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Richard H. Wells

How Governor Walker intends to fix the budget deficit in Wisconsin has rapidly turned into a political hot topic. Unfortunately, fear and rage are fueling heated discussions on all sides of this topic, and we are witnessing threats to our elected officials, demeaning ads, and shameful attacks on public sector employees. Such an environment calls for thoughtfulness and respect from all segments if civility is to prevail over incivility, which endangers free speech and academic freedom. In the spirit of informed discussion, I am sharing below relevant data to help all of us address mistaken notions regarding compensation for Wisconsin’s public sector employees. I am also calling on the Governor and legislators to grant greater leadership and management flexibility for all UW campuses.

Jeffrey Keefe, Associate Professor of Labor and Employment Relations, at Rutgers University, is the author of an Economic Policy Institute report titled, “Are Wisconsin Public Employees Over-Compensated?” (Feb. 10, 2011). Data provided in this report indicates that state and local government employees in Wisconsin are not overpaid. On the contrary, his data shows that “on an annual basis, full-time state and local government employees in Wisconsin are undercompensated by 8.2% compared with otherwise similar private sector workers.”  When comparisons are made controlling for the difference in annual hours worked (full-time public employees work fewer annual hours, particularly employees with bachelor’s, master’s, and professional degrees because many are teachers or university professors), “Wisconsin public employees earn 4.8% less in total compensation per hour than comparable full-time employees in Wisconsin’s private sector.”

Key findings

  • Jobs in the public sector typically require more education than private sector positions:  “59% of full-time Wisconsin public sector workers hold at least a four-year college degree, compared with 30% of full-time private sector workers”.
  • College-educated public employees are paid less: “Wisconsin state and local governments pay college-educated employees 25% less in annual compensation, on average, than private employers.”
  • Benefits make up a slightly larger share of compensation for the state and local sector: “Public employers devote on average 26.7% of employee compensation expenses to nonwage benefits, whereas private employers devote between 19.4% and 22.8% to those benefits.”
  • Public employers devote a larger share of their compensation packages to health insurance and pension benefits than do private employers: “Health insurance accounts for 12.9% of state and local government compensation compared with 7% to 9.7% of private sector compensation. Retirement benefits account for 8% of state and local government compensation costs compared with 2.5% to 4.9% in the private sector.”

Nationally, the data affirms these findings. Robert Reich, Professor of Public Policy at the University of California at Berkeley and former secretary of labor, states  in his article titled “The Shameful Attack on Public Employees” (January 6, 2011 at RobertReich.org) that, “even if you include health and retirement benefits, government employees still earn less  than their private-sector counterparts with similar educations.”  Furthermore, Reich also points out that “most public employees don’t have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year. Few would call that overly generous.”

Reich also warns that it is disingenuous to blame public employees for causing the Great Recession when the moral failure of financial investment leadership is a major reason for the economic collapse. For example, he states: “The main reason for underfunded pensions in both public and private sectors is investment losses that occurred during the Great Recession. Before then, public pension funds had an average of 86 percent of all the assets they needed to pay future benefits—better than many private plans.”

I realize that in these difficult times, public employees and their organizations will have to continue to tighten their belts the same as everyone else. I also realize we will have to contribute more of our salary to support our pension and healthcare benefits. However, if our benefits need to be more in line with national and peer group averages, then our well-under-average salaries should also reflect national and Midwestern peer group averages. According to the Competitive University Workforce Commission’s Final Report (June 2010), UW comprehensive faculty and academic staff salaries are from 10 % to 20% below those at comparable universities across the country.

Furthermore, UW comprehensive faculty and academic staff have already given up merit raises and pay plan increases and all employees have taken on additional pay cuts in the form of furlough days over the past two years.  Therefore, we are falling even further behind our peers.

In closing, I would like to propose one thing that can be done right away. I strongly encourage Governor Walker and our legislators to deregulate the UW System and its campuses by authorizing all of the leadership and management flexibilities requested in the letter and related attachments sent to Governor Walker on Feb. 11, 2011.

It is important that we provide all the “tools” our faculty, staff, and students need to help us and our state dig itself out of this financial landslide. We need to empower our talented workforce to become part of the solution. By respecting our employees, we also help the “victims” of a financial collapse, caused in large part by others, to work together to find ways to reform and restore the ravaged landscape in their own back yards.

Richard Wells is Chancellor of the University of Wisconsin Oshkosh.