CBO: Federal Compensation 16% Higher Than Private Sector

By • January 30, 2012 Comments

The Congressional Budget Office has released a study comparing pay and benefits of federal workers to workers in the private sector across wages, benefits and total compensation (wages plus benefits). On average, federal employees came out ahead in each case.

The methodology employed by the CBO in performing its analysis compared federal civilian employees with private sector employees who resembled them in the following areas:

  • Level of education
  • Years of work experience
  • Occupation
  • Employer’s size
  • Geographic location
  • Demographic attributes (age, sex, race, ethnicity, marital status, immigration status, and citizenship)

The data used were from 2005-2010.

So what did the CBO find? Here are some of the highlights.

 

Wages

Federal workers with a high school education earned about 21% more than comparable private sector workers, but workers who had at least a bachelor’s degree earned roughly the same as comparable private sector workers. The one education level where federal employees earned significantly less than private sector workers was with a professional degree or doctorate; federal employees earned about 23% less in this case. But the overall score for wages across all education levels, when averaged out, saw federal workers coming out about 2% ahead of the private sector.

Benefits

Federal employees clearly came out ahead in this category. According to the CBO study results, benefits earned by civilian federal employees were 48% higher, on average, than benefits earned by private sector employees with similar observable characteristics. Benefits were higher for federal workers in each education level except for a professional degree or doctorate where they were about the same as comparable private sector workers.

Total Compensation

When adding wages and benefits together, the CBO found that, on average, the federal government pays about 16% more than comparable private sector compensation levels. Specifically, the following findings were noted:

  • Federal employees with no more than a high school education averaged 36% better in total compensation than comparable private sector workers
  • Federal workers with no higher than a bachelor’s degree averaged 15% better in total compensation than comparable private sector workers
  • But, federal workers with a professional degree or doctorate averaged 18% lower total compensation than comparable private sector workers

So what is one to make of the findings?

The CBO says it’s a complicated issue. It said that the federal workforce has different characteristics, such as education, experience, and type of occupation, which can affect its compensation. It pointed out that the professional occupations more commonly found in the federal sector generally require more formal training or experience than do the occupations that are more indigenous to the private sector, and that the average age of federal employees tends to be higher, all of which presumably raises the likelihood of higher pay in the federal sector.

Critics of the study will no doubt cite these kinds of differences as being evidence that the higher overall compensation found by the study is justified. Opponents of federal pay are already citing the study as a reason for enacting some of the cuts that have been proposed recently, such as extending the pay freeze or cutting federal employees’ benefits. You can read the study results and decide for yourself which argument is right.

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About the Author (  |   )

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian has worked in the web development field since 1998 and does the development and programming for the FedSmith.com web site and its sibling sites.

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