Los Angeles, CA, USA. A new paper compares compensation for public-sector and private-sector employees and proposes "grand bargains" to address state budget problems, provide better services to the general public and treat employees fairly.

The researchers say that public-sector workers accept a lower total wage and benefits package than their private-sector counterparts. The trade-off is that public-sector jobs are more secure, and health and pension benefits are generally greater than in the private sector.


David Lewin, a professor at the UCLA Anderson School of Management, and Thomas Kochan, a professor at the MIT Sloan School of Management, released the findings, with contributions from various professors at the Employment Policy Research Network (EPRN)

• Lewin is an authority on public-sector collective bargaining and author of a classic paper on New York City municipal labor negotiations. He says their findings on public sector compensation are unequivocal.
  
  
• Research by Jeffrey Keefe at Rutgers University shows that, nationally, public-sector employee pay is 11.5 percent lower than pay for comparably educated private-sector employees. When health and pension benefits are included, public-sector employees still earn 3.7 percent less than those in the private sector.
  
  
• Craig Olson at the University of Illinois found that between 1995 and 2009, private-sector employees in Wisconsin saw their pay rise by an average of 10 percent (not including fringe benefits, but accounting for inflation). During the same period, pay for Wisconsin public school teachers declined by an average of 10 percent.

Public-sector union–management relations have changed significantly, according to Joel Cutcher-Gershenfeld, dean of the School of Labor and Employment Relations at the University of Illinois, Urbana–Champaign.

"Dispute-resolution procedures, such as fact-finding, mediation and arbitration, have proven themselves as alternatives to strikes and served as a foundation for the alternative dispute-resolution movement in society," he said.

He goes on to say that given states' budget problems, negotiations present opportunities for public employers and employees to work together in ways that provide better, more efficient service to the public while also recognizing and respecting employee rights.

Two major issues facing state and local governments are rising health care and pension costs. These issues need to be addressed state by state on a coalition bargaining, problem-solving basis, Cutcher-Gershenfeld said. When approached by management and labor as a mutually beneficial process, new-style collective bargaining provides an ideal venue for tackling these issues.

Kochan said he and the other researchers envision a three-step, state-by-state process to come to terms with budget deficits while still respecting public-employee rights:

• Perform an evidence-based analysis of wages, benefit costs and funding arrangements for state employees.
  
  
• Use the findings for state public-sector summit meetings to clarify and define the issues and problems that need immediate attention, and use problem-solving tools such as interest-based negotiations and mediation–arbitration to agree on statewide "grand bargains" that address the most critical budget problems and are fair to both taxpayers and employees.
  
  
• Charge a broadly representative group to carry out evidence-based analysis to modernize public-sector collective-bargaining practices.

"We need nothing less than a transformation of labor-management relationships in the public sector," Kochan said. "Public employees want to do a good job and provide service at a high level, and they deserve to have good jobs and effective work systems."

According to Lewin, "citizens have a right to expect accountability and high performance from public employees and those who manage them."

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