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OPM’s Berry Mischaracterizes Our Pay-Gap Findings



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Some commentators declare an issue settled by simply ignoring the other side, but government officials testifying before Congress should hold themselves to a higher standard. John Berry, the director of the Office of Personnel Management, apparently forgot that.

The House Committee on Oversight and Government Reform held hearings recently to explore whether federal employees are overpaid. It is well known that, on average, federal employees earn more than private-sector workers. They should. The federal government employs more highly skilled workers (on average) than the private sector does. The real issue is how much more they should make.

Our research finds that even after accounting for education, experience, occupation, and other relevant characteristics, federal employees still earn total compensation 30 to 40 percent greater than workers in the private sector.

Rather than acknowledge this, Director Berry misrepresented our work. At the hearing, Rep. Dennis Ross of Florida asked him:

Q: Mr. Biggs will testify that a federal pay premium of 14 percent . . . when combined with a benefits premium of 33 percent, total federal salary and benefits are nearly 25 percent above those of similar private-sector employees. And Mr. Sherk will testify that federal employees earn a total compensation of 30 to 40 percent greater comparable than private-sector workers. Do you agree with their findings?

A: Absolutely not.

Asked why, Berry answered:

A: Their comparisons are based on gross averages. [T]he federal workforce is now a very skilled, white-collar, sophisticated workforce. It used to be 30 years ago that over a third of our workforce was blue collar. Less than 10 percent is today. So we need to compare the federal government with like to like. … The averages you are going to hear from on that panel are looking at the total labor force of the civilian market. The primary jobs in the private sector are retail clerks and service workers, waiters and waitresses. We don’t have those in the federal government.

This is a fundamental mischaracterization of our research. The entire point of our studies was to go beyond “gross averages” and make “like to like” comparisons between federal and private pay. Berry either knew this fact and ignored it, or he criticized our reports without having read them.

We are not the only economists to find that the federal government pays too much. Decades of academic research have come to the same conclusion. Even the former chief economist in the Obama Treasury Department once wrote in his academic work that “the federal government appears to consistently pay higher wages than the private sector for comparable employees.” Ignoring this problem will not make it go away.

— James Sherk is a senior policy analyst in labor economics at the Heritage Foundation. Jason Richwine is a senior policy analyst in empirical studies at Heritage’s Center for Data Analysis. Andrew Biggs is a resident scholar at the American Enterprise Institute.



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