NCPA - National Center for Policy Analysis

For Federal Workers, the Grass Isn't Greener in the Private Sector

January 3, 2013

Conventional wisdom says that public employees are often paid less than their private sector counterparts. The Federal Salary Council, for example, claimed that federal employees are paid only 65 cents for each dollar earned by workers, say Jason Richwine, a senior policy analyst at the Heritage Foundation, and Andrew Biggs, a resident scholar at American Enterprise Institute.

However, much of the data that has been collected does not control for the individual person who has moved from the public sector to the private sector. There are immeasurable characteristics of an individual that may merit more or less pay even if he or she works the same job.

According to new data from the Census Bureau's Survey of Income and Program Participation (SIPP), public workers make comparable salaries to private sector workers.

  • The data analyzes salaries for the same worker, which is an important distinction between this study and other ones.
  • If the Federal Salary Council's claims are accurate, if a federal worker moves to the private sector, he or she should see a 54 percent increase in salary.
  • However, the average federal worker who moves to the private sector accepts a salary reduction of around 3 percent.
  • Private sector workers, on the other hand, get a first year raise averaging 9 percent.

The case of school teachers, who are often branded as the least compensated for their work, shows that they make just as much if not more than comparable positions in the private sector.

  • One study says that public school teachers receive 14 percent less on average than private sector workers with similar skills.
  • However, according to SIPP data, people moving into the teaching profession received an average raise of around 8 percent.
  • Moreover, teachers who leave to work elsewhere receive an average salary cut of 3 percent.

Some argue that the public employees who move to the private sector are among the least-skilled workers, explaining why they don't receive big pay increases. However, it implies that government workers don't leave their jobs in the first place since they have a salary comparable to their private sector counterparts.

Source: Jason Richwine and Andrew Biggs, "For Federal Workers, the Grass Isn't Greener in the Private Sector," Wall Street Journal, December 14, 2012.


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