‘Public Sector Reality’ findings bolster claims for pension reform
by Guy Page
Vermont public school teachers and state employees might have been underpaid once, but now they out-earn the private sector – refuting the myth that their low pay merits higher pensions, a new study concludes.
On Wednesday, Campaign for Vermont (CFV) released a new report entitled Public Sector Reality that compares the wages and benefits of teachers and state employees to the private sector and what that means for the current discussions around pension reform.
“As a former Commissioner of the Department of Labor and Commissioner of Human Resources, I was surprised by what we found in this report,” said CFV President Pat McDonald. “I think everyone needs to read this report because there were a number of assumptions that were carried through the years that were just plain wrong.”
The report found that public employees earn about $12,000 more per year in wages alone than the average private sector employee (a gap that grows further when benefits are considered). In retirement, this number jumps to over $20,000 per year. The average public employee in Vermont also earns right at the 75th percentile for all wage earners in the state. This means, on average, they are in the top 25% of income earners even before benefits are considered.
“It’s a myth when the union representatives stand up there (in the Legislature) and say the employees are underpaid, and that’s why benefits are so generous,” pension reform advocate David Coates of Colchester said during a Wednesday afternoon press conference.
“The goal is to better inform the public and policy makers about the reality around compensation for our public employees,” said Ben Kinsley, one of the lead researchers on the project. “There is a perception that state employees and teachers are underpaid and that we must offer extremely competitive benefits in order to compensate for this. In reality, the data doesn’t appear to back this up,” he concluded.
The organization hopes the pension task force, which is preparing to make recommendations to the legislature, will review this information and ask appropriate questions about the total compensation of public employees as they receive pushback on making critical changes to pension benefits.
“This study isn’t saying they’re overpaid,” Kinsley said during the press conference. But he added, “We don’t need to be afraid of making the state non-competitive.”
“We have always said we need to value our public employees,” said McDonald. “We should not break promises, but to do this we also need to make changes that safeguard the long-term stability of our pension funds. I think what we have learned here is that going forward we maybe don’t need to be quite as generous as we thought we did to compete with the private sector.”
She and Kinsley refrained from offering detailed specific recommendations on pension reform. However, they suggested that at the least, pension expectations for new hires should be reduced.
The full report can be found at CampaignForVermont.org/Public_Employees.
This news story includes excerpts from a Campaign for Vermont press release.