with several top academic researchers nationally to understand public and private sector compensation in Ohio. The overwhelming conclusion is that public sector workers are, when we control for education and experience, compensated less well than private-sector workers.”

Here is a chart from that PDF:

Excerpts for Hanauer’s testimony:

• Ohio’s budget problem is a revenue crisis, caused by a weak economy and ill- advised tax reductions that have deprived the state of needed revenue. Eliminating collective bargaining is not going to solve a revenue crisis.
• Paying workers adequately and giving workers a voice in their workplace actually strengthens the economy. Workers who are reasonably well compensated create more stable communities, do not have as much need for public services, can build assets and spend locally and are better able to focus on and excel at their jobs.
• The right of public workers to bargain collectively is not the cause of the budget shortfalls and eliminating that right to collective bargaining has not fixed the problem in states that have tried it. Deeper issues –investment, capital markets, trade and currency – are what shape regional economies.
• States with no collective bargaining rights for any public employees saw an average budget shortfall of 24.8 percent in 2010 while states (including the District of Columbia) with collective bargaining for all public employees had an average budget shortfall of 24.1 percent. For the 42 states (and the District of Columbia) with some (or all) collective bargaining rights for some (or all) public workers, the 2010 budget deficit averaged 23 percent. These numbers are all very close. The right of public workers to unionize is not driving the state revenue or fiscal crisis.
• On an annual basis, full-time state and local public employees earn lower wages by 5.7% in Ohio, in comparison to otherwise similar private sector workers in similarly-sized organizations (100 or more employees). When comparisons are made for differences in annual hours worked, full-time state and local employees are paid 3.1% less in Ohio.
• Considering both the cost of employer-provided benefits and direct wages, public-sector workers in Ohio earn less than they would in the private sector.
  A standard earnings equation produced what some may feel is a surprising result: Ohio full-time state and local employees are paid 6.1% less. Full-time public employees, however, work fewer hours on average – when we control for that, state and local public employees make 4% less, including benefits, than private-sector employees in Ohio.
• The wage penalty rose as jobs became higher skill. While low-wage workers received a small wage premium in state-and-local jobs (about 6 percent for a typical low-wage worker), the typical middle-wage worker earned about 4 percent less in state-and-local work, and the typical high- wage worker made about 11 percent less than a similar private-sector worker.
• The lowest-wage private sector workers are often compensated so poorly that they need to receive Medicaid, cash assistance or food assistance. Advocates have pushed for public sector jobs to have higher standards than that, reasonably arguing that workers collecting our trash, helping in our children’s lunchrooms and taking care of our parents should not be left deep in poverty. A 2008 report from Policy Matters Ohio found that the state of Ohio spent more than $100 million to provide Medicaid for the employees of fifty large private Ohio employers, a 29 percent increase between 2004 and 2007 among the firms that could be compared during the two years.4
• Ohio state and local public sector workers teach our children, protect our communities, save us from fires, guard those we’ve convicted of crimes, clean up our parks and do countless other tasks to improve Ohio and enrich our lives. These Ohioans deserve decent compensation and should not be vilified because we chose to cut taxes and make other choices that hurt our economy.