By Arnold Kling
This study comes from the Economic Policy Institute.
The study analyzes workers with similar human capital. It controls for education, experience, hours of work, organizational size, gender, race, ethnicity and disability and finds that, compared to workers in the private sector, state government employees are undercompensated by 7.55% and local government employees are undercompensated by 1.84%. The study also finds that the benefits that state and local government workers receive do not offset the lower wages they are paid.
In that case, laying off public sector workers is doing them a favor. They should enjoy the higher remuneration available elsewhere.
Thanks to Mark Thoma for the pointer. If some projects are self-recommending, then this sort of project is self-discrediting.