Rhode Island’s Government Payroll: Living Beyond Our Means
When a family comes to a decision about purchasing any product or service, it doesn’t merely accept the seller’s sense of what’s reasonable. In addition to the market rate, consumers must take into account the quality of the thing they’re buying as well as their own ability to afford it.
With deteriorating infrastructure, doubts about the quality of government services, and the high-profile specter of unfunded municipal and state retirement liabilities looming over the state during this current period of economic stagnation, the compensation of public-sector employees has become a subject of heated debate about fairness and affordability.
A study that I’ve just produced for the RI Center for Freedom & Prosperity shines a stark light on the comparison of the public sector in Rhode Island to the private sector that supports it financially. Using a refined methodology for collecting data, economists William Even, of Miami University, and David Macpherson, of Trinity University, find that state and local government employees here enjoy a 26.5% “premium” in total compensation over their private-sector neighbors — even after controlling for variables like education, experience, and broad job category. That compares with 18.8% for New England and 14.9% for the United States as a whole.
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