There are two major elements to look at when examining a state’s government workforce—the number of employees and the level of their pay. Each element is measured relative to the national average and summed together to obtain an overall measure of workforce productivity. By this metric, Alaska has the third least productive state and local government workforce in the country.
On state and local government employment, Alaska ranks very poorly with 25.22 employees for every 100 employees in the private sector—50.4 percent above the national average of 16.77 and is the 3rd highest ratio in the country.
Additionally, on state and local government compensation, Alaska also ranks very poorly with government employees earning 26.4 percent more than those in the private sector—126 percent higher than the national average of 11.7 percent and is the 4th highest compensation ratio in the country. The high compensation ratio compounds Alaska’s high employment ratio.
Both wages and salaries and benefits contribute to Alaska’s high government compensation ratio. On state and local wages and salaries, Alaska employees earn 2.3 percent more than those in the private sector—the 7th highest wages and salaries ratio in the country and significantly higher than the national average of -8.8 percent.
On state and local benefits, Alaska employees earn 130.2 percent more than those in the private sector—13.1 percent higher than the national average of 115 percent and is the 7th highest benefit ratio in the country. Though the differential is highest for benefits, wages and salaries weigh more heavily since it constitutes 66 percent of total compensation.
While identifying the specific underlying causes of Alaska’s government employment and compensation problem is beyond the scope of this analysis, you can begin by examining the actual compensation of government employees at Alaska Policy Forum.
Note: Recent data updates include significant definitional changes, especially to benefits which are now based on an accrual basis as opposed to a cash-basis. The changes currently go back to 2000 so comparisons between pre- and post-2000 data must be used with caution.
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.