|The benefits package|
Based on PUBLIC WORKS' 2011 Salary & Benefits Survey, those entering the public works profession can expect to see:
The majority of respondents also receive:
And more than half of those surveyed receive:
Yet less than half of those surveyed receive:
Percentages are rounded to whole numbers.
Source: PUBLIC WORKS
The “Great Recession” has officially been over for a year and a half. But it was so severe that the recovery is, at best, subdued. Even worse, according to Portland Cement Association Chief Economist Ed Sullivan's most recent forecast, the elements that brought on the recession are still hovering over our heads: home values are still down, lending is still tight, and state and local governments are still strapped for cash with income and property revenues well below 2008 levels.
When we launched our sixth annual salary and benefits survey in January, we knew that we'd find what you already know: Most public works professionals are continuing to experience wage freezes, pension cuts, furloughs, and reduced benefits. The real question then became: Has it gotten any worse?
On that front, this year's batch of more than 1,300 respondents reported somewhat good news.
We're riding the bottom
We've reviewed the last four years of survey responses to determine if your salaries and benefits are still free falling. Here's what we've found:
Last year's survey respondents felt the brunt of the economic slowdown that began in late 2008, reporting more pay cuts and freezes, and benefits losses than in previous years. This year's respondents, however, report a sliver of breathing room. To illustrate, two years ago three-quarters reported they hadn't lost any benefits. Last year that number dropped by eight percentage points to 67%. This year the figure crept up a bit to 70%.
Instead of pay cuts, explains an urban forestry/parks/public grounds manager, “Many benefits have been ‘scaled back' a bit, but not necessarily lost.” According to our research, this is a continuing trend.
Also, two years ago 38% of respondents didn't anticipate a pay increase over the coming year while 43% expected a 1% to 3% increase. Last year, the percentages were a more dismal 56% and 24%, respectively. This year, although a slightly higher percentage of 59% don't anticipate a raise, the percentage of respondents expecting a 1% to 3% increase also rose — to 30%.
What is more telling: although 14% of last year's respondents said they expected a pay cut — and 13% of this year's respondents DID receive a pay cut in 2010 — nearly half that percentage (8%) expects a pay cut this year.
Health care costs continue to rise
What's remained constant are complaints about ever-increasing health insurance premiums, dwindling pensions/retirement funds, and more out-of-pocket expenses. Since we began offering respondents space to comment in 2007, we have seen such concerns escalate as trepidations grew into reality. Said a parks & recreation foreman from the Eastern states in 2007: “We all took public-sector jobs knowing the pay was bad but the benefits were good. The pay is still bad and now our benefits are under attack.” And that was before the economy crumbled.
For those experiencing unpaid furloughs or whose wages have been frozen, this means less take-home pay.
“It has to be done,” admits a Midwest manager/supervisor. “But my concern is that we are now contributing a great deal more toward our health care benefits, while at the same time staying pay-neutral … this July will mark three years without a pay increase.”
Nearly two-thirds (62%) of respondents are paying higher insurance premiums this year. This compares to the 56% that said their premiums increased in last year's survey. Perhaps this is an anomaly, but we believe this is a continuing sign of tight times. As with last year, several of this year's respondents also mentioned that they're receiving less health coverage.
Nevertheless, more than half (52%) feel benefits are better than those offered to colleagues working in the private sector, while an additional 21% say they're comparable. Only 13% feel that private-industry benefits are more competitive than their own. (Is this a valid perception? See “The benefits misconception” on page 52.)
Additionally, about 7 of every 10 respondents are somewhat (38%) to very (33%) satisfied with their benefits packages, and a little more than a third (35%) say they'll stay in their jobs because of them. When asked how benefits impact employment, 14% say they don't. Only 4% say they'll leave their jobs if another benefit is cut and even fewer (2%) say benefit cuts will spur them to jump ship as soon as the economy recovers. Overall, a little more than half (51%) say they have better benefits than most and enjoy their work. And 41% are just thankful to have a job.
Does this tunnel have a light?
We hesitate to see the small improvements reported this year as a sign that public-sector paychecks are beginning to rebound. Unfortunately, we'll be bumping along ground zero for at least a couple more years.
Take state budgets, for instance.
A report recently released by the National Governors Association and National Association of State Budget Officers foresees that although fiscal year 2011 will be slightly better than 2010, revenues will remain lower than 2008 levels well into 2013 — so states will continue to have difficulty balancing budgets. So far, 23 states report $40.5 billion in budget gaps for fiscal 2012 and 17 are reporting $40.9 billion in deficits for 2013.
Last year, 25 states laid off employees, 22 instituted furloughs, seven cut salaries, and 10 cut benefits. This year 24 states are recommending layoffs and 16 have implemented furloughs; nine have cut salaries and 13 are cutting benefits.
