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Federal Paychecks Are Outsized

Posted By Jason Richwine On November 17, 2010 @ 2:00 pm In Energy | Comments Disabled

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In an article [2] 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 [3], here [4], here [5], here [6], here [7], and here [8].

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.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/11/17/federal-paychecks-are-outsized/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/government-unions.jpg

[2] article: http://prospect.org/cs/articles?article=scapegoating_federal_workers

[3] here: http://online.wsj.com/article/SB10001424052702303828304575180421298413374.html

[4] here: http://spectator.org/archives/2010/09/24/those-underpaid-gothose-underp

[5] here: http://www.washingtonexaminer.com/opinion/columns/OpEd-Contributor/Jason-Richwine-and-Andrew-G-Biggs-Federal-employees-are-not-underpaid-22-percent--102012103.html

[6] here: http://www.heritage.org/research/reports/2010/07/inflated-federal-pay-how-americans-are-overtaxed-to-overpay-the-civil-service

[7] here: http://www.heritage.org/Research/Reports/2010/09/Federal-Pay-Still-Inflated-After-Accounting-for-Skills

[8] here: http://blog.heritage.org../2010/10/25/dear-government-unions-we%E2%80%99re-not-making-this-up/

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