NCPA - National Center for Policy Analysis

Reducing Federal Employee Compensation Could Save Billions

June 13, 2011

Public sector compensation has come under increased scrutiny from politicians and the media, but comprehensive technical comparisons of federal and private compensation have been largely absent from the discussion.  Drawing from the academic literature and using the most recent government data, a new report by Andrew Biggs, a resident scholar at the American Enterprise Institute, and Jason Richwine, a senior policy analyst at the Heritage Foundation, measures the generosity of federal salaries, benefits and job security.

  • Compared to similar private sector workers, Biggs and Richwine estimate that federal workers receive a salary premium of 14 percent, a benefits premium of 63 percent and extra job security worth 17 percent of pay.
  • Together, these generate an overall federal compensation premium of approximately 61 percent.
  • Reducing federal employee compensation to market levels could save taxpayers roughly $77 billion per year.

Source: Andrew G. Biggs and Jason Richwine, "Comparing Federal and Private Sector Compensation," American Enterprise Institute, June 8, 2011.

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