NCPA - National Center for Policy Analysis

Iowa Leads Pay Gap Between Public And Private Sectors

July 2, 2001

In general, employees working for the government enjoy pay scales above that of private sector employees. According to the Public Interest Institute, Iowa has the biggest pay gap between public and private sector employees of any state.

Using data from 1994 and 1996, the institute found some other high pay states reduced the private-public pay gap, while in Iowa it widened. For example,

  • Government employees in Iowa received on the average 47 percent more than those employed by the private sector in 1994 -- and in 1996 the gap increased to 48 percent.
  • In 1994, Alaska had the second largest pay gap; their government employees received 38 percent more than their private sector counterparts.
  • However, by 1996 Alaska improved this pay difference by dropping its average state pay so that the pay gap was only 25.65 percent above the private sector.
  • In 1994, California, which had the third largest pay gap, reduced the difference between these worker groups by holding the rate of pay growth of state government workers to almost nothing in 1996.

Part of this gap between the sectors can be explained because of the vastly different mix of jobs and job requirements between the public and private sectors. However, Iowa pays its public employees more than many New England states, where the cost of living is far greater, and its public sector pay is 111 percent of the national average.

Looking at the data for 1999, researchers say it is obvious that Iowa's government sector pay is so disproportionate that it has assured itself the distinction of being the state with the largest pay gap for a long time.

Source: Steven B. Garrison, "Iowa's Privileged Class I - State Government Employees," Institute Brief, May 2001, Public Interest Institute at Iowa Wesleyan College, 600 North Jackson St., Mt. Pleasant, Iowa, (319)385-3462.


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