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Press Release: Montana State and Local Public Employees Earn 15 Percent More in Total Compensation Than Private Sector Workers

Press Release
11/8/2012
For Immediate Release
Contact:
Glenn Oppel, Policy Director
Montana Policy Institute
406-443-4205
Summary:

Decision makers and taxpayers often hear that public employees earn less than private sector workers. In Montana, the State Human Resources Division’s latest biennial salary survey enforces this impression, concluding that public employees earn 13.3 percent less than comparable private sector counterparts. But the salary survey suffers from weaknesses in its methodology, omitting fringe benefits, comparing employees of unequal skill and experience, and evaluating public sector occupations that have no private sector equivalent (e.g. firefighters.) A new analysis from the Montana Policy Institute uses rigorous statistical analysis to compare public and private employees of similar personal and professional characteristics. They also calculate the compensation value of various fringe benefits. MPI’s new report “Public Versus Private Sector Compensation in Montana” finds that public employees earn 15.4 percent more than private sector counterparts in total annual compensation.

FOR IMMEDIATE RELEASE

 

Montana State and Local Public Employees Earn 15 Percent More in Total Compensation Than Private Sector Workers

Bozeman – In a year when most state legislatures were engaged in budgetary belt-tightening, Montana Governor Brian Schweitzer and public employee union representatives agreed to a pay plan package that would cost taxpayers $138 million. According to the agreement, each of the next two years state workers would receive both a five percent raise in pay and a 10 percent increase in the state contribution toward health insurance premiums. After the pay plan agreement was reached, a local representative of theAmerican Federation of State, County, and Municipal Employees (AFSCME) argued that it was necessary to “bring us closer to being compensated fairly with those in the private sector.”

“Union representatives would have the public accept as conventional wisdom their caricature of the underpaid public employee,” responded Glenn Oppel, MPI Policy Director, “but the data suggest that public employees are actually compensated far more generously than their private sector counterparts.”

Much of the perception that public employees fail to earn as much as private sector counterparts is fueled by standard compensation comparisons. The State Human Resources Division’s biennial salary survey is a case in point. Salary data culled for the survey is used to determine what the state calls the “market midpoint” of compensation for 750 occupations within stategovernment.According to the salary survey, state workers are earning on average 13.3 percent less than the market midpoint.

“The state’s salary survey unfortunately suffers from a weakness in methodology,” emphasized Mr. Oppel.

By relying on salary ranges for occupational categories, the state’s report has grossly oversimplified the compensation question. For instance, many positions in the public sector, such as correctional officers and fire fighters, have no private-sector equivalent. Additionally, employees within these categories are not interchangeable; some are more educated, some are older, some are more experienced. Comparing only occupational categories ignores all of this variation. An additional shortcoming in the salary survey is that it doesn’t include the value of employee benefits – health insurance, paid leave, pension, etc. – which make up a considerable portion of any worker’s compensation.

To facilitate a more accurate comparison, the Montana Policy Institute has released a report that uses the “human capital” approach to achieve apples-to-apples comparisons between public and private sector pay.

“Our report starts by using government data to compare public and private employees of similar personal and professional characteristics,” explained Mr. Oppel. “For instance, instead of comparing pay in broad occupational categories, we compare public and private employees of similar work experience, education, gender, race, and disability status. Additionally, we calculate the annual compensation value of fringe benefits on top of annual wages.”

The results of the analysis are telling. Whereas the state’s salary survey concludes that that average state employee is earning 13.3 percent less than the market midpoint, the MPI report shows that when comparing similar employees, state and local public employees are in a statistical dead-heat with their private sector counterparts in terms of take-home pay.

Where state and local public employees surpass private sector workers in total annual compensation is from their various fringe benefits. When compensation from fringe benefits is factored in, state and local public employees earn nearly 15.4 percent more in total annual compensation than comparable private sector workers.

“We encourage lawmakers and state analysts to take a close look at the methodology we use in our report,” suggested Mr. Oppel. “It more accurately compares total annual compensation between public and private sector workers in Montana, which can better inform the decision making process on the state pay plan legislation.”

The full report is available on the MPI web site at http://www.montanapolicy.org/2012/11/public-vs-private-sector-compensation-in-montana-study-2012/.

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The Montana Policy Institute is an independent, nonprofit policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsibility, and free markets in Montana.

Montana Policy Institute
67 W Kagy Blvd, Ste. B
Bozeman, MT 59715
406-219-0508
MPI is a Montana tax exempt corporation operated exclusively for the public benefit.  No substantial part of the activities of the Institute are used for the carrying on of propaganda or otherwise attempting to influence legislation, promote any political campaign, or on behalf of or in opposition to any candidate for public office.

Immediate Release: Study ranks MT cities on business friendliness

Press Release
9/23/2012
For Immediate Release
Contact:
Glenn Oppel, Policy Director
Montana Policy Institute
406-431-3685
goppel@montanapolicy.org

Summary:
The Montana Policy Institute and American Indicators ranked the business friendliness of 25 cities across Montana based on three categories: 1) economic vitality; 2) tax burden on businesses; and 3) community allure. Factors included in the economic vitality category include recent job growth, residential population growth from 2010 to 2011, population growth from 2000 to 2010, and median per-capita income. Business tax burden focuses on the property tax in each locality. Finally, factors measured in community allure include the cost of living index, per-capita violent crime rates, percent of adults age 25 or older with at least a high school diploma, and average Criterion-Referenced Test (CRT) scores for all high schools in incorporates areas. The overall most business friendly city is Polson, with Glasgow and Sidney very close behind. For the top tier of largest cities, Bozeman took the top spot and fourth overall. The full report is available at www.montanapolicy.org.