Research issued by the National League of Cities last fall also reported discouraging news: Nearly nine in 10 finance officers surveyed reported they were less able to meet fiscal needs in 2010 than in the previous year. Tax revenues, which declined dramatically in 2009, declined further in 2010 and property tax revenues also began to decline.
Since budgets tend to lag economic conditions by 18 months to at least two years, finance directors expect further revenue declines and spending cuts this year and next. Plus, two of the factors that are having the largest negative impact on budgets are employee-related costs for health care coverage and pensions. Cities will likely continue to make cuts in personnel and services to balance budgets.
Jobs are key
State and local governments will continue to face troublesome deficits until job growth occurs, which will in turn increase spending, investing, and lending. For the public sector this means improved revenues that will perhaps put an end to salary and benefits revisions. But although the unemployment rate fell to 9% at press time, it's nearly double the prerecession rates of 2007.
To end this analysis on a hopeful note, we refer back to Portland Cement Association Chief Economist Ed Sullivan's most recent forecast. Although the report is geared for the concrete and construction industries, he also goes into detail on overall economic trends. Job growth should become stronger in late 2012, which ought to begin impacting state budgets as early as 2013.
Sullivan notes that job growth could begin earlier if Congress passes a new highway bill that effectively finances the Highway Trust Fund. So let's keep our fingers crossed this happens soon!
The benefits misconception
ON A TOTAL COMPENSATION BASIS (PAY+BENEFITS), PUBLIC EMPLOYEES MAY EARN LESS THAN PRIVATE WORKERS.
Here's something to take to legislators as they consider slashing benefits and salaries to offset budget deficits.
The general perception is that public-sector employees may not earn as much as their private-sector counterparts in terms of dollars and cents, but they make up for that with generous benefits packages. (Some say too generous.) A report released early last year by the Center for State & Local Government Excellence and the National Institute on Retirement Security says differently.
When researchers compared wages and salaries of state and local employees with comparable education levels and work experience as their private-sector equivalents, they found that state workers typically earn 11% less and local workers 12% less. And when they factored in retirement, health care, and other benefits, on average, total compensation is 7% lower for both state and local employees than for comparable private-sector employees.
In an apples-to-apples comparison, says Keith Bender, report co-author and associate professor with the University of Wisconsin-Milwaukee Department of Economics, public-sector employees both earn less money and receive less compensation than they would if they took their skills to the private sector.
So why do policymakers and mainstream media sources tout public salaries and benefits packages as fat? According to the report, this is because they routinely refer to “aggregate” pay and benefits differences, which only compare unadjusted earnings of similar positions and doesn't take into account education, tenure, and responsibilities.
At least one PUBLIC WORKS salary survey respondent agrees: “The public has the impression that our pay benefits are way above those in the private sector,” says a planning/zoning/inspection/permitting deputy/assistant director in the Middle Atlantic region. “Somehow, we've become the poster children for excess, which is patently ridiculous. This has resulted in no pay increases for managers … we get no comp time or overtime and must attend public meetings at night that run into the wee hours of the morning at no additional compensation.”
The pay gap has been growing for at least 15 years. Does this mean we've been operating under a decades-long fallacy that public-sector benefits are so much better than private? Yes and no. Blue-collar employees at the bottom of skill and responsibility hierarchies hold the advantage over private workers. But as they move up the ranks, private workers gain the advantage.
The study analyzes U.S. Bureau of Labor Statistics data as well as detailed census data from some of the nation's largest states — California, Florida, Illinois, Michigan, New York, Pennsylvania, and Texas. To read the full report, Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years, click here.
How does your salary compare?
This region-by-region analysis compares median salaries of survey respondents by population served. You can find median salaries by title or by title and department/area of work. Note: Not all titles, departments, etc. are represented due to lack of survey respondents from those areas.
Web Extra Links
May 2009 wage estimates for federal, state, and local government occupations
Click here to access mean and median salaries for even more jobs in the public sector, provided by the U.S. Bureau of Labor Statistics.
For more salary and benefits statistics by industry, occupation, region, and state, visit the U.S. Department of Labor's Bureau of Labor Statistics at http://www.bls.gov/oes/.
Benefits and pensions
To read the U.S. Department of Labor's Bureau of Labor Statistics' Program Perspectives on State and Local Government Benefits, click here.
A new database from the Center for State and Local Government Excellence and the Center for Retirement Research at Boston College offers access to a variety of state and local government pension data. To access the Public Plans Database, click here.
To read the full report, Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years, click here.
To read National League of Cities' 2010 City Fiscal Conditions Research Briefclick here.
To read A Fiscal Survey of States, Fall 2010, released by the National Governors Association and National Association of State Budget Officers, click here.