Department of Yikes

According to USA Today:

Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.

These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.

Thus, if these numbers are to be believed, federal workers on average earn in wages and compensation 50% more than workers in the private sector doing the same job.  Bear in mind that the federal workers are paid by the private sector workers.  We can't all be insiders

The figures do seem large to me, however, and they do not correct for a variety of factors such as age or experience so take them with a grain of salt.


I would particularly challenge the low total for benefits for private workers. My suspicion is that this includes all private workers, including those in service-industry type jobs where they receive little or no benefits, for which there is not many analagous federal workers.

It sounds as if the denominator being used to compute the average of health, pension, and other benefits is the number of active workers, while those benefits are flowing to both active and retired workers. Could the large discrepancy you point out be primarily due to retirement benefits for federal workers?

I'd ask about the geographic distribution of federal jobs, and how the cost of living in major cities affects the national average.

@ Nathan G: That might be interesting, but why? And what would your starting assumption on labor mobility be?

Is the quality of the work from federal employees much better that public sector employees? not from where I stand...

I still think when I told that kid to be a postman it was one of my best "advices not taken."

"Is the quality of the work from federal employees much better that public sector employees? not from where I stand..."

I wonder where you've decided to stand.
Or perhaps, I wonder what position you've taken such that you feel comfortable generalizing over a vast population of professionals.

I've known GS9 workers who were frightening, and I've known advertising executives who were dolts. If you've worked in the military, you know for sure that there is much inefficiency and insanity.

'Quality of work' might be due to organizational complexity, which is a problem shared by all entities. Organizational structure drives behavior, and at a certain level of complexity or size, private or public, you'll find silliness. Generalizing over people in public service, while forgetting like examples in the private sector, is poor form.

As an attorney, I'm not sure that their numbers for the lawyer category really make sense. They say that federal lawyers make an average of $123K, v. $126K for private sector lawyers. Of course, this shows that lawyers get paid less in the government than elsewhere--but I think it kind of understates this effect. Most first year attorneys competing for the very best government attorney jobs could earn roughly $180K in the private sector v. about $80K for the federal government. Elite government attorneys are arguably a underpaid. On the other hand, those elite government jobs often lead to higher paying private sector jobs later, so maybe that should be factored in. (Though perhaps that in of itself is something of a bad thing--maybe we don't want our best federal attorneys to have a big incentive to leave after 5 years.)

Based on this, and looking briefly at the salary averages for other skilled occupations, I'd question whether they're really getting the private salaries right (at least for white collar jobs). (Another good example: "financial analysts" make a lot more than $80K in the private sector.)

This is a gross and misleading oversimplification.

The Office of Personnel Management does surveys of occupations and work to match pay to the public sector.

I'm sorry, but these USA Today and CATO job titles of just meaningless. Go look at the description of the job classification. Then ask: hmmm, are there levels of difficulty in that classification. Yeah. Are those captured by the classification. No. Hmmm. Oh, also, within federal classifications there are ranges for the occupational title or classification.

This is complete BS. I once worked in the federal government over 30 years ago, and it was hard to recruit competent people with the low wages. You try living in DC.

What you should be looking at is the outsourcing contract mess when government doesn't do the work and contracts outside, only to find they can't do the work themselves because they can't hire engineers, scientists, computer technicians, and other professionals at government pay grades.

How much would you ask to be paid if it meant being known to be amongst the group of incompetent government workers?

Gee, we should subcontract to Halliburton.

Obviously this is the reasons so many private firms have trouble keeping their employees because they are always going into government to make some real money.

I have been waiting for some time for the opportunity to post this.

Thank you Alex.

not very useful. You are comparing BLS vs BEA numbers with some fairly arbitrary cuts in the data. I suspect when you average it all out you get back to the conventional wisdom: federal workers are paid less than private sector employees but have better benefits.

Let's see CATO suggest cutting wages for the military. Some of those guys are making well over 100K a year with hazard pay. I know several FSO who pulled in 150K in Afghanistan last year.

eccdogg -- if your points are correct why doesn't your wife take one of those higher paying government jobs.


insider/outsider problem

there are only so many government jobs, so only so many can be lucky enough to get them.

