Benefit Cost Comparisons Between State and Local Governments and Private-Sector Employers

This paper examines some of the causes of the differences in total compensation costs between state and local government employers and private-sector employers. As of September of 2007, overall total compensation costs were 51.4 percent higher among state and local government employers ($39.50 per hour worked) than among private-sector employers ($26.09 per hour worked) (calculated from Figure 1). Total compensation costs consist of two major categories: wages and salaries and employee benefits. For both of these categories, state and local government employers' costs were higher than those of private-sector employers: 42.6 percent higher for wages and salaries and 72.8 percent higher for employee benefits (calculated from Figure 1). The differences in compensation costs between public-sector and private-sector employers are driven by the differing mix of job functions, work force composition, and concentrations of workers. The composition of the benefit package is another major factor in explaining the difference in compensation costs. Benefit participation rates are higher for state and local government employees and the costs of providing these benefits are higher.The PDF for the above title, published in the June 2008 issue of EBRI Notes, also contains the fulltext of another June 2008 EBRI Notes article abstracted on SSRN: quot;The Number of Individual Account Retirement Plans Owned by American Families.quot