Government Wage Differentials in a Municipal Labor Market: The Case of Houston Metropolitan Transit Workers

Abstract

Previous studies of wage and fringe benefit differentials between public and private sector workers have generally employed one of three different methods to measure the differentials. This study is the first to use all three simultaneously. The authors find that the Houston Metropolitan Transit Authority provided total hourly compensation that was 82.8% higher for cleaners, 82.9% higher for bus drivers, and 31.3% higher for mechanics than the compensation received by comparable private sector workers in 1988. Separation rates for these three groups were less than half the national rate for similar workers. These findings suggest that previous studies, most of which have shown no significant wage premium for government workers, may be misleading. Also, estimates of government wage differentials may be biased downward for skilled workers because available data sets generally lack adequate information on fringe benefits and their distribution across occupations.