Summary
Benefit Cost Comparisons Between State and Local Governments and Private-Sector Employers
• Nature and work forces of public vs. private sector have major differences—Major reasons for the differences in total compensation costs between state and local government employers and private-sector employers are the different composition of their respective work forces and the different nature of public- vs. private-sector work. State and local government jobs include education and public safety functions (teachers, police, and firefighters), which involve high levels of education, training, physical fitness, or risk) and largely do not exist in the private sector. Unionization rates also are higher in the public sector than in the private sector.
• Compensation costs higher for state and local government due to work force characteristics—Overall total compensation costs as of September of 2007 were 51.4 percent higher among state and local government employers ($39.50 per hour worked) than among private-sector employers ($26.09 per hour worked).
• Health and retirement costs higher in the public sector to support better benefits—State and local governments have sharply higher costs for health and retirement benefits than private-sector employers, since their workers participate in these benefits at far higher rates and public-sector workers are far more likely to have defined benefit (pension) retirement benefits than are private-sector workers.
The Number of Individual Account Retirement Plans Owned by American Families
• Just over one-half of Americans do not have an individual account retirement plan—Half of families in the United States (50.9 percent) do not own an individual account retirement plan at all, but of those that do own at least one plan, most own only one. The minority of families that own more than one individual account plan tend to have a disproportionate amount of assets in these plans.
• Where the money is—Families that own more than one account tend to have family heads between the ages of 35–64, and family income of $50,000 or more. An accurate estimate of total retirement assets requires analysis of families’ current-job defined contribution plans, former-job defined contribution plans, and their individual account retirement plans.