[Bleeding Heartland Logo]

About
Bleeding Heartland is a community blog about Iowa politics: campaigns and elections, state government, social and environmental issues. Bleeding Heartland also weighs in on presidential policies and campaigns, federal legislation and what the Iowans in Congress are up to. Join our community, post your thoughts as comments or diaries, help keep our leaders honest and hold them accountable.
Author
- desmoinesdem
Highlights
- Iowa 2012 election coverage
- Who's who in the Iowa House for 2015
- Who's who in the Iowa Senate for 2013
- Iowa wildflowers
2014 Election Coverage
- Absentee ballot numbers
- IA-Sen
- IA-Gov
- IA-01
- IA-02
- IA-03
- IA-04
- Secretary of Agriculture
- Secretary of State
- State Auditor
- Iowa Senate overview
- Iowa House overview
- Senate district 5
- Senate district 7
- Senate district 9
- Senate district 13
- Senate district 15
- Senate district 17
- Senate district 27
- Senate district 29
- Senate district 39
- Senate district 41
- Senate district 47
- Senate district 49
- House district 8
- House district 15
- House district 25
- House district 26
- House district 28
- House district 30
- House district 33 (2013)
- House district 40
- House district 51
- House district 60
- House district 63
- House district 65
- House district 68
- House district 73
- House district 82
- House district 91
- House district 92
- House district 95
- House district 99
Search




Advanced Search


Paid Advertising


Bleeding Heartland
It's what plants crave.

Branstad building case to cut state worker compensation

by: desmoinesdem

Wed Oct 31, 2012 at 18:04:53 PM CDT


Later this fall, Governor Terry Branstad will begin negotiating new two-year contracts with several labor unions that represent state employees. He will come to the table armed with research that purportedly shows Iowa has been over-compensating its public workers.
desmoinesdem :: Branstad building case to cut state worker compensation
Branstad has been beating the drum about excessively generous state employee benefits for months, but few unionized workers took up his call to voluntarily contribute to their health insurance premiums. In September, the Iowa Department of Administrative Services released a report supporting the governor's position:

A new report concludes the benefit package for state government employees is better than what's normally offered to employees in 13 other states and a small group of businesses considered to be competitors for the same workers.

Iowa Department of Administrative Services director Mike Carroll says the analysis found state worker health care benefits were "well above the norm."

Michelle Minnehan Golightly,  the chief operating officer for the Iowa Department of Administrative Services, says Iowa is spending about $116 million more than its peers do on benefits and the main difference is the state now pays the entire health insurance premium for most of its workers.

"The market shows that 20 percent is in line," Golightly says.

It's no secret that state workers receive generous benefits. A 2011 report by the Iowa Policy Project found,

When education, work experience, annual hours worked, race, sex, disability status, and firm size are accounted for, male public-sector workers earn nearly 12 percent less and female public-sector workers earn over 16 percent less than private-sector workers. Male state government workers earn 9 percent less than comparable workers in private industry, while for local government the public-sector wage penalty was 14 percent. Among women, the earnings penalty was over 13 percent for state workers and 19 percent for local government workers.

Many critics have argued that it is not public-sector pay that is so out-of-line, but rather public-sector benefits, such as health insurance and pension contributions. It is true that such benefits comprise a larger share of public employees' overall compensation than for most private-sector workers. However, even after adding these benefits into the mix, total compensation for Iowa's male and female public employees are 7.9 percent and 10.8 percent less, respectively, than for their private-sector counterparts. The gap between private and public compensation narrows to 6 percent and 8 percent among male and female state government workers, and 9 percent and nearly 13 percent for male and female local government employees.

I recommend reading the whole report (pdf), which includes lots of supporting data. Pages 3 through 6 discuss the differences between education levels in Iowa's public sector and private sector.

Research has demonstrated time and time again that educational attainment is the critical predictor of income. Further, there is a wide divergence in educational attainment between Iowa's public-sector workers and its private-sector workers. [...]

he contrast in educational attainment between the two sectors is stark. While a third of private-sector workers have just a high school degree, for example, only 16.8 percent of public-sector workers have this level of education. Over half of Iowa's state and local government employees have a four-year degree or higher; just a quarter of private-sector workers in Iowa have a four-year degree. [...]

