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February 2017 Policy Study, Number 17-4

   

Iowa's Privileged Class: State-Government Employees

   

Executive Summary

   

 

Iowa has the largest Pay Gap in the nation.  Pay Gap is calculated using Bureau of Labor Statistics data, 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.  In 2015, Iowa’s state-government workers received an average wage that was 149.76 percent of what the average private-sector worker in Iowa was paid.  Iowa’s Pay Gap was larger than that of any other state or the District of Columbia.  That is, the gap between what state-government employees in Iowa were paid in comparison to their private-sector counterparts was the largest in the nation. 

 

One of the reasons for this persistent Pay Gap is that Iowa taxpayers often do not have a seat at the table when unions negotiate contracts on behalf of state-government workers.  Iowa’s collective-bargaining laws have stacked the deck against taxpayers.  Iowa law states that if negotiations break down, arbitrators “shall” take into consideration the state’s ability to raise taxes in order to pay for an increase in pay for state-government employees.  Arbitration in 1991 resulted in a 9 percent raise for state-government employees, despite the state being in the midst of a budget crunch.

 

Unions representing state-government workers often find themselves sitting across the negotiating table from a friend rather than a representative of Iowa’s taxpayers.  Following his defeat in the November 2010 election, then-Governor Chet Culver agreed to a salary increase for the next two fiscal years proposed by the unions representing many state-government employees.  Culver simply agreed to the unions’ proposed two-year contract on his way out the door with no negotiations, binding the hands of incoming Governor Branstad and caring little about the taxpayers who would foot the bill.

 

Then there is the slight-of-hand that results from government double-speak.  In Fiscal Year 2010 (which ran from July 2009 to June 2010), unions representing Iowa’s state-government employees agreed to a “zero percent across-the-board salary increase.”[1]  This allowed union reps to crow to the press about sacrifices made by state-government workers.  However, under Iowa law, state-government workers were still eligible for merit raises and “step increases,” an automatic increase in pay based on performance and longevity.  State-government workers, who “sacrificed” their raises, ended up receiving an average increase of 4.3 percent in salary that year.[2]

 

To the extent he is able under current collective-bargaining laws, Governor Branstad has made an effort to ensure Iowa taxpayers are represented during union negotiations of the contracts for state-government employees.  Those efforts appear to have made some difference.  In 2009, during the Culver administration, the Pay Gap between public-sector employees and private-sector employees in Iowa was 154.44 percent.  In2015, the Pay Gap was 149.76 percent.  The Pay Gap is trending in the right direction, as indicated by the most recent data available.

 

Some, particularly those working for the state government, may say it is not state-government wages that are too high, but rather private-sector wages that are too low.  While those of us working in the private sector would always appreciate higher wages, the difference is that in the private sector, a business cannot raise the prices of its goods and services and compel its customers to pay the higher prices.  Consumers have the choice to shop elsewhere or not to pay the price at all by not buying that product.  However, if the state government needs additional funds to pay its employees, it has the option of raising taxes, and its “customers” — the taxpayers of the state — must pay those higher taxes. 

 

Iowa lawmakers need to reform Iowa’s collective-bargaining laws to give Iowa taxpayers a seat at the negotiating table. 

 

   

 

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