Free Market

Public Utah Employee Compensation Out of Whack with the Private Market

Constant are the cries from many government agencies that there isn’t enough funding and that their budgets need to be increased, otherwise critical government functions and services will not be provided to the public. Unlike a household budget or a small-business budget, government agencies often fail to learn to live within their means and find other ways to re-prioritize their already existing budget.

Public employee compensation has been no different here in Utah. Often there is discussion about offering competitive salaries and needing to “keep-up” with what is being offered in the private market—otherwise government agencies might lose good employees to private companies offering better pay. Of course, in order to offer these competitive salaries, taxpayers are required to give these agencies more money.

This is another case of government failing to think outside-the-box. According to a study released this morning by the Utah State Auditor, government agencies are failing to appropriately balance their compensation packages, leading to lower salaries but larger benefits packages. In fact, when looking at total compensation, Utah is already highly competitive with market rates.

While it is true that salaries for government employees tend to be lower than market rates, the value of benefits like health insurance, retirement pensions, paid leave, and life insurance are significantly higher than what private companies usually provide. The imbalance in salaries is caused by an imbalance in benefit packages.

If government agencies are worried about offering competitive salaries, then they need to find ways to re-prioritize and decrease the overall compensation packages they give their employees. If this requires pension reform by the Utah Legislature, so be it. What is clear is that government agencies don’t need more funding in order to increase salaries. There is plenty of money in the overall pot as it is.

Shifting some of the funding that currently goes towards benefits to salaries can solve some of the perceived problems with public employee compensation. Until changes are made to Utah’s public employee compensation packages, there is no need for alarm and calling for increases in government agency budgets.