CBO: Federal Compensation 16% Higher Than Private Sector

By on January 30, 2012 in Current Events with 168 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.

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

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 also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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  1. kevmeist says:

    Come on…..trying to prove something with using a salary average over ALL employees is REALLY STUPID.

    I moved from the contractor world to being a Federal employee. My salary was about the same, my benefits may have been a little better in government employ, but not significantly.

  2. Rikker59 says:

    No, they need to compare engineers to engineers, truck drivers to truck drivers, accountants to accounts, etc with similar levels of education, experience, and levels of responsibility within the same geographic areas if there is ever going to be a fair wage comparison. NSPS promised to do this, but never did. Just another reason for its failure.

  3. Retired Fed says:

    I have observed that the federal compensation vis-a-vis the private sector is a mixed bag. I noticed that in SPAWAR, engineers’ compensation was lower than those of the private contractors. But, among technicians, their salaries were much higher than those of the private contractors. It was in an environment where the management had a rather low opinions of engineers and favors the technicians. Technicians have become used to getting up into the higher grades whereas the engineers were bumping up against the pay schedule limits. There is a fairly wide separation between techs and engineers in the private sector, but not as much in the federal. That’s just my observation.

  4. tlong559 says:

    Be sure to tie all the Fed salary and benefit cuts to our fat cat elected officials in congress.

  5. tlong559 says:

    Who runs CBO? Study after study says Feds are paid less. Maybe the fat FEDs at the top SES scue the Avg. Lets also talk about congressional salaries not us poor slobs trying to raise a family. You don’t get a GS job to get rich (unless your in DC) the benefits are good because they are tied to congressional benefits….but even their benefits are much better than the rank and file. This is a scam, the headline and opening paragraph are not supported.

  6. Jane Snape says:

    As the CBO itself admits, these aren’t apples-to-apples comparisons. Furthermore, a college degree is a de facto mandatory requirement for any job over a GS-3.

    • Roy Fowler says:

      Sorry, Jane, but not in the agency I worked for and other agencies with whom I worked. In our agency (USDA-NRCS) a person could rise to a GS-9 level Civil Engineering Tech position w/o the proverbial sheepskin.

      • Rikker59 says:

        They could rise to that level over time, but to be hired you have to have:

        FROM OPM.GOV:

        The following table shows the amount and level of education typically required for each grade for which education alone can be qualifying. At GS-13 and above, appropriate specialized experience is required for all positions.

        GradeQualifying Education

        GS-1: None

        GS-2: High school graduation or equivalent

        GS-3: 1 academic year above high schoolGS-42 academic years above high school, OR Associate’s degree

        GS-5: 4 academic years above high school leading to a bachelor’s degree,

        OR Bachelor’s degree

        GS-7: Bachelor’s degree with Superior Academic Achievement for two-grade interval positions,

        OR 1 academic year of graduate education (or law school, as specified in qualification standards or individual occupational requirements)

        GS-9: Master’s (or equivalent graduate degree such as LL.B. or J.D. as specified in qualification standards or individual occupational requirements),

        OR 2 academic years of progressively higher level graduate education

        GS-11: Ph.D. or equivalent doctoral degree,

        OR 3 academic years of progressively higher level graduate education,

        OR For research positions only, completion of all requirements for a master’s or equivalent degree (See information on research positions in the qualification standard for professional and scientific positions.)

        GS-12: For research positions only, completion of all requirements for a doctoral or equivalent degree (See information on research positions in the qualification standard for professional and scientific positions.)

        Source: OPM, http://www.opm.gov/policy-data
        Para 4.b.

        • fedHR says:

          Specialized experience can be substituted for education at all levels (in most positions). However, education can only be substituted for experience up to and including GS11. That said, there are certain positions that DO require a specific college education (such as Social Worker, Psychologist, Physician Assistant, RN, and Dental Hygienist, among others)- however most positions to do not have a blanket requirement for college education.

        • kevmeist says:

          Policies are NOT always adhered to in any profession. More like guidelines.

    • kevmeist says:

      A college degree is NOT a standard for any job over a GS-3. I retired as a GS-14 and do NOT have a college degree. I did retire with 47 years in the IT business, mostly as a contractor. I was hired as a GS-14 (direct hire).

  7. Hans Leschlong says:

    Pretty much a fabrication done by GOP idiots whom start wars and throw veterans under the bus.

  8. nonfednowfed says:

    What is the meaning of the word average. Simple; the total divided by the number of samples. What is the significance of that? Nothing, average by itself is not only meaningless, it is misleading. Unless the CBO gives us a statistical analysis of it’s findings, the use of averages is similar than an advertising gimmick. For example, if a real estate agent wants to convince retirees to relocate to an area, he or she might give information about the weather there simply by stating that the average temperature there is 75 degrees. Would you be interested in moving to such an area? Perhaps so if the agent withheld more detailed information about the temperature. However, if you later found that the yearly highs were above 110 degrees and the lows were minus 20 degrees, you would reconsider. In other words, how much does the highest paid worker get and also the lowest paid one? what is the standard deviation form the mean or average? Without the answers to these questions, the use of the average is as meaningful as the the average salary.

    • The Insidiator says:

      At the very least they should say if this is the mean or the median. As you point out, the mean can simply reflect the extreme ends of the salary distribution. They also don’t say what the distribution of the salaries is. If it is not a normal distribution (bell curve) then the mean is not the appropriate statistic to compare. Instead, they should use the median.

