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  • Yes, Federal Workers Are Overpaid

    The Government Accountability Office’s (GAO) report last week on federal and private-sector compensation showed that four recent studies agree: Federal compensation is higher than the private sector’s.

    Unlike the recent CBO paper on the same topic, the GAO did not crunch its own numbers or come to any firm conclusions. Instead, the watchdog agency summarized six recent studies that have addressed the issue, highlighting the methodological differences in each.

    The Heritage Foundation is well represented in the GAO study. In fact, two of my Heritage colleagues and a long-time associate at the American Enterprise Institute (AEI) made the GAO’s list. Heritage senior policy analyst James Sherk’s study was included among the six, as was a separate report for AEI coauthored by Heritage’s Jason Richwine and AEI’s Andrew Biggs.

    Readers interested in comparing methodological details across studies should take a look at both the GAO report itself and this Backgrounder contrasting the Heritage, AEI, and CBO reports.

    That said, I want to draw your attention to how the media reacted to the GAO report. The takeaway from the report has often been depicted by news sources as something like: “All these studies give different answers, so we just don’t know how federal pay stacks up.” Or: “All of the studies have limitations of some kind, so we shouldn’t trust any of them.”

    Is that really the best interpretation? Let’s compare the results of the five studies that attempted apples-to-apples comparisons by matching workers or jobs between sectors. These are the aforementioned AEI, Heritage, and CBO studies, a report by the Project on Government Oversight (POGO), and the federal government’s official annual wage comparison conducted by the President’s “Pay Agent.”

    Here are the results, separated between wages and benefits:

    • Heritage: federal wages higher than private sector, federal benefits higher than private sector;
    • AEI: federal wages higher than private sector, federal benefits higher than private sector;
    • POGO: federal wages higher than private sector, federal benefits higher than private sector;
    • CBO: federal wages about even with private sector, federal benefits higher than private sector;
    • Pay Agent: federal wages lower than private sector, no analysis of benefits.

    In summary, four of the five studies find that total federal compensation is higher than private-sector compensation. The fifth study (the Pay Agent report) cannot come to any conclusion because it does not consider benefits. So all of the studies reviewed by GAO that actually reached a conclusion found that federal workers are overcompensated. The wage penalty reported by the Pay Agent might be enough to outweigh the benefits premium that it didn’t look for—but we don’t know.

    So when not a single study has yet even claimed to overturn the basic conclusion drawn by Heritage, AEI, POGO, and the CBO, one would think the media would sound less discouraged about ever getting a definitive answer to the federal pay question. One would think.

    Posted in Featured [slideshow_deploy]

    15 Responses to Yes, Federal Workers Are Overpaid

    1. GS11 says:

      I am a GS 11 in WMA. One bedroom apartments are 1500 and two bedroom starts at 1770. These are modest middle class apartments. Rent is going up fast out here, contractors who make big money drive prices up. I may have to move to a place where I wouldn't let my mother or GF walk to her car by herself. I barely get by living check to check. i am glad to have a job but i could make more in the private sector. At least in the private sector the harder i work the more money i would make. Patriotism just doesn't pay the bills. My friends who have a wife and kids, essentially go into debt. Then volunteer for a war zone assignment to get out of debt and then start the cycle all over again.

      • Steve says:

        Dear GS 11 in WMA, wherever that is, get off the dime! If you can do better elsewhere, take advantage of the remaining freedom you have…go private. Nobody is holding a gun to your head telling you to stay where you are. Exercise your freedom and independence. Whatever hard place you are in is of your own choosing.

      • Grant says:

        And the reason you still work for the government?

      • Bobbie says:

        at least in the private sector the harder you work the more money you make. The more independently living people there are, the less cost of government control comes out of peoples pay. The more money you earn the less government costs the less government gets to take from your earned paycheck!
        Does that make sense? To pragmatic?

        Patriotism pays the bills where government isn't unjustly expensing it. Fight for America not for more government people to rule your life taken out of your paycheck!!

      • Hos says:

        What kind of statements do you expect to receive from anti-government ignorants? They might feel better if they live in Somalia where there is no functional government.

