For Immediate Release
Thursday, Oct. 1, 2009
Contact: Dr. Gary Wolfram
Adjunct Scholar
989-631-0900

MIDLAND - A recent report claiming to show that state employees are not overpaid uses incompatible data and reaches unsubstantiated conclusions, according to a Policy Brief released today and authored by Mackinac Center Adjunct Scholar Gary Wolfram, Ph.D. In the brief, Wolfram observes, "The conclusions drawn by the authors and attributed to the paper in the media are not substantiated by the data presented, and the use of the data is in some cases misleading."

The paper examined by Wolfram is titled "The Retrenchment of the State Employee Workforce in Michigan." It was commissioned by state employee unions and written by Michigan State University economist Charles Ballard and economics graduate student Nicole Funari.

Throughout their paper, Ballard and Funari indicate that state employees do not receive better compensation than their private-sector counterparts, but Wolfram argues, "A closer examination of the data suggests that the opposite could be the case."

Wolfram highlights numerous specific limitations of the Ballard-Funari paper, which include, but are not limited to:

• Failing to account for differences in job benefits when drawing comparisons between public- and private-sector employees
• Using data and surveys in a confusing and misleading way when discussing educational background differentials between state and private-sector employees
• Using civil service employment data to draw conclusions about growth in all state government employment, while not discussing total state employment
• Reaching unsubstantiated conclusions regarding the number of state employees and the quality of state services
• Underestimating state employee compensation by ignoring pension and other retiree benefits, such as health care coverage.

"The Ballard-Funari paper is not a rigorous analysis of a particular research question," Wolfram says. "It fails as a means of judging whether government employee compensation levels are justified."

Wolfram is the William E. Simon Professor of Economics and Public Policy at Hillsdale College. His paper, "A Commentary on 'The Retrenchment of the State Employee Workforce in Michigan,'" is available at www.mackinac.org /archives/2009/S2009-08.pdf.

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