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Chicago Fed Letter, No. 262a, May 2009
Public and Private Sector Compensation: What Is Affordable in This Recession and Beyond?—A Conference Summary (Special Issue)
For many years, conventional wisdom has held that public sector wages were lower than private sector wages, so generous ancillary benefits were needed in order to attract and retain skilled workers in the public sector. More recently, data from the U.S. Bureau of Labor Statistics (BLS) have suggested to some observers that total compensation averages of the public sector now significantly exceed those of the private sector. Economic pressures and global labor trends have led many private sector firms to eliminate expensive benefits, such as defined benefit pension plans (in favor of defined contribution plans), but most public sector agencies have not followed suit. Such changes have created a greater perceived gap between public sector and private sector employees in terms of both financial security and overall compensation.
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