The public-sector pay gap is widening, but unions help narrow it

State and local government workers earn less than their private-sector counterparts, and this pay gap has widened since the pandemic, according to a new Economic Policy Institute report. However, workers in states with strong public-sector collective bargaining rights had smaller pay gaps.

State and local government employees earned 17.6% less on average than similarly educated private-sector employees between 2020-2024, a larger pay gap than before the pandemic (13.9%). This pay gap is narrower in states where public employees have stronger collective bargaining rights (-14.9%) than in states with weak bargaining rights (-20.1%) or none at all (-22.9%).

Though public-sector workers receive more generous benefits on average, total compensation was still approximately 14.5% lower among state and local government workers nationwide.

As the public-sector pay gap grows, state and local governments are facing acute and growing staffing shortages. Low pay is a key factor driving the staffing crisis facing schools and other units of state and local government.

Moreover, the public-sector pay gap disproportionately affects Black and women workers, who are more likely to be employed in public-sector jobs and who are disadvantaged in the broader labor market. For example, 58.8% of full-time public-sector workers are women, whereas only 43.3% of full-time private-sector workers are women, according to the report.

"Addressing the public-sector pay gap is particularly important when state and local governments face staffing shortages and serious challenges to recruiting and retaining qualified employees. Strengthening collective bargaining rights for government workers would narrow the pay gap and reduce racial and gender inequality," said Monique Morrissey, EPI senior economist and co-author of the report.

In recent years, some states-including Colorado, Maryland, Michigan, Nevada, New Mexico, and Virginia-have taken important steps to establish, restore, or expand collective bargaining rights for some public employees. But in far more states, public-sector workers' collective bargaining rights have been diminished amid persistent legislative attacks on public employees and their unions.

The inconsistency in workers' rights across states and the large and growing number of states where public-sector workers lack comprehensive collective bargaining rights illustrate the need for Congress to take action to guarantee a solid floor for collective bargaining rights of all public employees.

"Congress should pass the Public Service Freedom to Negotiate Act to ensure that state and local government workers across the country have the right to bargain collectively over pay and working conditions," said Jennifer Sherer, Acting Deputy Director of EPI's Economic Analysis and Research Network and co-author of the report.

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