Utah state workers receive lower pay than private sector, but far more generous benefits

Wages for Utah’s state employees typically are lower than for their private-sector counterparts — but their benefits are far more generous, a new state-sponsored study says.

The combined effect is that overall compensation is 6 to 9 percent higher than for similar private-sector jobs, depending on whether state employees are enrolled in the newer, less-generous Tier 2 retirement system or the older grandfathered Tier 1 system, according to a study by Gallagher Benefit Services.

State Auditor John Dougall, whose office contracted for the study, is calling for the Legislature to better align public employee compensation with the private-sector mix.

“They probably ought to remix the total compensation package to increase salaries for those who are so far below market,” Dougall said, “but then work to rein in the costs of benefits — in essence raise salaries, lower benefits.”

He said the current situation may chase away applicants and employees in jobs where workers are more interested in pay than they are retirement, insurance and other benefits.

“Consider the example of a clerk at a liquor store. If their salary is too low, they are not going to want to come work for the state because they can make more cash today working some other job,” Dougall said.

“But if the benefits are above market, then we are overpaying for that kind of position. You’ve got dollars misaligned with folks you are trying to recruit,” he said.

The study compared wages of scores of state jobs with similar private-sector positions, but did not include comparisons with other governmental entities.

Utah Department of Human Resource Management Executive Director Debbie Cragun said her agency performs compensation studies about every three years — including last year — that include a mix of public and private sector employers.

She said she has not reviewed the new study ordered by the state auditor. But similar to its findings, Cragun said studies commissioned by her department have also found that state employees typically receive lower wages but more benefits than others.

“We wanted to do one that was just anchored off of the private market in Utah to see how we sit relative to the private market,” Dougall said. “It was kind of an audit to see how well their study represents the private market.”

Overall, the new study found that base wages for state jobs on average are 12.28 percent lower than private-market pay.

But that varies greatly by job. The study said the most underpaid state position for wages was for general maintenance workers — whose typical annual base salary of $23,237 is about 42 percent below the median private-market rate for similar jobs.

The state workers with the best deal on wages — information technology specialists in the attorney general’s office — are typically paid $68,047 a year, nearly 47 percent higher than the private-market median.

The new study said benefits for state employees are misaligned.

The employer costs for benefits such as retirement and for health, life and disability insurance were 88.89 percent above the private market median for longer-tenure workers in the state’s older Tier 1 retirement program. They were 76.35 percent higher for more recent hires in the newer Tier 2 system.

Again, that varies greatly by specific job.

The Tier 1 employees with the best benefits compared to private colleagues are legislative information technology managers — whose $52,233 worth of annual benefits are 171.4 percent above median private market levels.

The Tier 2 workers with the lowest relative benefits are clerks at state liquor stores. But they still typically receive $21,118 worth of benefits a year — 40.3 percent more than similar private-sector jobs. That is more than their typical wages of $14,000 a year, which is 28.2 percent below market.

Dougall said, “It’s important to better match the private sector because we recruit a lot of folks out of the private sector.”