Local government workers earned on average 14.1% less than comparable private-sector employees in 2015-2019, but workers in states with strong collective bargaining rights had smaller pay gaps, according to a new EPI report.

In the 26 states plus the District of Columbia where employers had a duty to bargain with local government workers, the earnings gap averaged -10.5%, whereas in seven states where collective bargaining was banned outright in those years the earnings gap was -22.9%. In the 17 states where collective bargaining was permitted but not required, the gap was in between (-16.7%). The earnings gap was especially large in Virginia (-29.9%), which until this year banned public-sector collective bargaining.

Though public-sector workers received more generous benefits, these were not enough to close the pay gap and total compensation was still approximately 10% lower among local government workers nationwide. Total compensation, factoring in relatively meager benefits, was 28% lower for local government workers in Virginia compared with their private-sector counterparts. Closing the compensation gap in Virginia and elsewhere would especially help Black workers and women, who are overrepresented in local government jobs.

“Since Black workers and women are also disadvantaged in the broader labor market, strengthening collective bargaining rights for local government workers should reduce racial and gender inequality in the labor force and potentially attract Hispanics and other underrepresented groups to public-sector jobs,” says Monique Morrissey, report author and EPI economist.

While Virginia and states like Nevada and Colorado are moving in the right direction, other states have weakened collective bargaining rights for public-sector workers in recent years. A decade ago, Wisconsin restricted the scope of public-sector bargaining to base wages and capped wage growth to inflation, ensuring that public-sector wages would not keep up with productivity growth and would continue to lag behind private-sector wages.

Other states followed in Wisconsin’s wake. Recent EPI research by Emma García and Eunice Han found that laws restricting collective bargaining in Wisconsin and four other states led to a 6% reduction in school district spending on teacher compensation, even though teachers are already among the most underpaid public-sector workers. The effects of laws that expand or restrict collective bargaining rights extend beyond workers and their families, with implications for the quality of education and other public services as well.