The Congressional Budget Office has released a new study showing that federal-government employees receive significantly higher compensation than private-sector workers with the same levels of education and experience. The CBO report confirms many of the findings of a 2011 study I wrote with Jason Richwine of the Heritage Foundation and helps rebut union claims that federal workers are underpaid.
CBO found that federal employees’ average salaries are about 2 percent higher than those for similar private-sector employees and their benefits exceed by 48 percent private-sector levels, putting total average federal compensation at 16 percent above private-sector levels. With federal-employee compensation totaling $200 billion per year, a 16 percent pay premium is big money — almost $390 billion over ten years.
While I have my quibbles with some of CBO’s methods and assumptions, it’s very good work and broadly consistent with the 2011 AEI study. We found a larger federal pay premium because we sought to capture a broader range of federal compensation — including the implicit value of federal workers’ near-total job security — and because we used somewhat different economic assumptions. Nevertheless, the CBO report serves as a valuable contrast to the claims coming out of the federal Office of Personnel Management, which says that federal employees are underpaid by 26 percent relative to private-sector jobs.
Weren't we told recently that nobody works harder than federal government employees? I guess we should feel it's a bargain if they only receive a 2% premium over private sector workers. And on top of that, the private sector workers are no doubt working for some capitalist and maybe even a 1%er CEO, so who needs them anyway.
Reply to this commentLinkReport AbuseCan you underpay an employee in a competitive market?
Any employee that is undercompensated is free to go elsewhere where they are valued more appropriately. I would think that turnover would be a good measure the actual value of compensation. The low turnover in government jobs strongly suggests that the employees do not feel they can do any better.
Reply to this commentLinkReport AbuseI won't be happy until the counties rimming Washington DC are among the poorest in the country.
Reply to this commentLinkReport AbuseBut the real kicker is in benefits. I own my own business, and therefore am self employed. For that, I get to pay my health insurance with after tax dollars (yeah, look it up: the owner of a Sub S corp can't deduct his insurance premiums, being a fat cat and all), and whatever pension I have is my savings (i.e. my contribution to my retirement is 100%--every d*** dollar I get to spend in my retirement is contributed by myself and no one else). Veronique de Rugy recently had a post that showed that private sector employees contributed about 65% of their pension benefits; federal employees contributed 5%. My tax dollars go to support federal retirees. While I'm bustin' by a** at 70, some 62 year old retired Associate Adminstrator of Admnistrating Associate Bureaucrats is taking a cruise on the bucks I'm still kicking in to their system. To hell with them. They're essentially parasitic, and the first rule of biology is that the most successful parasites don't kill the host. TOO LATE!
Reply to this commentLinkReport AbuseBOO-HOO ! If you don't like it, move to Somalia.
Reply to this commentLinkReport AbuseI'm a conservative and a Federal employee. (Hey, somebody's got to do it.) I find this result very surprising. I know alot of gov't workers who took government work for job security, or for the chance to do more interesting work (usually in the sciences), or for personal reasons like taking a job to be near aging parents. I do not know One. Single. Federal. Employee. who went to work for the government in order to get a higher salary. I do not know One. Single. Federal. Employee. who actually got a substantial pay raise when leaving the private sector. I know several who took a pay cut. I myself am making substantially less than I did in my private sector days. Not that I am living in a rusted out trailer by the highway or anything, and I am not saying the compensation is "unfair". But I am still making less that I used to. This study goes against everything I have seen in government work.
Reply to this commentLinkReport Abuse"I do not know One. Single. Federal. Employee. who went to work for the government in order to get a higher salary."
You overlooked that the CBO study and the Biggs/Richwine study find most of the overcompensation in benefits, not salary. Biggs/Richwine also accounted as a benefit the job security you mentioned as a motivator for taking a federal job.
Reply to this commentLinkReport AbuseYou might be right about the retirement benefits, but that's assuming that we're actually going to get the pensions we're being promised. Yeah, that and Social Security. What a hoot.
And still, taking all this "compensation" into consideration, I don't know any federal employee who lives "25% better", or whatever the number was, than his private sector equivalents.
As for the job security, that doesn't seem to me to be a fair element of comparison. If they're going to throw that in, then "compensation" should also include things like job satisfaction and how long a drive it is to the nearest Fuddrucker's for lunch.
Reply to this commentLinkReport AbuseIf you don't see the benefits of being a federal employee, just drive through the Washington DC area one day.
