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April 2014 Policy Study, Number 14-2

   

Iowa's Privileged Class: State Government Employees

   

Executive Summary

   

 

Public Interest Institute first published an article highlighting the Pay Gap between Iowa’s private-sector workers and the state’s government workers in 1996.  Since that time, we have periodically revisited this topic, providing updates with the latest economic data on the average annual wages of private-sector and government employees.  Unfortunately, the results have remained the same throughout the years that the Institute has been publishing this information – Iowa has the largest Pay Gap in the nation.  Iowa has held that status not only since 1996, but has held the top spot among states for the largest Pay Gap between government workers and private-sector workers for 26 years.

 

The Pay Gap is calculated using the data provided in the U.S. Department of Labor’s Bureau of Labor Statistics’ annual publication, “Employment and Wages, Annual Averages,” which gives the average annual wage of a state-government worker and the average annual wage of a private-sector worker for each of the 50 states and the District of Columbia.  Our study uses these figures to determine the Pay Gap between the average state-government worker and the average private-sector worker in each state.  We then rank the states from highest to lowest Pay Gap.  We do not directly compare private-sector wages to state-government wages; rather we compare the differences between the two numbers and use that to rank the states.  We use data from the federal government, and the only calculation we perform is to determine the percentage difference between the two figures.  As such, the data is not manipulated or skewed in any way.  If anyone disputes the numbers, their dispute is with the U.S. Department of Labor, not the Public Interest Institute.

 

Iowa ranks as the state with the largest Pay Gap between the average annual wages of state-government employees and the average annual wages of private-sector employees.  In 2012, Iowa’s state-government workers received an average wage that was 151.03 percent of what the average private-sector worker in Iowa was paid.  Iowa’s Pay Gap was larger than in any other state and the District of Columbia.  That is, state government employees in Iowa earned relatively more than private-sector workers anywhere in the United States. 

 

The argument is often made that state-government workers are paid more because they are generally more highly educated than the average private-sector worker, and state-government workers are typically full-time employees.  However, if this is true in Iowa, it is also true across the United States.  Iowa’s state government may include judges and football coaches and university physicians – but so does every other state.  If Iowa’s annual average wage for private-sector employees includes a larger number of part-time employees than does the state-government sector, this is also true in every other state.  If Iowa has a Pay Gap because of these differences, every other state should have a Pay Gap of a similar size.  But Iowa’s Pay Gap is larger by far than any other state.  These differences may explain, in part, why there is a Pay Gap, but they do not explain why Iowa’s Pay Gap is so much larger than in other states and is the largest in the nation!

 

Those attempting to justify the nation’s largest Pay Gap between state-government workers and private-sector workers in Iowa are often those who benefit from that Pay Gap – state-government employees or those they can convince to make their case for them, who obviously have a self interest in preserving the Pay Gap.  Many have made false claims about what our study said and claimed that those falsehoods have been discredited, but no one has ever been able to discredit our actual study, based on the government’s own data.

 

   

 

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