Matthew Albright

The News Journal

The often-repeated claim that state employees in Delaware could find better pay in the private sector is a myth, according to a report by pro-business think tanks issued Monday.

Public employee union leaders and some legislators say the findings are bogus.

The study was performed by Andrew Biggs, a scholar at the American Enterprise Institute — a national "free enterprise" think tank — in cooperation with the Delaware Public Policy Institute, a group affiliated with the Delaware State Chamber of Commerce.

Biggs has authored similar papers in other states, like Connecticut and California, suggesting that government workers are excessively compensated. He's also authored pieces making that argument in publications like the Wall Street Journal, Forbes and the American Spectator.

The report comes amid a debate in Dover over soaring employee health care costs. Gov. Jack Markell says the state can't afford to maintain current health care plans for employees, but he is facing stiff resistance from lawmakers who don't want to balance the health care budget "on the backs of employees."

Bill Osborne, interim president of the Delaware Public Policy Institute, said the goal isn't to make a partisan point about any single issue, but to provide facts for policy debates.

"We are not taking a policy position at all. We are trying to enlighten those who are in charge of making policy," Osborne said.

The 40-page study says public-sector workers earn slightly smaller salaries on average than their private-sector counterparts, but generous benefits packages more than make up for the disparity.

"Delaware's state government needs to attract and retain employees to accomplish the tasks set to them by citizens, but without overcharging taxpayers by paying excessive compensation," the report says.

Counting payments toward retirement, the study cites an average state employee salary of $48,967, compared with an average of $55,039 salary for private-sector workers. But it finds that government employee benefits, including health care and pensions, were between $36,563 and $48,230, much bigger than the average of $23,775 for those employed by private companies.

The study found that total compensation for state employees was $6,716 to $18,383 higher than they would get with similar education and experience outside state government.

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"The biggest takeaway has to be that state employees are underpaid yet overcompensated," Osborne said.

Those who represent state workers are crying foul.

"I have not had time yet to look at all their formulas, but I cannot in my wildest imagination come up with a formula that would get to this number," said Mike Begatto, president of the Delaware Chapter of the American Federation of State, County and Municipal Employees. "Figures lie and liars figure."

Begatto said the study, for example, grossly overinflates how much it costs the state to pay pensions.

The numbers come from a comparison of public employee wage data against private-sector data from the U.S. Census Bureau and Bureau of Labor Statistics, the report says. The author excluded teachers, public safety workers and local government employees, saying they may have different health and pension plans.

Some General Assembly members are not convinced.

Rep. Debra Heffernan, D-Bellefonte, said she doesn't trust the American Enterprise Institute to push facts that don't fit their small-government agenda.

"It's a right-wing, D.C. think-tank, and their top priority is to bash public sector employees, so I'm not surprised that that's how their endpoint came out," Heffernan said. "I think they had a foregone conclusion that they wanted to reach, and they tailored the data to fit it."

Heffernan said the teachers and other workers the study excluded make up more than half the state's workforce. Delaware's teachers make less than neighboring states, she said.

About 1,000 state employees earn so little that they are eligible for public assistance, Heffernan said.

Osborne said his institute benefits from and is affiliated with the state chamber but its own independent body. Still, Heffernan said the study made it look like the Chamber was joining what she called a "war on state workers."

"I was very disappointed to see the Delaware State Chamber of Commerce, which is a legitimate organization, partnered with a right-wing institute," Heffernan said.

The study comes as lawmakers like Heffernan try to prevent Markell's administration from moving forward with a major overhaul in state employee health care plans.

Markell wants to not only increase premiums, but also put all new workers in a health savings account system that would require employees to pay a greater share of their health care costs.

The administration says it has no choice but to make big changes because skyrocketing health care costs – spending in that area could eclipse $1 billion by 2020 – are chewing up the state's budget.

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But legislators on the budget-writing Joint Finance Committee are pushing back. They say they're loathe to ask employees to shoulder more health care costs after years without raises, fearing it would make it harder to attract talented, skilled employees.

Left-leaning and right-leading think tanks often debate about the best way to accurately compare private-sector and public-sector pay. The labor-friendly Economic Policy Institute, for example, has previously issued rebuttals to papers by American Enterprise Institute researchers like Biggs on the issue.

Osborne acknowledged that some facts, like the current value of deferred compensation like pension, can be difficult to quantify. But he called the findings "very defensible," pointing out that the author included ranges instead of single numbers to account for different interpretations.

Contact reporter Matthew Albright at malbright@delawareonline.com.