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Benefits in Balance

How to save Michigan $5.7 billion annually

It happens like clockwork. Every year, state officials struggle to balance the budget. They propose tax increases, threaten to cut programs and fight to protect pet projects. Policymakers assure us that government has been "cut to the bone."

Is this annual spectacle unavoidable?

Not at all. Michigan can fix its economy, control government spending, save for the future and improve infrastructure with just one idea: Benefits in Balance. The gap between what private-sector workers and public-sector employees receive in benefits amounts to $5.7 billion annually. Bringing this disparity into balance will save the state this amount without cutting a single program, lowering anyone's wages or laying off a single employee.


 

How big are the disparities?

  • Insurance benefits per employee are $7,149 more per year in the public sector than in the private sector.
  • Retirement benefits per employee are $11,725 more per year in the public sector than in the private sector.
  • Michigan government workers receive generous paid-leave.

With $5.7 billion each year, the state could:

  • Repeal Michigan's new $800 million corporate income tax
  • Maintain a balanced budget
  • Spend $1 billion improving Michigan’s roads
  • Put savings into the rainy day fund.

Best of all, this could be accomplished with:

  • No service cuts
  • No government job losses
  • No government wage cuts.
Just Benefits in Balance.


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Picturing the Gap

Wages aside, there is a substantial difference between the benefits offered to the State of Michigan’s workforce and private-sector averages:


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Public-sector wages and benefits have increased while the private-sector's have fallen:
(Note: A previous version of this chart contained a minor error in the wages and benefits calculations. In addition, the Bureau of Economic Analysis has released new data and revised previous data. The figures in this chart have been corrected and updated.)


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In the past decade, Michigan’s private-sector employees have taken major hits in compensation while state and local government workers have gained:


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State and local government workers make up an increasing portion of the total jobs in the state:


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The average worker for the state of Michigan now receives a compensation package that costs $94,686:


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Videos



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The Disparity

  • Bringing Balance
  • Methodology
  • In Pictures
  • Videos
  • Frequently Asked Questions

Commentaries

  • Structural Overspending in Michigan’s State Budget: One Way to Fix It
  • What Can $5.7 Billion Get You in Michigan?

In the News

  • 2/21/11: "What Public Employees' Benefits Cost Taxpayers." (Video) WILX TV
  • 2/3/11: "State government from new perspective." State Sen. Patrick Colbeck in The Detroit News
  • 1/31/11: "Gap between public, private sector compensation is unjustifiable, unsustainable." Holland Sentinel
  • 1/30/11: "Getting to work — Bringing balance to public benefits." James Hohman in The Oakland Press
  • 1/22/11: "Michigan could save $5.7B by bringing pay, benefits in line with private sector workers." Joseph Lehman and Hannah Mead in the Lansing State Journal
  • 1/17/11: "Snyder needs budget flexibility." The Detroit News
  • 1/16/11: "State expectations: Michigan eager to hear solutions from Snyder." Crain's Detroit Business
  • 1/15/11: "State wages increasingly come under microscope." Lansing State Journal
  • 1/14/11: "Bringing balance to public benefits." James Hohman in the Dearborn Times-Herald
  • 1/14/11: "Economist says 'death spiral' gnaws at Mich." Livingston Daily Press & Argus
  • 1/14/11: "Snyder must look at public sector benefits." Clare County Review
  • 1/3/11: "Public workers in Snyder's sights." The Detroit News
  • 11/21/2010: "Public workers in Snyder's sights." Michigan Technology News
  • 10/25/2010: "Mackinac Center: Public Benefits 'Significantly' Above Private Sector." MIRS News
  • 9/16/2010: "Government needs to trust business, economist tells Policy Forum." Business Review West Michigan

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