FEDERAL PAY OUTPACES PRIVATE-SECTOR PAY
May 31, 2006
Compensation for the federal government's 1.9 million civilian workers in the executive branch costs almost $200 billion annually, says Chris Edwards, director of Tax Policy Studies at the Cato Institute.
Federal wages and benefits have been rising quickly, and by 2004, the average compensation of federal workers was almost twice the average in the private sector.
- The average federal worker earned $100,178 in wages and benefits in 2004, which compared to $51,876 for the average private-sector worker.
- According to U.S. Bureau of Economic Analysis data; since 1990, average compensation has increased 115 percent in the government and 69 percent in the private sector.
- Pay inflation has been fueled by routine adjustments that move workers into higher salary brackets regardless of performance, and by jobs that are redefined upward into higher pay ranges; the federal civilian workforce has become an elite island of secure and high-paid workers, separated from the ocean of private-sector American workers who must compete in today's dynamic economy.
According to Edwards, Congress should restrain federal compensation by freezing federal wages for a period of years and examining fringe benefit programs for possible savings. In the longer term, the coming surge in federal worker retirement as baby boomers enter their sixties offers an opportunity to downsize federal agencies without problematic layoffs or buyouts.
Source: Chris Edwards, "Federal Pay outpaces Private-Sector Pay," Cato Institute, May 2006.
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