State and local government workers were roughly 40% more expensive to employ than private sector employees in the second quarter of 2024, largely due to generous benefit plans, according to data from the Bureau of Labor Statistics (BLS) released Tuesday.
Total compensation costs, including wages, salaries and benefits, averaged $43.94 per hour for private sector employees, approximately 40% less than the $61.37 average hourly compensation cost for state and local government workers, according to the BLS data. The disparity was primarily driven by pricey government benefit plans, with costs averaging $13.04 per hour for private industry workers, over 80% less than the $23.57 per hour in benefit costs for their state and local government counterparts.
“These data reflect a clear lack of efficiency in government compared to the private sector, and that’s gotten worse over time,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation. “One of the large contributors to higher benefit costs for government employees is the bloated pension systems that provide retirement benefits far in excess of what private workers receive. That’s especially true for defined benefit plans, which are so unaffordable that the private sector has nearly entirely transitioned away from them.”
Gov’t employees cost 39.7% more than their private sector counterparts in Q2 of this year, w/ wages and salaries being 22.3% higher and benefits being a whopping 80.8% higher – gov’t work is a helluva gig! pic.twitter.com/HrZHcHAFAw
— E.J. Antoni, Ph.D. (@RealEJAntoni) September 10, 2024
Defined benefit plans involve fixed, pre-established benefits that, unlike a 401(k) or defined contribution plan, do not depend on employees contributing their earnings toward retirement, according to the Internal Revenue Service. Around 86% of state and local government employees had access to defined-benefit plans in 2022, compared with just 15% of private sector workers, according to the Urban Institute.
State and local government workers in service occupations cost $47.05 per hour on average, while private sector service workers earned between $17.88 and $34.64 — a difference of roughly 163% and 36%, respectively, BLS data shows.
“Gov’t work is a helluva gig!” Antoni wrote in a post on X analyzing the BLS report.
The White House did not immediately respond to a request for comment.
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