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, Indiana has the fifth most productive state and local government workforce in the country.
On state and local government employment, Indiana ranks well below the national average with 15.42 employees for every 100 employees in the private sector which is -8.1 percent below the national average of 16.77 and is the 42nd highest ratio in the country.
Additionally, on state and local government compensation, Indiana ranks very low with government employees earning -1.6 percent less than those in the private sector—significantly below the national average of 11.7 percent and is the 42nd lowest compensation ratio in the country.
Both wages and salaries and benefits contribute to Indiana’s low government compensation ratio. On state and local wages and salaries, Indiana employees earn -13.5 percent less than those in the private sector—the 37th highest wages and salaries ratio in the country and significantly below than the national average of -8.8 percent.
On state and local benefits, Indiana employees earn 50.7 percent more than those in the private sector which is 55.9 percent lower than the national average of 115 percent and is the 4th lowest benefit ratio in the country. Though the differential is highest for benefits, wages and salaries weigh more heavily since it constitute 72 percent of total compensation.
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.