Public Sector Unions and the Rising Costs of Employee Compensation

Abstract

This article examines the compensation of state and local workers, who account for 20 million of the 23 million civilian government workers in the United States. State and local workers include teachers, college instructors, police officers, health care administrators, and many other occupational groups.

Examining state and local compensation is important because it represents a major portion of the overall U.S. economy. In 2008, the total cost of wages and benefits for state and local workers was $1.1 trillion, which was half of the $2.2 trillion in total spending by state and local governments. Compensation costs are expected to rise rapidly in coming years due to growing pension and health care costs.

Keywords: public sector employment, public sector compensation, teacher unions, wages, government pensions, benefits

JEL Classification: J50, J51, J58, H50