State Employee Pay Up 46% Between ’01 and ‘08

A 2009 study co-written by Michigan State University economist Charles Ballard reports that the state saved $3.7 billion in wage, pension and health care expenditures and that Michigan state employee wage growth was close to zero between 2001 and 2008. But James Hohman, fiscal policy analyst for the Mackinac Center for Public Policy, said the data does not back Ballard’s figures.

The Detroit News reported on Jan. 3 about Gov. Snyder’s plans to “target” public employee pay and benefits as part of an effort to balance the state budget.  The newspaper began by noting that the Mackinac Center’s work on the subject has been influential in driving debate in the direction of where the new governor is going.  Ballard’s figure was presented as evidence that not all policy analysts agree that this is a worthwhile direction.

Hohman calls the Ballard study incomplete and inaccurate.

According to the Michigan Department of Civil Service, the state spent $3.9 billion on employee pay and benefits in 2001 and $4.7 billion in 2008. That’s an $800 million increase despite there being an 18 percent drop in the state work force. There were 62,057 full-time state of Michigan employees in 2001 and 50,799 full-time employees in 2008.

So how did compensation increase $800 million with about 11,200 fewer state employees?

The average employee costs much more now than in 2001, despite any concessions, Hohman said.

The average cost of a state employee was $63,474 per year in 2001. By 2008, this had gone to $93,039. That’s an increase of 46.5 percent over the seven years and more than $15,000 per employee above the rate of inflation.

“It tells me that the state is not addressing the reason why government costs so much - salary and benefits,” Hohman said.

This past spring, a 3 percent pay hike was approved for state employees. The total additional cost to taxpayers for this fiscal year is estimated to be $77 million.