Nevertheless, accusations of "overpaid" public employees often neglect this reality and lump all public and all private-sector employees together without regard for educational attainment differences. However, when the earnings between the two sectors are compared across education levels, it is apparent that there is no public sector advantage.

A new report hailed by the Branstad administration contradicts those findings. The human resources consulting firm Aon Hewitt concluded that Iowa is paying substantially "above market" base salaries to many state workers. The Des Moines Register gave the governor the news lead he wanted:

The base pay for 18,500 state government employees in Iowa is 17.9 percent higher than the market pay of comparable employees working for private and public employers, according to a consultant's report released today.

The study by Aon Hewitt, a nationally known human resources consulting firm, said that 83 percent of Iowa state government positions studied had average base pay that was 20 percent  or higher than comparable states. But when considering the minimum and maximum for base pay, State of Iowa employees are competitive with the market.

The Register's William Petroski didn't delve into the details of the report, which you can download here (pdf). I found it difficult to follow, because Aon Hewitt didn't provide details about which private-sector jobs were deemed "comparable" to various state positions.

I didn't notice a huge methodological problem flagged by Peter Fisher of the Iowa Policy Project.

First, you lose an apples-to-apples comparison when you compare a mean, or average, with a median. Yet that is what this study does, comparing an average or mean base salary in state government with the median pay in the "market." Income and wages are usually distributed in such a way that the mean is higher than the median. There is not enough information provided to show those distributions in this study, but the danger is that it creates a built-in bias to make the public-sector wages appear higher than the market. (Suppose seven workers earn $40,000 and three earn $60,000, in both the public and the private sector. The average is $46,000, the median is $40,000 - a wide disparity.)

Aon Hewitt buried the fact that it compared average (mean) state base pay to median private-sector pay in the tables that begin on page 24 of the report. Any competent high school math student knows that when you're analyzing a group of numbers, the mean and the median can be very different. A small number of higher-paid supervisors can make the average Iowa public employee's salary seem higher than it is in reality.

Fisher raises other important questions about Aon Hewitt's study, so I recommend reading his whole post at the Iowa Policy Points blog. Any journalist who will cover the upcoming labor negotiations needs to understand the potential flaws in this analysis.

Meanwhile, consider one of Aon Hewitt's policy recommendations.

For incumbents who are paid well above the estimated market value, Aon Hewitt does not generally recommend reducing pay. Rather, Aon Hewitt recommends reducing or eliminating future increases to base pay to allow the labor market to "catch up" to State of Iowa compensation levels over time. As a best practice, Aon Hewitt recommends weighing individual performance against market to determine if pay is appropriate, as high-performing employees may warrant pay higher than the estimated market value.

Expect the Branstad administration to take this position into the labor negotiations. State employees will not only be asked to contribute 20 percent toward their health insurance premiums (amounting to a significant pay cut for some), but also to forgo pay raises for who knows how many years until the private sector "catches up" to their wages.

What labor union representative would agree to a contract on those terms? My money's on the talks going to arbitration sometime in 2013.

Tags: , , , , (All Tags)
Print Friendly View Send As Email
Tweet This!

Menu

Make a New Account

Username:

Password:



Forget your username or password?


Iowa Liberal Blogs
- Ames Progressive
- Blog For Iowa
- Essential Estrogen
- Iowa .Gif-t Shop
- Iowa Independent (archive)
- Iowa Policy Points
- Iowans for a Future That Doesn't Suck
- John Deeth
Iowa Conservative Blogs
- Hawkeye GOP
- The Bean Walker
- Caffeinated Thoughts
- The Conservative Reader: Iowa
- The Iowa Republican
Journalists' blogs and research
- 24-Hour Dorman
- Cedar Rapids Gazette government page
- Iowa Fiscal Partnership
- Iowa Policy Project
- Iowa Politics Insider
- Iowa Watchdog.org
- On Brief: Iowa's Appellate Blog
- On the Campaign Trail with Ed Tibbetts
- Newton Independent (Peter Hussmann)
- Politically Speaking
- Price of Politics, etc.
- O.Kay Henderson at Radio Iowa
Iowa Democrats
- Tom Harkin (U.S. Senator)
- Bruce Braley (IA-01)
- Dave Loebsack (IA-02)
- Iowa Democratic Party
- Iowa House Democrats
- Iowa Senate Democrats
Statistics


 
Powered by: SoapBlox