The Corner

CBO: Federal Workers Overcompensated

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.

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