This data also neglects the option value of the high end. Top private sector CEOs, senior partners at big name law firms, etc. make far more money than anyone in the public sector could dream of.

The chance to make that much money has an option value, in particular for strong performers who may see themselves promoted more quickly in less bureaucratic environments.

Nearly $41,000 in benefits? I find that hard to believe absent a breakdown of what's involved.

And the geographic distribution is very important. About 15% of federal employees work in the DC area, for example, while the metropolitan area population is less than 2% of the nation's.

One other question about this study:

It apparently looked at 216 occupations, of which 40 are listed in the table in the article. If you simply average the salaries in the listed jobs you get $70,748 for federal jobs, $63,118 for private, about the same difference the article cites, though with higher salaries. But that doesn't tell us much, since it doesn't weight for the number of people in each job.

I wonder what calculation USA Today did.

A lot of these criticisms sound valid if looking at the overall averages, but look at Secretary and Janitor. Federal Janitors make 25% higher salaries ($6000 a year) and Secretaries make 33% ($10,000 a year!) more. I've been in Federal buidings enough to know that their janitors aren't any better than ours, and I've dealt with enough Federal secretaries to know that theirs aren't any better either.

And this answers that issue with labor mobility and hiring--there are lots of unemployed people in DC who could work as a Federal janitor, even for $6000 less, but they still get the Federal Premium.

There are a few occupations where private sector folks make more (why Train Engineers?!), but very few.

Good point George.

That said the economic distortion caused by paying Janitors an extra $6,000 a year is likely relatively minor.

While there are a lot of good criticisms, I am not ready to throw this study out. I think the real difference is the larger variance for private sector jobs and the slightly lower mean.

In the private sector, you won't make anything being a janitor, but if you're a highly skilled individual, you can pull drastically more in the private sector than the public sector. However, most people are not at the top of the labor force, and these people can make modestly more in the public sector, obtain better benefits, and work less. The people pointing out the much higher wages for janitors and secretaries are right on.

For once govt. employees can stop complaining that they are underpaid. In fact, federal employees usually receive a 2% pay raise each year to keep with inflation (which may ironically cause more inflation).

Budget cuts anyone? Greece, Ireland, and former President Clinton had the nerve to do it at least.

The biggest "con" portion that some commentators have mentioned is the fact that you have an unofficial or official "mobility agreement": If you want to gain in position and pay in the federal government, you must move. Some jobs also are salary based so you would work alot in your "private time." But in the age of the crackberry and email, I think this has spread to all sectors, depending on the level of responsibility.

If you really want good retirement benefits, join the French Foreign Legion, after 15 years you supposedly get a pension:

As Libert mentions, any reasonable compensating differential story would suggest that Federal employees ought to be paid less than those in the private sector. They work fewer hours, they can't be fired or laid off, etc. If that's no longer the case, it's not the labor market that is to blame. (There aren't that many Federal jobs for private sector workers to move into.) The blame rests with those in Congress who vote to raise Federal salaries every year in exchange for campaign contributions.

Can somebody, uh, break down that 40k figure? I work for a large private company that's considered to have platinum benefits for private companies, and the benefit would be around 15k for me (I'm single) and about 25k if I had a family plan.

Seriously, what do they spend 40k on? It would be a good place to start to start cutting that figure and it would be much more palatable than salary cuts.

Another good datapoint in favor of the insiders vs outsiders story.

In a given year about there will be 25 quits for every 100 private sector workers. For federal employees there will be only 8.5 quits for every 100 workers.

Federal employees know they have a good deal and few give it up once they are in.

see table 16

Came to say what Spenser said. There are no federally employed janitors, or at least almost none. Same with cooks, and other occupations that don't require spefic mission knowledge (and even some that do).

i imagine this is where averages hude facts. i bet for private sector, it's much more bimodal, with lots of very-under (gov't salary) people and a few very over people. the gov't employees, almost to a "t", know wht they are getting. the private entrepeneurs, get what industry and fate afford them.

