Implicit Compensation for Career Public Employees
IB-2007-D (May 2007)
Author: Michael Mannino and Elizabeth Cooperman
The Colorado Division of Human Resources (DHR) conducts an annual compensation survey to support a state policy that provides competitive total compensation to ensure a qualified and competent workforce. Because this survey is significantly flawed in its estimation of retirement compensation, the comparison between private and public sector compensation is distorted. In particular, DHR substantially understaes retirement compensation for career public employees in Colorado. To indicate the magnitude of understatement, our study of PERA retirement benefits provides an historical baseline from which to evaluate retirement compensation. Improved estimates of implicit retirement compensation would allow a more realistic comparison between private and public sector compensation, and would support better decision making about allocation of scarce tax dollars for public employee compensation.