Incentive compensation in the public sector: Evidence and potential

Abstract

During much of the 20th century, the U.S. public sector underwent a conversion from a patronage to a civil service system of work and pay. Later in that century, a substantial proportion of public employees became unionized, with the consequence that pay (and other terms and conditions of employment) became less single-mindedly management determined and more collectively determined. Still later, fiscal crisis, the government re-invention movement, and broadened economic competition spurred governments to shift away from strict payment for time practices and adopt various incentive compensation initiatives based on the principle of pay-for-performance. That this is not the only pay principle operative in governments, however, is attested to by the existence of prevailing wage, minimum wage, and, most recently, living-wage statutes in many if not most governments.