State Budget Deficits Are Not an Employee Compensation Problem

March 10, 2011

The Great Recession Is to Blame

By David Madland, Nick Bunker

The conservative explanation for state budget deficits is that employee compensation for public-sector workers is out of control. But a close look at the facts demonstrates these claims are unjustified. Public-sector pay is not the cause of state budget deficits because public-sector compensation did not significantly increase in recent years.

Instead, state tax revenues declined sharply amid the Great Recession—shortfalls made worse in some states by ill-advised tax cuts for businesses and the wealthy, as happened most famously in Wisconsin before its governor began pushing to eliminate public-sector collective bargaining rights.

In this issue brief, we will detail why public-sector workers didn’t cause budget shortfalls, but they can and are working to fix state budget problems.

Read more and download the full issue brief here.

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