I would also hope that the Justice Department (picked out of a hat) has the funds necessary to outbid corporate America for the best attorneys - they are enforcing the law against their counterparts and citizens should (for the most part) want them to win.

If only this were true. I took a very substantial pay cut when I joined DOJ. I do antitrust work. A starting first-year lawyer carrying the briefcase of the guy who comes to talk to us makes more money than the most experienced staff attorney in the Antitrust Division.

I don't understand why it makes sense to compare federal workers to the private sector as a whole. There are other public-sector employees, and I bet state, county, and municipal workers make less, on average, than their federal counterparts.

I'd rather see a comparison of the whole public sector to the whole private sector (comparable jobs, ages, experience, etc.), or of federal employees to some subset of desirable, selective private-sector employers.

One factor I haven't seen mentioned here in terms of the economics driving salary levels is the cost to the government of contracting a job through the private sector. I used to be a federal employee until our base was BRAC'd, whereupon I began doing the exact same job through a contractor. My salary stayed about the same; my benefits (mainly vacation time) were reduced slightly, as was my job security; but the labor rate charged to the government for my time actually went up (unfortunately I can't quantify this). This isn't to say that closing the base didn't save money overall -- obviously there's a host of variables that would need to be considered. But the main point is that if the government needs a job done, it may well be able to bear paying a higher wage compared to paying even more to a contractor, even though the wage which the contracted employee sees is less.

Those private employees at Blackwater deserve to be paid so much
more than actual soldiers because, gosh darn it, look at how
much better they perform.

Steven Schreiber,

Thanks for the information. That's by far the most useful comment on the thread.

I must confess that I am a bit surprised by the number of folks who seem to either...

1. Questions the data
2. Have little or no problem with a large, overpaid federal workforce.

Having a large group [federal employees] who are disconnected from the realities of our economy - not subject to wage freezes - not subject to layoffs - have a great medical plan compared to most in the private sector cannot be a good thing for our country,

It's a great thing for the fortunates who get to feed at the public trough - but a bad thing for the rest of us.


I must confess that I am a bit surprised by the number of folks who seem to either...

1. Questions the data
2. Have little or no problem with a large, overpaid federal workforce.

1. What's wrong with questioning the data?
2. Complaints that someone has no problem with a "large" federal workforce are irrelevant to the discussion. Clearly opinions differ as to the proper size of the federal workforce, but that's not what we're talking about.
3. Complaints that someone has no problem with an "overpaid" workforce beg the question. The issue being discussed is precisely whether or not the federal workforce is overpaid.

A lot of these criticisms sound valid if looking at the overall averages, but look at Secretary and Janitor. Federal Janitors make 25% higher salaries ($6000 a year) and Secretaries make 33% ($10,000 a year!) more. I've been in Federal buildings enough to know that their janitors aren't any better than ours, and I've dealt with enough Federal secretaries to know that theirs aren't any better either.

Secretary and janitor once got reasonable wages plus excellent benefits in the private sector, because all employees had to be treated much the same way for lots of reasons. Then the innovation of outsourcing essentially eliminated those jobs in the private sector, placed with essentially temps who are as close to day labors as possible.

Of course, the American dream is to have your kid grow, get a college degree, and become a low paid part time janitor, part time data entry clerk, call center worker, getting paid a few bucks more than minimum wage, but no benefits, and because they are part time, no unemployment when their work is terminated suddenly as the contract is canceled and turned over to another firm because the workers didn't have the training to do the menial jobs.

