State Worker Compensation Needs a Rightsizing

The Seattle Times reports today on state worker pay and how it compares with the private sector. The story won't settle many arguments. The most notable weakness is the reporters' inability to look at total compensation - pay and benefits - when drawing comparisons. They acknowledge the problem.

The Times did not compare state health-care plans and pensions to the private sector. Such benefits are a major part of total state employee compensation — about 30 percent, on average — but are difficult to put present-day dollar values on and even harder to compare across different employers and job categories.

I think the difficulty is overstated. As the Times story acknowledges up front,

State employees do receive benefits that are richer than those earned by many other workers.

Particularly when it comes to health care benefits, the data are clear. For example, a 2008 analysis by the Washington Roundtable found significant disparities between public and private sector benefits.

• Washington state employee health benefit  costs are higher than those of employees in  large, private firms.  Washington state employees covered by the Public Employees  Benefits Board (PEBB) had average total health  benefit costs in 2006 that were 5.8 percent  greater than per employee costs of other large  employers in Washington state. 

• Washington state employees contribute  considerably less to their health care  coverage than the average of state employees across the country. Nationwide, the average monthly contribution  of state employees for family health care 
coverage was nearly four times that of  the $49 monthly contribution made by 
Washington state employees in 2006.  

Direct job class comparisons can be difficult. But focusing on pay alone misleads. The Times offers a glance at state workers' benefits, but provides little in the way of direct comparison.

The Times editorial board continues to challenge the generous benefit packages offered state workers, urging the state

to reopen state employee labor contracts so that workers pay more than 12 percent of their medical premiums. Gov. Chris Gregoire says she wants to do this, and could reopen the contract but that she has no leverage over the unions. We believe she has plenty of leverage and is politically reluctant to use it.

The Daily News takes the same dim view of the status quo for state workers..

The contracts also give union employees more generous health benefits than most other state or private-sector workers enjoy. The state will cover 88 percent of the health costs, leaving just 12 percent of the costs for employees to pick up. An editorial in The Spokesman-Review of Spokane last week cited a study that found workers, on average, pick up about 24 percent of the costs of their employer-provided health coverage.

While the disparities exist, voters will be justifiably questioning the decision to raise taxes.