Report: Public worker pensions up 28% above private sector
Retirement benefits for state and local government workers in Connecticut pushed overall compensation 28% above comparable private sector pay and benefits, a conservative think tank said in a recent study.
The Yankee Institute for Public Policy, which has criticized what it says are generous benefits for public employees, said fringe benefits are twice what is offered in the private sector. As a result, compensation for a typical public sector employee is about 28% greater than for a comparable private sector worker, according to the report.
“Connecticut faced significant budgetary challenges even prior to the COVID-19 pandemic and economic downturn, in part due to high public pension and retiree health obligations,” wrote Andrew Biggs, the study’s author. “Policymakers will need to balance spending priorities even more finely as the state seeks to recover from the COVID recession.”
Connecticut state or local government employment pays a salary that is roughly comparable to what a similar employee would earn in a private sector job, he said. But state and local jobs in Connecticut offer fringe benefits that are more than twice what’s offered in the private sector, he said, citing federal data.
Total compensation for government employees, when accounting for retirement benefits, jumps to a median $92,764, compared with $72,500 for private sector workers, the study said.
A spokesman for the state Office of Policy and Management did not immediately respond to an email seeking comment.
Sal Luciano, president of the Connecticut AFL-CIO,
criticized the Yankee Institute for pursuing a “political agenda” that opposes organized labor’s priorities such as paying prevailing wages to construction workers, a higher minimum wage and many other issues.
Compensation is skewed by higher paid public employees such as physicians at state hospitals and pensions are intended to make up for lower salaries in other public sector jobs, he said.
The Yankee Institute said median salaries for public sector workers are 1.8% higher than for private sector employees, but earnings increases are boosted by pension and retirement benefits that are equal to 49.6% of annual salaries, compared with 19% in the private sector.
Luciano also s aid Connecticut’s state labor force has contracted and will continue to do so with a wave of retirements expected, further reducing taxpayer costs.
Gov. Ned Lamont, who has frequently cited significant fixed costs as a factor that complicates budgeting, negotiated a deal last year with state employee unions to refinance payments into their pension funds.
His predecessor, Gov. Dannel P. Malloy, also hammered out an agreement with state employee unions to restructure pension payments.
A report by state Comptroller Kevin Lembo said the state’s 2017 agreement with public employees saved $1.7 billion in 2018 and 2019, greater than what had been projected. It’s expected to generate more savings in coming years.
Both of the state’s major pension funds — for state employees and for municipal teachers — have been undermined by inadequate contributions over decades. Analysts commissioned by Malloy warned in 2015 that annual required contributions into both pensions were headed for dangerous spikes by the early 2030s.
The Yankee Institute study did not include teachers because it said several factors, including the shorter work year, complicate the analysis. It relied on salary data from 2014 to 2018 and did not include recent pay raises for state employees this year and in 2019.