Federal employees get lots of days off, are allowed to work at home, get their transportation or parking paid for by the government, take lengthy vacations, take ten days a year of sick leave, drive nicer cars, live in bigger houses, and have created three of the richest counties in the country (surrounding DC where they all live). They are permitted several (paid) periods each day to go outside for smoking breaks, and even are required to attend regular training seminars on IT Updates, Sexual Harassment, Diversity, Recycling Awareness, and Global Warming--all during the work-day, when they are still paid for a full day's work.
If all these perks aren't "real" benefits, than what is a benefit??
And best of all, if you engage any in a simple neighborly chat, they invariably will complain about how they "work harder than anybody else."
Reply to this commentLinkReport Abuse"If you don't see the benefits of being a federal employee, just drive through the Washington DC area one day."
Fine. Some fed. emps. get great slaries and perks. And when I say "some", I mean about 1% of them all. No way I or anyone I know at work could begin to afford to live in those three high-priced counties. Again, I'm not complaining; I'm just stating what the facts are.
I guess living in the beltway or in those counties constitutes a real benefit, but only for the very top slice. You can't make accurate statements about a whole class of people by looking only at the smartest, the dumbest, or the, in this case, the most well paid. This is the kind of arguing that feminists and other grievance groups have been doing for decades. You ought to know better.
Reply to this commentLinkReport AbuseIn my experience as a contractor and seeing it first hand, it's even worse than that. Not only are they overpaid but there are twice as many as needed for any given department because they are all working at 1/2 the speed of a "normal" person.
Reply to this commentLinkReport AbuseYet another reason to despise my federal government:
How much of our hard-earned money did it cost the CBO to render this most obvious of conclusions?
Reply to this commentLinkReport AbuseDespise? You despise your federal government? Wow. Ok. The patriotic right in their full glory.
Reply to this commentLinkReport AbuseIn the government, workers make more but executives make less with respect to corporate America.
Corporate America's move from rewarding and promoting productive workers to its current winner-take-all executive merry-go-round hasn't helped our country's economic performance, so it's no wonder that private-sector workers are feeling resentful.
In fact, corporations are running to the politicians to demand labor law changes that would make it easier for them to classify salaried workers as "exempt," i.e. ineligible for any overtime compensation whatsoever. This means that any work over 40 hours/week would for all practical purposes be taxed at a 100 percent marginal rate by the company.
Yet these same executives cry and complain about "incentives" / "I'll go on STRIKE, I will!" if you suggest that the marginal tax rate of their income be raised just a little.
Reply to this commentLinkReport AbuseAre you kidding? Just 16%? My friend is a retired federal employee. When she retired at 59 after 30-some years of service, she tried finding a job in the private sector doing what she liked doing for DOE: event planning. The highest salary she was offered was 40K.....to start. She said, 'thanks, but no thanks.' She had been earning a 6-figure salary. Are you kidding?
Reply to this commentLinkReport AbuseThat's not necessarily an indication that government workers are over-compensated across the board. The problem is that the Federal pay scale is more flat than the private sector pay scale, both across positions and across ranks. Highly specialized Federal workers like lawyers and engineers often make less than their private sector counterparts, while Federal workers in areas where there is low demand and low pay in the private sector make much more. That could certainly be the case with event planning, but would also apply to fields like administrative services, non-specialized IT support, etc. A private sector employee in those types of fields would be lucky to get a salary that is just enough to live on, while a Federal employee, particularly one with years of seniority, can have a very comfortable income. Conversely, someone who would be making big bucks in the private sector, e.g. as a lawyer or an executive, may end up with a moderate middle-income salary from the Feds. It is all a symptom of the fact that Federal pay is largely disconnected from market forces.
Reply to this commentLinkReport AbuseIs there any adjustment in CBO's numbers for the security of federal employment?
Because if the 2% salary advantage is in straight dollars, the economic advantage is considerably higher in any economic environment, and particularly this one.
Reply to this commentLinkReport AbuseIn my paper with Jason Richwine we attempted to place a value on federal job security; in effect, it's an insurance policy against becoming unemployed and we tried to price it as such. It's also valuable because it protects a job in which the person receives a premium -- if a federal worker is fired, it's likely he'll come back at lower pay. In any case, the paper is available at AEI's website: External Link
Reply to this commentLinkReport AbuseWell written summary of the CBO plan, but done in by a very poor headline.
The CBO is non-partisan. It is non-political, and non-ideological. Assigning descriptors to it's work such as "overcompensated" is drawing a political conclusion on a technical, data driven analysis.
Reply to this commentLinkReport AbuseI wonder how many private sector employees received a 5% match, or any match at all, to their 401k contributions the way that Federal employees did before, during, and after the great financial meltdown of 2008?
It's not as if they weren't continuing to accrue pension benefits during at that time.
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