The Impact of Act 10 on Public Sector Compensation in Wisconsin

AEI Economic Policy Working Paper 2012-02

31 Pages Posted: 27 Mar 2013

Date Written: May 29, 2012

Abstract

After a protracted legal and political battle, on March 11, 2011 the Wisconsin state legislature passed Act 10, the Budget Repair Act, which increased public employee contributions toward pensions and health coverage and restricted union powers of collective bargaining and dues collection. This study analyzes public sector salaries and benefits in Wisconsin, with a particular focus on disentangling the risk-adjusted value of pension benefits offered in the public sector from accounting conventions that can understate the cost and value of defined benefit pension plans. We find that state and local government employees receive salaries roughly equal to those paid to private sector Wisconsin employees with similar education and experience or working in jobs with similar skill requirements. However, even following Act 10, pension benefits for Wisconsin public employees are roughly 4.5 times more valuable than private sector levels while health benefits are about twice as generous as those paid by larger private sector Wisconsin employers. This difference results in a combined salary-benefits compensation premium of around 22 percent for state workers over private sector workers, with varying but often larger pay advantages for local government employees.

Suggested Citation

Biggs, Andrew G. and Richwine, Jason, The Impact of Act 10 on Public Sector Compensation in Wisconsin (May 29, 2012). AEI Economic Policy Working Paper 2012-02, Available at SSRN: https://ssrn.com/abstract=2239127 or http://dx.doi.org/10.2139/ssrn.2239127

Andrew G. Biggs (Contact Author)

American Enterprise Institute ( email )

1150 17th Street N.W.
Washington, DC 20036
United States
202-862-5841 (Phone)

HOME PAGE: http://www.aei.org

Jason Richwine

Independent ( email )

No Address Available
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
93
Abstract Views
517
rank
300,808
PlumX Metrics