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  • Federal Paychecks Are Outsized

    In an article titled “Scapegoating Federal Pay,” Paul Waldman of The American Prospect predicts that we will hear much more in the coming months about “outsized federal paychecks.” I hope he is right.

    The labor economics literature, going back more than two decades, is clear that federal workers enjoy a substantial pay premium over comparably skilled private workers. Two separate Heritage analyses have updated that literature for recent years and come to the same conclusion. President Obama’s deficit commission seems to agree, as it has suggested freezing federal pay.

    Despite the overwhelming evidence, Waldman says that criticizing excessive federal pay amounts to “scapegoating.” His first argument is that federal employees possess more skills and work in more specialized occupations than typical private sector employees, which justifies their higher pay. This argument is tiresome, because our analyses have always controlled for worker characteristics, as do all of the academic studies referenced above. Federal workers are more skilled than private workers, but their superior skills are not nearly enough to justify their higher salaries. We have explicitly made this point here, here, here, here, here, and here.

    Waldman’s second argument is that, to the extent that federal workers do earn more than the private sector, this can only be a good thing:

    We ought to be able to agree that we want government to do the things it does as well as possible. To ensure that, we need to recruit and retain quality workers. We don’t have to pay them millions, but we have to pay them enough to make working for the government an attractive option.

    But we should also agree that government should not be an excessively attractive option, since taxpayers would be overcharged and the private sector would lose valuable workers. The trouble is that federal employment is already overvalued by American workers. As detailed in the links above, federal positions have much higher “queue rates”—job applications per new hire—and much lower quit rates than private employment. In other words, workers very much want to get a federal job and, once they get one, do not want to give it up.

    None of this is surprising, of course, given the federal pay premium we have documented. The new Congress would do well to correct the pay imbalance, and even The American Prospect should get behind the effort.

    Posted in Energy [slideshow_deploy]

    14 Responses to Federal Paychecks Are Outsized

    1. LibertyAtStake says:

      I actually would not mind a situation where government workers earned slightly more than their private sector counterparts …. if only three things were true (which are not). (1) hiring was in fact competitive, (2) firing was in fact possible, (3) government was only performing its legitimate functions. I believe a pretty good solution is an "up or out" competitive promotion schedule modeled on the active duty military. Then the compensation issue would cease to be thumb in the general population's collective eye and become instead a continuous draw for new blood.

      http://libertyatstake.blogspot.com
      "Because the Only Good Progressive is a Failed Progressive"

    2. PHodge says:

      I wonder if there is a way to make the changes in Federal Pay "targeted". All the proposals I have seen are "across the board", which worries me. Yes, I am a Civil Service employee… but, I am one that makes 38,000 a year in an area where a 3 bedroom home rents for 1200+ a month. I drive a 10 year old vehicle, I pay taxes at the same rate as others, I pay for my health insurance and I struggle at times to care for my family. I have a degree and have worked in the private sector, but did not find it as personally rewarding. I moved to the position I am in now because it coordinates/supports the medical care of active duty military and veterans on a Global scale (no, not the VA). I work rotating night shifts and earn less leave than I did prior to coming to this job. It is disheartening to see people "blanket' disparage all Federal employees and call for layoffs, pay cuts, etc. when a lot of us Federal workers are not making those “outsized federal paychecks". I am positive that there are those in Federal service who are receiving pay well above what they should, just as there are those in the private sector that do. But, there are thousands of employees like myself who are trying to make an honest living while doing something worthwhile. Absolutely, fix the problems with government and the misuse of OUR tax dollars… but please don't forget (or punish) those of us who don't sit in an office in a business suit drawing a six figure salary.

    3. George Colgrove, VA says:

      The readers of this blog have offered many ideas. I have offered some ideas that the HF has refused to post. I am curious after reporting this serious issue many times what the HF would recommend we do to resolve this matter.

    4. Chicago, IL says:

      I came from the private sector and I am not getting anywhere near the pay at the government that I did in the private sector doing similar work. I am also getting simiar benefits. Half the people in the department I came from are making over 100K and many are making over 150K. You must be including people working for minium wage in your cacluations and not including the public accounting and law firms. Becasue when a government manager a can only make a maxium of 150K your numbers do not work out.

    5. Ann, Georgetown, Tx says:

      I am very tired of seeing all these articles alleging government premium pay. I, as a government worker, challenge you on two points……look at the vehicle(s) you are driving and the house and neighborhood you are living in and compare to it to the average government employees around you. We do not live in upscale neighborhoods and do not drive expensive vehicles. Also, if you think we have it so good, there are plenty of positions open on usajobs.gov. Go to work for the government and actually experience what we do on a daily basis. Then we can have this discussion again.

    6. Thomas Coyle says:

      I am a veterinarian with USDA, FSIS, and make about $81,000 per year. Tell me how I make more than a veterinarian in the private sector!! Now I made the choice voluntarily, with my eyes open, for a number of personal reasons, but if you claim to be comparing apples to apples, you're lying.

    7. Art, Maryland says:

      I trust your "think tank" numbers as much as I trust an elected official – not at all. You have an agenda and an axe to grind and the truth is hidden behind the driving need to satisfy whoever funds the Heritage Foundation.

      In all fairness, I will tell you that I think the same thing of any "think tank" – that we would be better served if the money sent to fund your organization was used to hire more Dog Catchers.

    8. BLIU says:

      I am tired of hearing about the high salary that media has claimed these days. I joined the federal government as a chemist. With the locality counted, my salary is lower than my previous salary working for private business. With bonus included from private business which can be as much as 20% of base salary, I am worse off with the government job, except that government job security is much higher.

