Bringing Benefits in Balance to Michigan

Public sector outpaces private sector by $5.8B

In 2009, we released a Viewpoint detailing the average cost of benefits for public sector employees compared to those in the private sector in Michigan. Now that time has passed, we decided to explore whether this has changed. It turns out that it has. The gap increased very slightly to $5.8 billion.

There is no way to immediately tap into all of these savings. For instance, there is no way to easily catch up on the immense underfunding problem in state retirement systems.

As our new study shows, there’s already been a number of pieces of legislation that have attempted to tap into these savings. But it’s yet to make a large dent in the differences. Some of the changes take a while to phase in.

Government employers need to be mindful of these costs and of the trends in the private sector. And legislators need to reconsider some of the benefits that are mandated through state statute, like the retirement benefits it manages for half of all state and local government employees.

There are no simple fixes, but these are necessary fixes if we want to ensure that Michigan can continue to live within its means.