Why Government Employees in Iowa Are Paid So Much
Iowa has the largest Pay Gap in the nation.
"The Pay Gap" is calculated using Bureau of Labor Statistics data, which gives the average annual wage of a state-government worker and the average annual wage of a private-sector worker for each of the 50 states and the District of Columbia. Our study uses these figures to determine the Pay Gap between the average state-government worker and the average private-sector worker in each state. In 2015, Iowa’s state-government workers received an average wage that was 149.76 percent of what the average private-sector worker in Iowa was paid. Iowa’s Pay Gap was larger than that of any other state or the District of Columbia. That is, state-government employees in Iowa earned relatively more than private-sector workers anywhere in the United States.
One of the reasons for this persistent Pay Gap is that Iowa taxpayers often do not have a seat at the table when unions negotiate contracts on behalf of state-government workers. Iowa’s collective-bargaining laws have stacked the deck against taxpayers. Iowa law states that if negotiations break down, arbitrators “shall” take into consideration the state’s ability to raise taxes in order to pay for an increase in pay for state-government employees. Arbitration in 1991 resulted in a 9 percent raise for state-government employees, despite the state being in the midst of a budget crunch.
Unions representing state-government workers often find themselves sitting across the negotiating table from a friend rather than a representative of Iowa’s taxpayers. Following his defeat in the November 2010 election, then-Governor Chet Culver agreed to a salary increase for the next two fiscal years proposed by the unions representing many state-government employees. Culver simply agreed to the unions’ proposed two-year contract on his way out the door with no negotiations, binding the hands of incoming Governor Branstad and caring little about the taxpayers who would foot the bill.
Then there is the slight-of-hand that results from government double-speak. In fiscal year 2010 (which ran from July 2009 to June 2010), the Des Moines Register reported that unions representing Iowa’s state-government employees agreed to a “zero percent across-the-board salary increase.” This allowed union reps to crow to the press about the sacrifices made by state-government workers. However, under Iowa law, state-government workers were still eligible for merit raises and “step increases,” an automatic increase in pay based on performance and longevity. State-government workers, who “sacrificed” their raises, ended up receiving an average increase of 4.3 percent in salary that year.
Some may say, particularly those working for the state government, that it is not state-government wages that are too high, but rather private-sector wages that are too low. While those of us working in the private sector would always appreciate higher wages, the difference is that in the private sector, a business cannot raise the prices of its goods and services and compel its customers to pay the higher prices. Consumers have the choice to shop elsewhere or not to pay the price at all by not buying that product. However, if the state government needs additional funds to pay its employees, it has the option of raising taxes, and its “customers” — the taxpayers of the state — must pay those higher taxes.