Wage Determination in the Public Sector

TLDR: This article found evidence that wages in the public sector tend to be higher than those in the private sector for most blue-collar jobs and lower level white-collared jobs, but salaries are generally lower for managerial and professional occupations, which can be explained by a combination of two factors: the discretion that public employers must exercise in implementing the prevailing wage rule adopted by most cities and larger government units, and the nature of the political forces that affect governmental wage decisions.

Abstract: This study provides evidence that wages in the public sector tend to be higher than in the private sector for most blue-collar jobs and lower level white-collar jobs, but salaries are generally lower in the public sector for managerial and professional occupations. The authors argue that these differentials, many of which are accentuated by differences in fringe benefits and job security, can be explained in large part by a combination of two factors: the discretion that public employers must exercise in implementing the prevailing wage rule adopted by most cities and larger government units, and the nature of the political forces that affect governmental wage decisions. Careful attention should be given to the evolving structure of collective bargaining in the public sector.