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Judging Which Sector Receives Higher Pay Is Tricky

ALBANY, N.Y. (AP) — Focusing on benefits alone provides only a partial snapshot of employee compensation.

The old rule of thumb was that public-sector workers enjoyed better benefits and job security to offset lower pay and that the two sectors would come out close to even when comparing salary plus benefits. Demonstrating whether that’s true gets tricky.

In many cases, public workers earn more for jobs lower on the income scale, but can lose that advantage for higher-end professions.

A recent report from New York City Comptroller John Liu showed security guards for state and local governments averaging $31,351 in wages to their private counterpart’s $23,927. But doctors did far better in the private sector: $188,174 on average compared to $107,445.

Researchers comparing total compensation for public versus private employees have come to very different conclusions, largely because of how they weigh different factors.

One study last year commissioned by the National Institute on Retirement Security that controlled for age, education and other demographic factors concluded that state and local employees have lower salaries and overall compensation than comparable private-sector workers.

“My fear is that these overall numbers are out there, and that’s what policy makers potentially are reacting to … It’s a more complex story than appears on the surface,” said Keith A. Bender, a co-author of the study and an associate professor of economics at the University of Wisconsin-Milwaukee.

Andrew Biggs, resident scholar at the American Enterprise Institute, figures differently.

He and co-researcher Jason Richwine took into account superior retiree health benefits and job security in the public sector. They also gave greater weight to public-sector pension benefits in finding that public workers in Wisconsin and California are better compensated than workers in the private sector, even with wages lower than employees of large private firms.

“They get more generous benefits and job security,” Biggs said of public workers. “And so the question is: Do they balance out? And that really differs from state to state.”

(Copyright 2011 by The Associated Press.  All Rights Reserved.)