    9. No_ill_FX, Gettysbur says:

      I'm an Instructional Designer for the Federal Govt. who has worked in private industry. My counterparts in private industry make considerably more than I do per year. I do enjoy equal and in some cases better benefits and higher job security. I was recently promoted to the next higher grade and became my sections supervisor and my counterparts in private industry still make more than me! I know this because many of them work as contractors for my department and have tried to recruit me to work for them. I choose not to go. I really do like my job and get great satisfaction in knowing that everyday I go home I may have helped to save someone's life. For me, it's not all about the pay, it's job satisfaction, highly skilled co-workers, and a job that matters. I wouldn't trade public service for any other job!

    10. Arkansas Cubicle Nin says:

      Hear Hear!

      This is exactly why I only vote Republican. I'm a government employee and all these people around me are vastly overpaid. I know of one guy who just took a cruise!!

      Except me, of course. My job is more critical, so my pay is justified.

    11. Gnatman says:

      I feel that Heritage articles denigrates my 40 year contribution to the taxpayers. When I tested into the Armed Forces, my grade got me anything I desired from Pilot to Procurement. I chose Procurement as the best fit and safest because Viet Nam was raging.

      Over my years negotiating contracts with the largest Defense contractors I felt the authority and trust placed upon me was far greater than any commercial career I could have imagined. I was successful, rewarded time after time by a capability to match knowledge and wits with Contract Directors, Finance CFOs and Corporate Officers. My career took me to the highest level of DOD COs and the largest Contractors. Needless to say S&P 500 Corporate Directors and Officers are exceedingly well paid versus civilians in DOD, and those counterparts were my peers.

      Now, my retirement is also not in the same zip code as those of the commercial firms I dealt with. How do I know? well, I can read SEC form 10Ks and have sparred with them in the past on the levels of their benefits that would be allowed for Gov Contracts.

      But again, the Heritage view doesn't seem to perceive the large imbalance presented by Gov officals that deal with peers so highly placed. Your view is that we in the Gov all have no inherent value and scope, which is false.

    12. Dr. J, Mid Atlantic says:

      As a conservative, I am very sympathetic to trimming the fat from our bloated federal government. However, as a PhD government scientist, I have to argue that many of us are NOT overpaid… I make $81,000 in an area with a relatively high cost of living. With more than 13 years experience and an expert in my field, my private sector market value is significantly higher than my federal salary. I have considered making the jump back to the private sector MANY times, but due to a severe illness in my family, I stay put for health insurance reasons. Cuts in government salaries need to be carefully targeted. We need less secretaries and technical staff making $50k+, not less doctors and PhDs making $100k.

    13. jose, las cruces nm says:

      Its simple just read between the lines. Its reaganomics all over again. Their going after the unions and their using the federal employee as the slaughter lamb. None of us make $125K.

    14. S. McClure, Pensacol says:

      Somehow the figures for federal workers is getting skewed. I know there are people in the federal government making more than they are worth – often because if they are horrid, the only way to move them is up. But, I have been working as a visual illustrator and webmaster for 23 years and I am making under the national median – $34,000 a year. I drive a 12 year old car, shop at discount stores and don't take vacations. I started at less than $5 an hour and fought for 8 years to get my job relegated to the proper rating for what I was doing. Under different leadership it would have happened and I could have moved up to jobs I was qualified for, but the people overseeing the manpower had to be forced to change the job description when the base came under study for private contracting – I mention this for those who think decisions on who is worth what can be made fairly. (I was awarded civilian of the year, so it's not my lack of worth.) People in the GS 9 and up area seem to be able to move on but lower grades don't seem to have the pull to make things happen if they play by the rules. Meanwhile the base had to cut 30% workforce to win the contract and then the decision was made across the Navy that all bases had to cut back, without considering that some already had. Many lost their jobs and bases are doing more with fewer people. (no longer is a federal job a guaranteed safe position) Now they hire most lower rated jobs on temporary flex basis- no guarantee of 40 hours and no benefits. (I realize this is happening in the private sector also-benefits are costing employers more than pay) Where I work, this category far outnumbers those making $80,000 plus. We are the ones who are going to be hurt by the freeze as insurance rates, gas, food, taxes and energy costs rise 30%. When gas was up to $5 plus a gallon those of us on already tight budgets were in a world of hurt – and the option of buying a new hybrid was NOT in the cards. A second part-time job was. Meanwhile, how much is the latest Federal Bill for FDA expansion going to cost in more federal jobs and costs – on top of all the other governmental positions, departments and bureacracies that have been created as our government grows to spend and regulate us out of the trouble they have largely created? As the good judge says, don't piss on my leg and tell me it's raining. When Congress votes to follow the same rules and programs they designate for us and stops expanding their budget, I'll believe they are trying to bring government spending under control.

      The little guys don't need to pay for the excesses of the big guys. When there is a 2% raise for federal workers, those making $8 an hour aren't making the dent in the budget that those making $50+ an hour are…and those making the decisions are tied to those raises…probably why we get them. I'm not one who thinks schooling, heavy responsibility and job creators don't deserve higher pay or that they should be taxed into middle class, but federal cost cuts shouldn't be across the board when you have people making minimum wage on flex jobs with no insurance and no power to influence spending or saving in their departments while others making better than 5 times as much could be doing a better job of streamlining costs. (sometimes it's the guy on the line that can point out money waste if they were asked- and there are firms that do just that when paid to evaluate where businesses could improve)

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