One of the canards that has been prevalent throughout both the federal budget debate and the battle in Wisconsin is the idea that government workers are overpaid. The Economic Policy Institute points out the problem with this argument.
In Wisconsin, which has become a focal point in this debate, public servants already take a pretty hefty pay cut just for the opportunity to serve their communities (Keefe 2010). The figure [pictured, click to enlarge] shows that when comparing the total compensation (which includes non-wage benefits such as health care and pensions) of workers with similar education, public-sector workers consistently make less than their private–sector peers. Workers with a bachelor’s degree or more—which constitute nearly 60% of the state and local workforce in Wisconsin—are compensated between $20,000 less (if they just have a bachelor’s degree) to over $82,000 a year less (if they have a professional degree, such as in law or medicine).
Those who say that public sector employees earn more than private sector ones ignore the fact that the makeup of the public workforce is different than the private workforce. Public sector workers tend to have more education and be older. Once these factors are controlled for (something any policy analyst is taught how to do their first semester in school) then it is clear that private sector workers make more money than those in the public sector.