NCPA - National Center for Policy Analysis


July 12, 2010

In March, USA Today reported that federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations that exist in both government and the private sector.  Instead of taking the news as an opportunity to save taxpayers money, the Obama administration pushed back and dispatched Office of Management and Budget Director Peter Orszag to defend government employee pay.   

"I think the key thing to remember about that is the federal workforce is more highly educated than the private workforce. ... Basically the entire delta between private sector and public sector federal government average pay can be explained by education and experience," Orzag told reporters.  The problem is this is just not true, says the Heritage Foundation. 

James Sherk, a senior labor policy analyst at Heritage has just released a paper analyzing data from the Bureau of Labor Statistics' Current Population Survey (CPS) for 2006 through 2009:  

  • He found that even after controlling for education and experience, federal employees get paid 22 percent more per hour on average than private-sector workers.
  • Federal employees can not only can enroll in a Thrift Savings Plan that works like a 401(k), but they also get a "defined contribution" plan, which lets a worker with 30 years of experience retire at 56 with full benefits.
  • And don't forget the Federal Employees Health Benefits Program, paid leave, group life insurance and on-site child care.  

To be sure, many private employers offer similar benefits but not all of these at the same time: 

  • All told, while the average private-sector employee gets $9,882 in annual benefits, federal government employees get $32,115 on average.
  • Adding cash and non-cash compensation together, federal employees earn approximately 30 percent to 40 percent more in total compensation than comparable private-sector workers.  

If the federal government paid market rates for their employees' skill, education and experience, it would save taxpayers $47 billion in 2011 alone, says Heritage. 

Source: Conn Carroll, "Federal Government Overpaid $47 Billion a Year," Heritage Foundation, July 8, 2010. 

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