Federal Workers Are Paid More Than Private Sector Workers
Last June, Andrew Biggs of the American Enterprise Institute and Jason Richwine of The Heritage Foundation released a study showing that the federal government pays its employees 61 percent more in total compensation than the private sector. They concluded that taxpayers could save $77 billion a year by reducing federal employee compensation to private sector levels. The reaction from federal worker unions and their liberal allies was predictable and fierce.
William Dougan, president of the National Federation of Federal Employees said the report was full of “lies.” Office of Personnel Management Director John Berry claimed it was part of “a misinformation campaign.” National Treasury Employees Union President Colleen Kelley accused Heritage and AEI of fabricating “self-serving, self-created data.” And Economic Policy Institute President Lawrence Mishel said that the idea that federal workers are overpaid is “a conservative myth.”
Fast forward to this Monday when the Congressional Budget Office released a report showing federal employees receive compensation packages that are 16 percent higher than those received by the private sector. Specifically, the CBO found that federal employees receive average salaries that are about 2 percent higher than those for similar private sector employees, and that federal employee benefit packages are 48 percent more generous than private sector levels.
The AEI/Heritage study found a similar breakdown. They pegged the salary premium at 14 percent and the benefit premium at 63 percent. But they also identified a third factor ignored by the CBO: job security. Looking at how few federal workers ever leave their jobs, and how few are ever fired, the Heritage/AEI study found that job security was worth another 17 percent of total pay.
Commenting on the CBO report released Monday, Biggs writes:
CBO’s methods are broadly consistent with the 2011 AEI study, although 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 of somewhat different economic assumptions. Nevertheless, the CBO report serves as a valuable contrast to figures generated by the federal Office of Personnel Management claiming that federal employees are underpaid by 26 percent relative to private sector jobs.