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  • Even After Walker Reforms, Wisconsin Public Workers Still Overpaid

    “What Mr. Walker and his backers are trying to do is to make Wisconsin—and eventually, America—less of a functioning democracy and more of a third-world-style oligarchy.” New York Times columnist Paul Krugman was more theatrical than most in denouncing Act 10, the set of public-sector reforms signed by Wisconsin Governor Scott Walker (R) on March 11, 2011.

    The spirit of Krugman’s denunciation, however, has been echoed by a broad coalition of labor activists, students, left-leaning political commentators, and Democratic politicians. Words such as radical, extreme, and even un-American have been used to describe Act 10.

    The law itself has two major components. First, it requires public-sector workers to make larger contributions to their pensions and health benefits, effectively reducing their compensation. Second, Act 10 limits the power of public-sector unions by restricting collective bargaining for most workers and making dues collection more difficult.

    Are these changes really unfair to public workers? In a new working paper, the American Enterprise Institute’s Andrew Biggs and I argue that they are not. Even following significant increases to pension and health insurance contributions mandated by Act 10, total public-sector compensation in Wisconsin remains comfortably ahead of compensation for private-sector workers with similar levels of education and experience. Specifically:

    • Before Act 10, Wisconsin state workers received health benefits about 2.3 times as valuable and pension benefits about 5.7 times as valuable as what workers in large private firms receive. After Act 10, Wisconsin state workers still receive health benefits nearly twice as valuable and pension benefits more than 4.5 times as valuable.
    • Before Act 10, Wisconsin state employees received total compensation (salary and benefits) about 29 percent higher than comparable private-sector workers. After Act 10, the compensation premium is about 22 percent.
    • In dollar terms, the average Wisconsin state worker after Act 10 receives total compensation including benefits equal to $81,637, versus $67,068 for a similarly skilled private worker.

    The conclusion is that Act 10 is far from a radical or sweeping reform. Its direct reductions to public-sector compensation still preserve a substantial premium for public workers, and its limitations on the political power of unions could reflect a reasonable desire to restrict the growth of compensation in the future. The Walker reforms may, in fact, be too moderate to restore pay parity between the public and private sectors in Wisconsin.

    Posted in Economics [slideshow_deploy]

    9 Responses to Even After Walker Reforms, Wisconsin Public Workers Still Overpaid

    1. Bobbie says:

      when employees have to pay a union to go through a union to get what they want without using the ability they have to do it for themselves, who's the real slaves? If these public workers (brainwashed by union thugs) don't like profit, says they're overpaid when paid at all…

      Rock on, Mr. Walker!!!! We love those true to their word who doesn't bend to those that aren't and the respect you have for the good of the people!!!

    2. Why, it just might be the case that allocating resources via a centralized authority, which can compel behavior via force of law, and having one entity as the seller of a good or service to that centralized authority, leads to an inadequate feedback loop for the purpose of conveying data as to whether resources are being well-utilized!

    3. edwardzlove says:

      When getting health insurance I usually go through "Penny Health" website. The reason for this approach is because I get more personalized service and assistance. Once I went though ehealthinsurance and it offered no customer support.

    4. Marc DeSalis says:

      So… it's okay to force public workers to pay more on their pensions and healthcare because they make too much money… but when the Dems try to raise taxes on the rich, it's called Socialism?

      • Bobbie says:

        taxing the rich because government wants to is only for money use to control you. That falls under alot of government "ims." Pay more? No, it's still less than adequate.

      • Dr dbiggs says:

        When the taxpayers are forced to pay for the public union parasites, YES it is SOCIALISAM!!

        Are you really that stupid or did I catch you on a good one today?

      • NJ for Walker says:

        Well gee Marc, let's see… forcing people to pay for their OWN pension and benefits, not because they make too much money but because they are benefiting from taxpayer dollars in an unsustainable way, vs. forcing someone to pay for SOMEONE ELSE'S benefits simply because they make more money than others… yes, I see a difference. The first is called prudent reform and the other is called Socialism. Now go cry to your union boss…

    5. slickzip says:

      Wisconsin public workers need to be fired an d replaced with private temp workers ,who will give 8 hours of hard work for 8 hours pay, and they will work hard so they will get cal;led back to work the next week ,,,,

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