State and local workers don't end up with more money at age 65 than their private sector counterparts, according to an issue brief by the Center for Retirement Research at Boston College.
In its research, the Center compared employees with the same characteristics, education and experience from both the public and private sectors. It examined wages and benefits on both sides. What it found is that, taken as a whole, compensation in the two sectors is roughly comparable. It also found that couples who spent more than half of their careers as public workers—one-third of respondents—had 11 percent to 18 percent more wealth at age 65 than similar private sector couples. The other two-thirds, who spent less than half of their careers in public sector jobs, ended up with less wealth than private sector employees.
The analysis uses data from the "Health and Retirement Study," a nationally representative panel of older American households. The study began in 1992 by interviewing about 12,650 individuals from about 7,600 households ages 51 to 61 and their spouses. It has been re-administered every two years since 1992.
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The study found that wealth comparisons between state-local and private sector workers are influenced by the discipline imposed by the pension structure. Households with a long-tenured state-local worker end up with greater wealth than households with a history of private sector employment. This could be because they earned more in total compensation or they worked in a defined benefit environment where they were forced to save, the report said. Seventy-eight percent of state-local households in the sample received a defined benefit pension compared to 59 percent of private sector households.
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