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As the Legislative session in New Mexico draws close to an end, those at the capitol continue to discuss the issue of compensation rates among public employees.
The push is on for pay raises and is justified by the fact that the last across-the-board pay raises for public employees was in 2008.
Surely, it can be hard for any worker to deal with stagnant wages, but before leaping to conclusions and jumping on the wage hike bandwagon, it is worth taking a closer look and saying “relative to what?”
Wages across the economy have stagnated since 2008 and New Mexico in particular has lost jobs in recent months.
Given New Mexico’s dismal economic performance, it is important to approach the issue of government employee pay hikes with scrutiny.
The Rio Grande Foundation has undertaken a careful examination of compensation rates among those in the public and private spheres.
Our analysis which uses a statistical tool called “regression” found that public employees in fact make more on average than those in the private sector.
In fact, on average those in the public sphere make 8.6 more in compensation than those in private industry.
The key factor in this disparity between both groups is simply benefits.
Those in the public sector make significantly more in pensions and health care than those working in the private sector.
Utilizing an “apples to apples” comparison between public and private workers (this includes variables such as level of education and work experience) the evidence becomes clear that those in the public sector are not only not being underpaid, but are actually faring well when compared to private employees.
Given that nearly twenty percent of New Mexico’s workforce is employed in the public sphere, this rebuttal of tax funded wage hikes will surely bring opposition.
But the Rio Grande Foundation is not alone in coming to the conclusion that these days, working in government is more lucrative than similar jobs in the private sector.
Five studies which were reviewed by the Government Accountability Office concluded that federal workers are paid equally or above comparable jobs in the private sector.
By only examining the data of “real incomes” between private and public workers, one would assume that public workers do make less, but once benefits such as insurance and pensions are taken into account it becomes clear that such simplified analyses are misleading.
Given the poor state of New Mexico’s economy as well as the fact that those in the public sphere are not making less than commonly assumed, it would be wise to avoid such policies as the proposed wage hikes.
While the compensation issue was the primary area of study in this report and we feel that, while our results will be criticized by public employee unions and others who benefit from propagating the myth that government workers are “underpaid,” a better way to solve the government compensation issue is to end collective bargaining policies.
Collective bargaining, whether used in the private or public sector, pays all workers based on the misguided assumption that one worker is just like another worker.
The reality is that some government workers are undoubtedly “in demand” and deserve higher pay than they currently receive while other workers are overcompensated based on market demands.
A responsive, service-oriented government should reward individual initiative and competency rather than treating government workers like interchangeable widgets.
Absent this broader change in collective bargaining, the fact remains that in New Mexico, being a government worker is more lucrative than a similar job based on similar skills and experience in the private sector.
Increased compensation should be based on the need to retain qualified workers, not the political pull of certain interest groups.
Ben Sugg is a policy analyst with New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.