Why Government Employees in Iowa Are Paid So Much

Iowa has the largest Pay Gap in the nation.
“The Pay Gap” is calculated using Bureau of Labor Statistics data, which gives the average annual wage of a state-government worker and the average annual wage of a private-sector worker for each of the 50 states and the District of Columbia. Our study uses these figures to determine the Pay Gap between the average state-government worker and the average private-sector worker in each state. In 2015, Iowa’s state-government workers received an average wage that was 149.76 percent of what the average private-sector worker in Iowa was paid. Iowa’s Pay Gap was larger than that of any other state or the District of Columbia. That is, state-government employees in Iowa earned relatively more than private-sector workers anywhere in the United States.
One of the reasons for this persistent Pay Gap is that Iowa taxpayers often do not have a seat at the table when unions negotiate contracts on behalf of state-government workers. Iowa’s collective-bargaining laws have stacked the deck against taxpayers. Iowa law states that if negotiations break down, arbitrators ‘shall’ take into consideration the state’s ability to raise taxes in order to pay for an increase in pay for state-government employees. Arbitration in 1991 resulted in a 9 percent raise for state-government employees, despite the state being in the midst of a budget crunch.

This post was published at Ludwig von Mises Institute on Feb 09, 2017.

 

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