A number of people have made these or or similar points, but a few bear repeating:
For a number of categories, like janitors, the federal government employees very few of them directly. Most janitors working in federal facilities are contractors. Those who are actually federal employees tend to be quite senior. The same general trend (actual government employees being more senior and experienced than their private contractor counterparts) is true of many other categories in the list. Interestingly, when you look at those categories where the government directly employs most/all of those in the category who are doing government business (e.g. lawyers), the private sector wages are higher.
The stats don't appear to take account of geographic distribution. For many of these categories, federal employees are concentrated high-COL metro areas more than the general population of the category. Compare the average salary of a secretary in, say, Tulsa, or the suburbs of Milwaukee, with the average secretarial salary in the DC area. (Or, if you're concerned that DC salaries are skewed by fed hiring, compare salaries in Chicago or Boston, where the averages for even low-level secretaries are above 40K.) It's a huge difference, and highlights the need to account for geography for these numbers to be meaningful (or to have the meaning for which Cato wishes to cite them -- as it stands, perhaps they suggest we should outsource many federal jobs to low-wage areas in, say, North Dakota or Mississippi, but they don't indicate that federal employees are paid more than their private sector counterparts.)

mw, just two big-ticket items would seem to account for most of that $40k to me: health benefits and retirement benefits.

Health insurance benefits are in the $5k to $25k for private-sector employees, with many union contracts ending up with insurance on the high end of that. I would be somewhat surprised if federal spending on health insurance is significantly under $20k per employee.

Retirement benefits really depends on how they're being calculated. It may be done by dividing total current retirement benefit payments by total current employees, or it may be done by assuming that the federal government has a retirement fund that it puts money into (and invests or something) to fund retirement benefits it promises now. The former calculation is more or less meaningless in terms of how much benefit current employees get.

For the latter calculation, poking around the links at it looks like retirement benefits are 50-80% of peak salary, depending on length of service, etc. For a currently-30-years-old worker who wants to retire at 65, live to 85, and get 60% of pre-retirement income in retirement, and who currently makes $60k a year the calculator at suggests about $12k a year in retirement savings, assuming 5% rates of return on the investment. So call it $10-15k ballpark, since there's lots of play in all the above numbers (and since some of the funding of these retirement benefits does come out of paychecks; usually a lot less than the 20% of salary needed above though)

Sum: $30-40k for health care + retirement, without counting any other benefits that might exist. Of course I expect other things to be small compared to those two.

I recently looked at the California public employees pension benefits (CalPERS). I don't know how federal benefits compare, but the CalPERS pensions are far better than what you typically find in the private sector.

For example, a worker can retire at 55 and collect 2% of of their salary per year of employment, calculated against the single highest year for earnings. If a worker started at age 20, then he could retire at 55 with a 70% pension. But it gets worse - they can also count unused sick time as years of service, and sick time benefits are pretty good. The result is that someone who doesn't use sick time can retire at 55 at 75% of the highest income earned. The pension also includes full lifetime medical, dental, and optical coverage, and your spouse can continue to collect after you die.

Using the single highest earnings year rather than a 3-5 year average makes the system ridiculously easy to 'game'. There are plenty of people who make $70K a year, and then become a supervisor in their last year or change jobs to bump their pay by $10K or more, just to get them a bigger lifetime pension. That one year spent supervising can increase total pension benefits by a couple of hundred thousand dollars.

Retiring at 55 means that the government should expect to pay you for 30 years or more, after your having worked only 30-35 years. So it's not hard to see how benefits could account for a 40% increase in compensation.

Under CalPers, if you stay later than 55, your % per year goes up. I believe it was at age 60 that it went to about 2.5% per year, allowing someone with 35 years of service to retire on more than 90% of their highest salary. That's an outrageously good deal for the worker.

In comparison, I have a pretty typical private sector pension with a large corporation. My benefits are 1% per year worked, averaged over the last three years of employment, and I can't collect that amount until age 62. If I retire at 55, the pension is cut dramatically. The total pension benefit I will get is less than a third of what a CalPers retiree is eligible for, and I'll have to work seven more years to get it.

It is conflict with the Report on Locality-Based Comparability Payments for the General Schedule, which states, "the overall remaining pay disparity as of March 2009 was 22.13 percent" in favor of the private sector.

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eccdogg -- if your points are correct why doesn't your wife take one of those higher paying government jobs.


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