Public and Private Sector Pay Comparisons

The New York Times offers some data to help make sense of the debate about who earns more: people in the public sector or people in the private sector?

When lumped together, it would appear that on average, the public sector earns more when benefits are included.
But they acknowledge this comparison is difficult because a greater percent of people in state and local government have college degrees than people in the private sector. As a general rule, people with higher degrees tend to earn more than those with just a high school degree.

The best analysis would compare by education level: people with high school, college, and masters degrees in the public and private sector. In social science jargon: the analysts should be controlling for educational levels.
See New York Times Data

Consider this: How do the earnings of people with a Master in Public Administration degree working in the public sector compare to the earnings of people with a Master of Business Administration working in the private sector?

Comparing benefits is difficult as well. What benefits are being counted? What about bonuses and stock options? How do benefits get calculated for a corporation that does not provide benefits for its hourly employees but does provide benefits for its full-time salaried employees? Trying to get an apples to apples comparison no doubt makes economists crazy.

Overall, this whole debate is a great example of how analysis gets played out in policy debates–and how objective data analysis is hard to find.

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