Employee Earnings

Employees of Nevada’s local governments historically were paid much more than counterparts in state government or private industry. Recent data, however, indicates an improvement in wage rates for these latter sectors and an evening of the playing field.

Government employees should face financial incentives rewarding productivity and the development of creative and cost-effective solutions to public problems. Pay structures should reflect this approach by rewarding successful agency and individual performance rather than rewarding mere time in office.

Key Points

Nevada’s local-government workers are well paid in comparison to other states. While state workers and private-sector workers are the 25th and 28rd highest paid in the nation, respectively, Nevada’s local government workers receive the 10th highest salaries among peers nationwide.¹ 

The difference in public versus private earnings cannot be explained by education levels or other factors. While there is a higher concentration of academic credentials among workers in the public sector, studies show that this does not fully explain the pay difference. Less than half of the pay premium enjoyed by public-sector workers can be plausibly attributed to differences in educational attainment, years of experience or other personal characteristics.² 

Compensation consists of more than just wages. It is important to remember that a simple wage comparison significantly understates the compensation premiums awarded to public-sector workers. Public-sector workers also receive deferred-compensation and other benefits more generous than those found in the private sector. In fact, the average annual value of pension benefits for full-career retirees is higher in Nevada than in any other state, at $64,008.³ While state workers must contribute on a matching basis with taxpayers toward their pension, most local-government workers contribute nothing personally toward this benefit due to collective bargaining provisions.⁴

Recommendations

Phase out “longevity pay.” Longevity pay is foreign to the private sector and most of the public sector. Yet, decades ago some local governments in Nevada began awarding a “longevity bonus” that amounts to 2% of base pay per year on the job. In 2023, lawmakers extended longevity pay to state workers who are not unionized.5 This pay structure rewards time in office rather than effectiveness.

Give local government administrators more flexibility by easing mandates for collective bargaining. Union leaders representing most employee groups at the local level have been granted far-reaching powers to bind local governments into costly and inflexible pay schedules. Empirical research shows that this legal environment inflates annual spending by Nevada’s state and local governments by more than $1 billion.⁶ This guide provides many options for changing collective bargaining requirements to result in better outcomes for taxpayers and government workers alike.

Recognize excellence through bonuses. Pay structures should reward both workers for individual and agency effectiveness. If agencies achieve clearly defined goals under budget, workers should share in the savings. The recommendation herein for charter agencies would allow employees to earn up to a 50% annual bonus if they can meet performance goals while reducing spending.⁷

¹ US Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages, 2021.
² See, e.g., Bahman Bahrami et al., “Union Worker Wage Effect in the Public Sector,” Journal of Labor Research Vol. 30, (2009), pp. 35-51.
3 Andrew G. Biggs, “Not So Modest: Pension Benefits for Full-Career State Government Employees,” American Enterprise Institute, March 2014.
⁴ See “PERS: Local Government Employees.”
⁵ Nevada Legislature, 82nd Session, Assembly Bill 522.
⁶ See “Cost of Collective Bargaining.”
⁷ See “Charter Agencies.”