  9. Govt_Employee_Number_99 says:

    I read through the CBO findings and while it was clear that overtime, premium pay and bonuses were used to calculate civil service salaries what it did not state is how many of the salaries included overtime resulting from deployment to combat zones.  If those samplings INCLUDED the salaries of U.S. civil service combat deployers then the figures are skewed, inaccurate and invalidates the whole study.  For example, a GG-13, Step 5 costs the U.S. govt ~$180,000 per anum in the amount of overtime the employee earns if working 16 hours per day, seven days a week (for a full year)…and that does not include the employee’s annual base pay of $92,732 (frozen at 2010 level).  If you combine the two wages that’s in excess of $270,000 per employee per year at the GG-13, Step 5 level…if an employee has the stamina to work that many hours during a year-long combat deployment…most do not…and only deploy for four or six-month stints.  So what’s my point?  My point is that since September 11, 2001 we have deployed civil service employees to combat zones and as an incentive, the government pays overtime and other incentives to entice employees to deploy.  Since major combat forces have been withdrawn from Iraq and as withdrawals continue from Afghanistan there will be fewer and fewer civil servants accompanying the military…and less of a tax burden.  So…if the salaries of civil service combat deployers were included in the study then the data is invalid…it’s not about a 16% civil service salary advantage…it’s about the cost of war and compensating those civil servants that place their lives at risk….it’s an anomaly and the rest of the civil service work force should not be permanently penalized for those combat deployers…that will decline in number as more combat forces are sent back home.  Just my two cents…

  10. Jlamar says:

    Who comes up with this stuff. I am a Federal employee and earn less in wages and bonus’s then my private sector friends doing the same job.

  11. HappyFeetForYouSir says:

    drum roll……………..When was the last time the federal government hired someone with a High School diploma alone…..

  12. HowCome3313 says:

     The CBO appears to use an antiquated 1970’s style methodology when even
    attempting to do a wage and salary comparison.  It’s like they compare
    private sector wages/benefits from a factory worker who earned a
    paycheck from the 1970’s to a 21st century government employee who has a
    college degree, bachelor’s and perhaps even a master’s degree, and is
    extremely computer literate and productive.  Of course it’s apples and
    oranges.  Now look at a lot of today’s (21st Century) private sector
    “social media” and advertising and marketing professionals, who may not
    earn a decent SALARY, per se, but many get huge bonusses, stock options,
    and are paid in ways that DWARF how people in the private sector were
    paid just 20-30 years ago.   I work in NYC, across the way is GOOGLE,
    IACI, O Network, Martha Stewart Inc, I mean the list goes on and on, and
    those YOUNG PROFESSIONAL SOCIAL MEDIA “kids” are doing VERY VERY
    well!!!  I would bet a year’s salary that #1, those types of
    professionals are not included in the GAO study, because there is no
    comparable GOVT job in Social Media or advertising, marketing, etc, and
    #2, those kids are not making a “salary” of $100K,  it’s probably around
    $35K, but with sales commissions and bonuses and stock options, they
    are probably pulling down close to $150K to $250K, but I can say with a
    fair amount of certainty, ALL GAO is looking at is their base SALARY and
    BENEFITS, NOT THE WHOLE COMPENSATION PACKAGE !!  That’s what I’d like
    to see GAO come out with, compare TOTAL COMPENSATION packages…….not
    just salary and benefits (which pretty much includes the cost of
    employer paid  health insurance, vacation and sick days).  If GAO
    included stocks, stock options, ownership interests earned, Venture
    Capital “carried interest” instead of calling it WAGES,  and other forms
    of COMPENSATION that are more indicative of 21st century wealth
    creation, it would far dwarf federal wage and benefit packages.

  13. Pamcats2 says:

    I do not see where they come up with annual salary of $100,000; maybe in DC, but not in the Maryland suburbs.

  14. rasmass says:

    I would like to see how and what they include as benefits.  All of these show that our benefits equal approximately 40% of our wages.  As far as I can see I do not get benefits equal to approximately 40% of my wages.  There have been numerous studies in the paat by thinktanks like the heritage foundation that have stated that our benefits are approximately = to 40% but when you get into their methodology they give us approximately 16% of our wages based upon the stability of our jobs. 
    Another thing is does this include postal workers (approximately 800,000).  For most postal workers there is no private sector to compare to.

  15. Newyorkman2005 says:

    Federal employees are scapegoats, our benefits are horrible and pay is miserably low…..don’t believe the lies…..no dental plan, no eyeglass plan and I have to pay for my own medical out of pocket.

    • The Insidiator says:

      Are you a temp or term employee? Admittedly, those two groups get screwed. Being permanent takes a lot of that stress away, but permanent jobs (especially at the low end of the scale) are rare (at least in my agency).

    • kevmeist says:

      What part of the Federal government do you work for. I certainly never saw anything you mention in benefits while I was a Federal employee.

  16. H0BS0N says:

    With 20 years and counting in the FAA as a Computer Scientist, I can say without any reservation that wages are definitely significantly lower as a civil servant than if I were in the private sector. I’m not sure about benefits. They seem to be about the same as my non-fed contractor friends. But wages are certainly lower.

    I have several friend/co-workers who left federal service (without retirement) to work in private industry for more. I could have, I suppose, but I wanted to be able to keep my retirement and retain some security. The FAA is no longer under civil service so we could be downsized easily, but I’m taking my chances.

    So I’m not complaining about the small pension (FERS) but the income is lower.

    I’ll agree that clerks and lower grade jobs probably pay more than outside the government, but not computer scientists or professionals. In fact I still remember the big govt study that showed there was a terrible discrepancy in wages and there was an ununded plan to raise govt wages to be competitive with private pay. Then there was (in the FAA) an effort to make pay more performance based but so far I am now about 15% behind where I would have been had that plan worked or had they left us in the civil service.

    No matter. I think these studies are flawed in that they don’t agree with what I see in real life, and they only incite people to want to punish those who enter public service–which used to be a admirable way of actually serving your country.

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