Rhode Island’s Business is Government Employment (And Business is Good)


While reading the comments to Scott Mackay’s recent RI-NPR piece dismissing the latest CNBC-negative-ranking-of-RI stories, I came across a reference to recent Pew data (using 2012 numbers) that showed that Rhode Island state employees earned more than private sector employees in the state. Well, that’s nothing new, but I thought I’d take a look at the data. It’s worse than I thought.

Pew’s context-adding (and entirely correct) caveat regarding the data states:

State workers are a large and diverse group. Some build roads, while others help protect children from abuse and neglect. Some inspect restaurants, while others collect taxes.The average state employee is better educated than the average private sector employee, an important factor to consider when looking at salary data from the Bureau of Labor Statistics Quarterly Census of Employment & Wages. Still, the newly released 2012 data provide an interesting glimpse at how salaries for both public and private sector workers are recovering from the recession. State employee salaries are growing at dramatically different speeds, in comparison to both their peers in other states and private sector workers in their own states.

Interesting, indeed. Rhode Island “leads” the six New England states in salary differential between Private and Public sector workers.

On average, Rhode Island public employees make close to $18,000 (almost 40%) more than the average private sector worker.

That is significantly larger than the New England average of around $4,000 (or 10%) and the National average, which is about the same.

STATE Pvt Sal Pub Sal $ Diff % Pub/Pvt
Rhode Island $44,604 $62,201 $17,597 39.5%
Vermont $40,189 $49,587 $9,398 23.4%
Maine $38,078 $40,116 $2,038 5.4%
Massachusetts $61,471 $60,173 -$1,298 -2.1%
New Hampshire $48,745 $47,171 -$1,574 -3.2%
Connecticut $63,248 $60,621 -$2,627 -4.2%
NE Avg $49,389 $53,312 $3,922 9.8%
National Avg $45,332 $49,330 $3,998 9.6%

Yes, but that’s New England, where things cost more, you might say. Correct, so let’s expand the comparison to the Northeast.

Rhode Island public workers make less than their New Jersey counterparts. But the differential between private and public employees is still much larger. And the regional average differential in the Northeast is actually lower than just New England (around $2,500 and 6%).

Well, surely expanding this out to a national comparison will make things look better, right? Actually, yes. If not being “1st” is acceptable.  You see, Rhode Island is actually the state with the 2nd largest Private vs. Public employee salary differential. The “winner” is Iowa (which is interesting; and makes me wonder if there is a connection between the progressive tradition in that state and their ranking here). Here are the “Top Ten”:

I even thought I’d look at states that suffer from the same economies-of-scale deficiencies as Rhode Island. Basically, if they had 1 million (give or take a few hundred thousand) residents.

Here, the average differential is around $5,000 and 13%.  Not really any better.

Overall, in 2012, the average Rhode Island public employee salary of $62,201 ranks as fourth overall in the U.S. (behind New Jersey, California and Illinois). Further, by every comparative measure, Rhode Island is a national leader in public employee salary compensation, particularly as compared to its private sector employed residents. Thus, it can be said that Rhode Island’s most attractive and successful business is government employment. And business is good.

  • MoniqueAR

    Awesome post, Marc.

    Compensation for RI public employees doesn't just exceed that of the private sector, it also beats out most other states.

  • Pat Crowley

    The old canard resurfaces again… http://www.governor.ri.gov/personnel/012613study….

  • A lot of good info in that study, including need for performance pay and consolidating pay scales between different bargaining units and non-union jobs that happen to be in different departments. Also shows that RI public sector vacation/leave time is generous/top of the line.

    But it is a study of the current salary pay scale structure, not the actual payroll expenditures, and there is a big difference. Especially since their analysis of the pay scale takes into account–and notes in particular–that RI has suspended longevity pay, which affects all of their pay scale comparisons. Longevity was suspended in 2011 (I believe), but the people receiving it at that time did not have that money removed from their salaries. I'm sure they are still earning it, regardless of what their published pay scale rate is. Again, the published pay scale analyzed by Segal does not reflect the payroll actuality!

    The study also explains that RI employees reach top of scale in a relatively short amount of time compared to other states/private sector (5 years or so). It then compares the base salaries of those at entry level, mid-level and top of scale. In other places, mid-level is anywhere between 4-12 years. In RI it's 2.5 years. Thus, the payscale figure for a "top level" employee in RI is for someone with 5 years exp., which is more comparable to a similar mid-level employee elsewhere.

    That is why they recommend more steps to get to high level or even steps beyond the current high level. That makes sense. Since longevity has been removed, there is no vehicle for newer employees to make salary gains, so something should be put in place to accommodate that. With that I completely agree.

  • To clarify, the 'study' I'm referring to in my above comment is the one linked to by Pat Crowley in his comment. The study is from earlier this year and was conducted by Segal, which concluded that the current RI pay scale isn't in line with other states/municipalities. As I said in my response to Pat, that is different than saying the actual pay being received by current employees doesn't align, something I think the Pew poll illustrates.

  • Steve

    Not to mention benefits!!! Also, do state employees work a traditional 8-hour day?

  • Steve, in looking at the Segal report, many of the job descriptions indicate a 40 hr work week, though some are 35.