Connecticut needs a return to fairness

Oct. 8 – Total compensation for Connecticut state employees, including pay and benefits, exceeds compensation for similarly qualified non-government workers in the state by at least 25 percent, according to a Yankee Institute study, Unequal Pay: Public vs. Private Sector Compensation in Connecticut, released today.

Download the study: Unequal Pay: Public vs. Private Sector Compensation in Connecticut

The study compares similar government and non-government workers – excluding public-safety – while controlling for education, work experience and other factors. Although the average private-sector worker in Connecticut earns a slightly higher salary ($71,112 vs. $70,970), the average state employee receives benefits worth nearly twice as much as the non-government worker ($54,561 vs. $29,371).

The study values state retirement benefits using cautious assumptions and more realistic assumptions. Under the most cautious assumptions (those used by state actuaries), state workers receive 25 percent more compensation, while the more realistic assumptions put the number as high as 46 percent more than non-government workers.

“Connecticut needs a return to fairness,” said Carol Platt Liebau, president of the Yankee Institute. “The same workers who earn less than state employees are facing more than $1 billion in new taxes this year, much of which goes to compensate state workers. Bringing state compensation in line with non-government earnings would save the state between $1.4 and $2.5 billion, depending on the assumptions used.”

The Hartford-based Yankee Institute, a free-market think tank focused on Connecticut, commissioned the study by Andrew Biggs, a resident scholar at the American Enterprise Institute. Dr. Biggs has a Ph.D. from the London School of Economics and previously served as principal deputy commissioner of the Social Security Administration.

“It took a while to build the system that overcompensates state employees, so it will take some time to phase it out,” said Suzanne Bates, policy director for the Yankee Institute. “But we shouldn’t wait to start the process. We should start moving toward high-deductible health plans and 401(k)-style retirement accounts right away. This will put us back on the path to sustainable budgets.”

The Yankee Institute for Public Policy is a Connecticut think tank that develops and advances policy solutions to promote smart, limited government; fairness for taxpayers; and an open road to opportunity for all the people of our state.

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