Unsustainable Benefits Drive State Worker Costs

Member Group : Commonwealth Foundation

Commonwealth Foundation
Contact: Gina Diorio, 862-703-6670, [email protected]

Unsustainable Benefits Drive State Worker Costs Near $100K Each
Per Worker Compensation Jumped $11,000 in Last Two Years

February 22, 2017, Harrisburg, Pa.—Yesterday, PennLive published a database of more than 7,000 state employees earning $100,000 or more in salary. But factoring in health and pension benefit costs, the average compensation for nearly 80,000 state workers under the governor’s jurisdiction is a stunning $97,203 per employee.

This isn’t due to rising salaries. Since 2007, benefit costs have skyrocketed 76.8 percent while salaries have risen just 1.4 percent. In fact, in the past year alone, the average salary slightly declined, yet per-worker state employee compensation costs jumped by more than $4,400.

"The dramatic rise in state employee benefit costs should compel structural reform to the state’s unsustainable health and pension systems," commented Nathan Benefield, vice president and COO for the Commonwealth Foundation. "With state budget hearings getting underway, lawmakers should work to bring benefits in line with standard private-sector practices and give new public employees greater control over their financial futures by offering new employees 401(k)-style retirement plans."

In 2015-16, per-worker costs for employees under the governor’s jurisdiction rose to $97,203. Of that figure, salary was $53,853 and benefits accounted for $43,360. Benefits are now equal to 80 percent of salary for state employees—a stunning figure wildly out of step with the private sector where benefits are 43 percent of salary.

In addition to pension reform, redesigning health plans is another way to close the compensation gap. According to the Office of Administration, public employees pay approximately 11.7 percent of state health care expenditures, compared with private-sector employees, who pay about 20 percent for their share of insurance coverage.

"Our current system of government benefits is entirely out of touch with the private sector, and working families are being forced to foot the bill through higher taxes," continued Benefield. "As lawmakers and Gov. Wolf redesign state government, they should seriously consider giving state employee benefits a makeover that mirrors changes the private sector made years ago."

Nathan Benefield and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or [email protected] to schedule an interview.

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