More Info On the ‘Elite Island of Secure and High Paid Federal Workers’

By on September 27, 2006 in Pay & Benefits with 0 Comments

Recent articles on the FedSmith site about the amount of compensation for federal salaries generated a rash of comments.

A number of readers asked for more information. What was particularly disturbing to some was a statistic showing that the average compensation for federal employees is twice that of private sector employees and that the pay gap is growing each year in favor of the federal workforce. According to the latest figures, the average private sector worker compensation: $53,289. The average compensation for federal employees: $106,579. (See Underpaid Feds?)

Many of the comments from readers were to the effect that the figures were misleading because federal positions often require more education, the jobs are more professional than the average private sector worker, or that the figures listing federal salaries and benefits are wrong and being used to promote a political agenda.

Some readers also questioned whether the same methods were used to compare private sector and federal government salaries and contended that the private sector salary figures must not include the high salaries of company executives.

Here is additional information on the statistics surrounding federal employees’ wages and benefits that may satisfy the curiosity of our readers. As you will see, some of the arguments and concerns that were expressed are correct while some are not.

The information used by the Cato Institute for its report on federal salaries came from the Bureau of Economic Analysis, a subdivision of the Department of Commerce (BEA). The BEA calculates total compensation of Federal Government non-postal civilian employees in the same way that it calculates total compensation of private-sector employees. It adds wages and salaries and supplements to wages and salaries. Supplements are employer (the Federal Government) contributions to social insurance and to pension and health insurance funds.

The private-sector workforce ranges from jobs that pay a minimum wage to highly paid CEOs. The federal government statisticians do not, as some readers contended must be done, eliminate highly paid executives to bring down the private sector average.

The BEA gathers information from several sources. It complies estimates of wages and salaries for Federal Government civilian employees on data from the Bureau of Labor Statistics quarterly census of employment and wages and from the Office of Personnel Management (OPM). BEA estimates of supplements to wages and salaries are based on data from the Social Security Administration, Department of Labor and OPM.

Readers are generally correct over the trend in federal employment. In recent years, there has been a shift in Federal employment toward higher-skilled, higher-paid positions as a result of contracting lower paid jobs to private companies. This trend has undoubtedly contributed to the much higher average pay for federal employees.

Moreover, according to the Congressional Budget Office, federal jobs are concentrated in professional (e.g., lawyers, accountants, and economists), administrative, and technical occupations. Private sector jobs have a wider array of skills and occupations.

For those who were concerned that the figures for federal employees were not accurate, often because a reader knows people working for private companies who sometimes get higher benefits, government data collectors are confident that figures on federal employee and private sector benefits are accurate. No doubt, there are private companies that have better benefits. But, on average, federal employees receive higher benefits in the form of pensions and health insurance contributions than private-sector employees. In part, this is because some private-sector employees receive very little compensation in the form of benefits. On the other hand, federal employees have access to benefits such as health insurance and a retirement plan.

Having said this, what impact will the statistics have on future wages and benefits for federal employees and how is the information received by the media? Only time will tell. Here are a couple of cartoons that appeared after the average compensation information on pay and benefits for federal employees was released. (Only those with a sense of humor should check this link–no doubt some readers will be irritated, offended or otherwise bent out of shape.)

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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