FOR IMMEDIATE RELEASE

Montana Cities Ranked On Business Friendliness

Bozeman, MT – The Montana Policy Institute and American Indicators have released a ranking of the economic vitality, business tax burden, and community allure of Montana’s 25 largest cities, providing an index of the measures most sought after by businesses. Polson tops the list, while Anaconda ranks lowest overall.

The report also breaks the cities into five population tiers, with Bozeman heading the largest city rankings and Glasgow leading the smallest group by population.

“Cities and towns are the real engines that drive the statewide economy and we compare how business friendly they are,” according to Glenn Oppel, MPI’s Policy Director. “Businesses that want to start up or relocate in Montana will not only look at the state’s business climate but also stack localities up against each other. Cities that are more welcoming to job creators and their families will obviously have an edge.”

The rankings use several criteria to measure the business climate of each city: tax policy; community allure, including cost of living and crime rate; year-over-year population and job growth; and economic vitality, including average incomes.

“We wanted to make sure that we conducted a comprehensive comparison of cities around the state,” emphasized Oppel. “That’s why we included both large and small, as well as western and eastern, cities in our comparison.”

The western Montana town of Polson takes the prize for the most business-friendly town in the state, with two eastern cities – Glasgow and Sidney – very close behind.

Ranked by size, Bozeman was the most business-friendly city in the top-tier of the largest cities, beating out Billings, Great Falls, Missoula, and Butte in that order. Havre edged out Kalispell, Helena, and Miles City in the second tier. Belgrade topped out the third tier, and Polson and Glasgow topped out the fourth and fifth tiers, respectively.

Oppel pointed out that MPI plans to publish this study on an annual basis to track the business friendly progress of the various cities and see how various policies affect job growth and community well-being.

The full report is available at www.montanapolicy.org.

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The Montana Policy Institute is an independent, nonprofit policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsiblity, and free markets in Montana.

Montana Policy Institute
67 W Kagy Blvd, Ste. B
Bozeman, MT 59715
406-219-0508
info@montanapolicy.org
www.montanapolicy.org

MPI is a Montana tax exempt corporation operated exclusively for the public benefit. No substantial part of the activities of the Institute are used for the carrying on of propaganda or otherwise attempting to influence legislation, promote any political campaign, or on behalf of or in opposition to any candidate for public office.

Press Release: Mandatory Wage Hikes Accelerate Montana Teen Unemployment

Press Release
8/3/2012
For Immediate Release
Contact:
Glenn Oppel
Montana Policy Institute
406-443-4205
Summary:
The Montana Policy Institute announces the release of updated research data on the unemployment effects of minimum wage increases on working-age teens in Montana. The unemployment rate for working-age teens has nearly doubled since 2006 and fewer are actually entering the workforce. Controlling for the job-killing effects of the recession, the research estimates that nearly 1,200 jobs were lost because of state minimum wage increases from 2005 to 2011. Unemployment rates for teens are likely to rise in coming years as the recession persists and the state minimum wage increases annually.
FOR IMMEDIATE RELEASE

Mandatory Wage Hikes Accelerate Montana Teen Unemployment

Contact:

Glenn Oppel, Policy Director

Montana Policy Institute

(406) 443-4205

Helena – A recently released study indicates that the state’s nearly 50% minimum wage hike since 2005 has resulted in about 1,200 fewer teen jobs, even after taking into account impacts of the recession.

The Montana Policy Institute released those findings in a study examining the effects of higher labor costs on low skilled workers in the state. The study controls for job losses due to the recession and finds that, as the minimum wage increases, employers are less likely to hire teen workers with fewer skills or lower education levels.

“Simple economics dictates that when the cost of something goes up, people will buy less of it,” according to Carl Graham, CEO of the Montana Policy Institute. “Mandatory increases in our state’s minimum wage hurt the very people, those who are just starting out or starting over, that we’re trying to help by reducing the overall number of jobs available.”

Teen employment in Montana is at historical highs. Census Bureau data shows an almost doubling from 10.2 percent in 2006 to 19.4 percent in 2011. Average weekly hours fell 34 percent, from 12.1 to 8 hours,during that same period. Not surprisingly, the percentage ofMontana teenagers employed also declined, from 48.2 percent in 2006 to 36.6 percent in 2011.

Montana’s minimum wage is currently $7.65 per hour, 12th highest in the nation, and one of just 10 that is indexed to inflation. Another increase to $7.80 is likely to go into effect in January, further increasing the costs of employing low skilled workers.

“The Montana Legislature does have options that will encourage employers to put teens to work by getting closer to the market wage,” emphasized Graham. “Ideally, they can repeal the expected state minimum wage of $7.80 starting in 2013 and default to the federal minimum of $7.25. If that’s not possible, they should at least suspend the inflation index that imposes annual increases even during periods of high unemployment.”

The full study is available at www.montanapolicy.org.

 

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328 Words

 

The Montana Policy Institute is an independent, nonprofit policy research center based in Bozeman.  It provides analysis and information to encourage individual freedom, personal responsiblity, and free markets in Montana.

Montana Policy Institute
67 W Kagy Blvd, Ste. B
Bozeman, MT 59715
406-219-0508
MPI is a Montana tax exempt corporation operated exclusively for the public benefit.  No substantial part of the activities of the Institute are used for the carrying on of propaganda or otherwise attempting to influence legislation, promote any political campaign, or on behalf of or in opposition to any candidate for public office.

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, opengovmt.org, 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 opengovmt.org transparency portal along with detailed school revenue and spending information.

 

Contact:

Carl Graham

CEO

Montana Policy Institute

(406) 219-0508

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For July 11th, 2012 Release

 

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

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