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Think Tanks Debate State Employee Compensation In Dueling Reports

by | Dec 8, 2016 12:20pm
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Posted to: Business, The Economy, Jobs, Labor, State Budget

A nonpartisan think tank is slamming a year-old report published by the Yankee Institute for Public Policy, sparking a contentious debate about public-sector versus private-sector compensation in the state.

The Hartford-based Yankee Institute commissioned a study by Andrew Biggs, a resident scholar at the nonpartisan, nonprofit American Enterprise Institute. Published in October 2015, the study found public-sector employees in Connecticut, on average, earn slightly less in annual salaries than private-sector workers, but receive benefits averaging more than $54,000 - compared with just $29,400 for private-sector workers.

This week, the Washington, DC-based Economic Policy Institute (EPI), another nonpartisan think tank, criticized the report, saying Biggs made various errors in his calculations. The Yankee Institute stands by the study.

Among its complaints, EPI says Biggs “cherry-picked” the sample of workers he examined and excluded the pay of most public-sector workers in the state. In particular, the group said he did not take public school teachers into account and, since teachers earn significantly less money than similarly-credentialed private-sector workers, that skewed his salary and benefits calculations.

EPI also claims Biggs incorporated a “selective use of controls” in his analysis, and inflated the cost of retiree benefits in the public sector while downplaying the cost of benefits in the private sector.

On Wednesday, Yankee Institute President Carol Platt Liebau defended the Biggs’ report, saying Census data backs up his findings and noted Bigg’s credentials. He was appointed by President Barack Obama to the Financial Oversight and Management Board for Puerto Rico, among other accomplishments.

“We are flattered that a year after Yankee Institute released ‘Unequal Pay: Public vs. Private Sector Compensation in Connecticut,’ the Economic Policy Institute, a national left-wing group, felt it necessary to attack our study,” Liebau said in a statement. “It is clear that the study’s findings, particularly that state workers in Connecticut earn an average of 25 to 46 percent more than their private sector counterparts, has ruffled some feathers.”

She went on to say, “Given EPI’s union ties, perhaps it’s entirely predictable that it would try to rebut the study.”

The study looked only at state workers, not local ones, she noted, and was intended to help find “common sense ways” to alleviate the state’s “budget mess.”

“State employee compensation is an obvious place to start, especially when state pension payments alone consume 10 percent of the state budget,” Liebau said.

Meanwhile, union leaders in Connecticut praised the EPI for shedding light on what they feel is an important topic. 

“The Economic Policy Institute’s finding on public-sector compensation are sorely needed in what has become an increasingly fact-free state,” Lori Pelletier, president of the Connecticut AFL-CIO said in a statement. “The Yankee Institute’s intentionally deceitful propaganda and flawed methodology are never more evident than in how they cherry-picked information to fit the anti-union narrative their corporate backers want to sell.”

The EPI study was done by Monique Morrissey. It showed wages and salaries are 14–16 percent lower on average for Connecticut public-sector workers, compared with similar workers employed by large private-sector firms in the state. Public-sector workers receive benefits worth approximately 16 percentage points more as a share of salary, which means, according to Morrissey, that compensation costs are roughly equal in the two sectors.

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