    2. Lorita Goza says:

      Just curious. Are the wages of the 'general' workers 'higher' than private sector jobs for 'general' workers? Working as a fireman for the FEP always seemed to be lower wages than the city firefighters. Although the benefits were higher for the FEP. So, was the report reflecting the wages of the general workers, like secretarys, paper pushers, clerks, etc., or supervisors over departments and above?

      • Pragmatic says:

        Wow. You got an overall negative thumbs down for asking questions about the methodology.

        I guess readers here prefer you to accept what is said and don't ask questions – even if they're honest questions.

      • Bobbie says:

        This is about federal worker pay. "Private sector" pay of those who govern their own is not relevant but when government is behind the scenes there's no telling what or who they're paying. It's all corrupt!

    3. Conservative Spouse says:

      When they take out Congress and their staffs, the judiciary and staffs, all political appointees, and so forth – then the reports might be valid. Include the military and the figures would plummet. I know from experience as the daughter of a veteran and spouse of a federal worker. Government workers have the same bills as private sector employees. Stop the generalizations and be specific in comparisons. Get rid of redundancies and waste, such as empty federal buildings and lavish "conferences."

      • Magi says:

        When the benefits are included, there is no comparison. Holiday pay, sick leave, vacation, medical, and the big banana, retirement, all make the government jobs overpaid positions. I read a recent analysis that said average paid private employees would require nest eggs of a couple of million bucks to equal the life time retirement benefits of average paid government employees. I am a highly paid private employee and I don't have anywhere near that number in my 401.

    4. WHICH WAY says:

      Don't just make a statement without explaining how you came to the conclusion.Many things go into what people make and their "needs" are a small part.Skill,profit generation,working conditions,how many apply for the job,proformance in the job,and many more.Threats,pleas,connections,favors should not be a part of the equation.Any job to be permanent must produce more than it costs or you are just going broke.Gov jobs are a good example since most of the cost of gov is wages and too many are permanent and accomplish little after what they were hired to do is fixed.

    5. Carl says:

      I have been tracking this debate for about 32 years. At one time, Federal Government Employees had lower wages and compairable benifits to the Private Sector. The US Government has continued to give pay raises and have stable pay rates that have been adjusted for inflation. The Government benifts have remained the same and were updated by President Reagan in 1983. The Private Sector has cut wages and benifits over the past 20 years. Now the Government Employees have a slight advantage in wages and benifits at the lower end of the pay scales for all jobs. Government Employees at the Executive and VP level are very underpaid for their duties and responsibilities. Just compare the wages and benifits of the US President to any of the Fortune 500 CEOs.

    6. gayle says:

      I believe a question should be posed: Who produces more relative to their salaries federal or private workers. I'd be willing to bet on the latter.

    7. Valentine says:

      The lower the education, the more the workers are overpaid. Higher education is penalized. And the longer you stay, the bigger the financial penalty.

      Benefits aren't standardized across federal arenas. For example, congressional "workers" get 100% pension and (virtually) free, gold-card health insurance. Civilian DOD pay $400-650/month for more than one person (so a couple pays same as family of 12), and Congress gutted the civilian pension 20 years ago. (1% of final salary for every year worked.) Yes, we still *have* any pension at all, which is becoming rare.

      Northwestern Mutual Life Insurance (corporate) has 100% pension. WMATA drivers (Washington area Metro transit system train operators) can earn over $100,000 a year. By the way, unionized grocery employees can easily earn $40 an hour on Sundays (the equivalent of $80,000 a year).

      My husband could easily make 50% more (conservative estimate from a cursory search I did two years ago) by working for "private" industry. Why does he stay? Because someone smart, ethical, and hardworking NEEDS to raise the standard of thinking there.

      Could we PLEASE distinguish between janitors making $25/hr from a PhD in computer science making $120,00?
      Could we PLEASE not continue this frankly stupid, overly simplistic, inaccurate discussion regarding the lovely, fat benefits of SOME groups that others will never see?

      You want something black-and-white to look at? Why is West Virginia included in the Washington area's "cost of living" location adjustment? And why is Chicago's cost of living higher than those in DC? Argue about THAT.

      Oh, and feel free to get congressional pay and pension to the same level as other federal workers. (Why do they make so much? Why do they get full pension after just a couple terms? Etc.)

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