Public vs. Private Sector Compensation in Montana (2012)

By Glenn Oppel, MPI Policy Director

Click here for full study. (PDF – 4MB)

The State Human Resources Division (Division) of the Montana Department of Administration plays a key role in the adoption of a pay plan for state employees in Montana. It is for all intents and purposes the sole source of data on compensation used by policymakers and agency managers. Unfortunately, the data the Division produces is based on a flawed methodology and limited data.

The Division conducts a salary survey of Montana and surrounding states on a biennial basis to arrive at a private sector comparison for occupations and offices in state government. With the most recent survey, the Division determined that on average a majority of the public sector occupations studied have earnings that are 13.3 percent below what they call the “market midpoint.” The Division’s methodology is open to criticism on a number of points:

• Many positions in the public sector have no private-sector equivalent. Correctional officers and fire fighters, for instance, have no direct private sector equivalent. Comparing occupations like these to a “market midpoint” yields very little useful information.

• Comparing earnings among occupations does not account for the differences in age, education, and experience for the employees who work in these occupations.

• The Division’s analysis doesn’t include the value of employee benefits — health insurance, paid leave, pension, etc. — which make up a considerable portion of public employee compensation.

This new analysis from the Montana Policy Institute compares employees of similar personal and professional characteristics in both the public and private sectors of Montana. Instead of comparing pay in broad occupational categories, this report uses regression analysis to compare public and private employees of similar work experience, education, gender, race, and disability status. It also analyzes total compensation (which the state fails to do), including take-home pay as well as fringe benefits.

This report details the methodology and finds that public employees in Montana actually earn over 15 percent more than comparable employees in the state’s private sector.

New Website Provides State Employee Pay

Bozeman — Despite a two-year pay freeze, average state employee salaries and benefits have increased faster than the rate of inflation since 2004.

This and other findings are available in a new website,, created by the Bozeman-based nonprofit Montana Policy Institute.

Pay data in the website was handed over by the state following a long legal battle and provides individual pay information for all state employees along with summary statistics in a variety of areas, including employee demographics, average compensation values, union membership, and funding sources.

According to MPI president Carl Graham, site users can review salary information for employees based on name, location, department, and many other criteria.

“The site is nonjudgmental about whether the numbers are too high, too low, or just right” said Graham. “But it does put the lie to recent statements that state employee pay has been frozen.”

According to site data, the real (after inflation) average increase in compensation was nearly 11 percent between 2004 and 2011, with the largest increases going to those making over $75,000 per year.

Compensation is likely to be a hot issue for the 2013 Legislature after it failed to ratify a pay raise for state workers in 2011. Lawmakers will be expected to vote on a recently announced 5 percent increase negotiated between public employee unions and the Schweitzer administration.

“This type of data should place everybody on an equal footing” added Graham. “Legislators and taxpayers have a right to know what their employees are paid, and that information simply was not available until now.”

Following nearly two years of open records request refusals by the state, MPI recently won a lawsuit demanding actual pay data for each state employee. That data is now available to the public at no cost on the transparency portal along with detailed school revenue and spending information.



Carl Graham


Montana Policy Institute

(406) 219-0508


305 Words

For July 11th, 2012 Release


For an interview with Montana Policy Institute’s Carl Graham call (406) 219-0508 or email

The Montana Policy Institute is a nonprofit, nonpartisan policy research center based in Bozeman. To find out more visit us on the web at or contact us at 406-219-0508.