New CBO Report on Total Compensation of Federal Employees
In April 2024, the CBO issued a new report titled Comparing the Compensation of Federal and Private-Sector Employees in 2022.
The FSC concluded that the pay gap between the federal and private sectors in 2022 was 22.47%. In its latest report, The Federal Salary Council (FSC) reported that federal employees are underpaid by 27.54% as of March 2023.
The CBO report goes into more depth and finds a significant difference in total compensation for federal employees and the private sector. The differences were significantly different depending on employees’ education levels. Overall, federal employees had an advantage in total compensation, with a 5% higher level of compensation than comparable positions in the private sector.
Here is a breakdown of the number of federal employees at several education levels as of September 2023:
- High School or Equivalent: 603,221
- Between High School and College: 365,367
- Bachelors Degree: 599,799
- Masters Degree: 383,901
- Doctorate: 85,140
Here is what the CBO concluded for total federal compensation for this range of federal employees by education level:
- High school or less: +40%
- Some College: +38%
- Bachelors Degree: +5%
- Master’s Degree: -4%
- Doctorate: -22%
- All levels of education: +5%
Differences in FSC and CBO Conclusions
Membership in the Federal Salary Council consists primarily of unions representing federal employees. Federal employee unions’ goal is to support federal employees, including increasing salary levels for their members. However, the membership composition does not exist to provide an objective appraisal of federal employee compensation levels.
An annual report of the FSC touched on this issue:
For far too long, the Council has not addressed whether its annual estimate of the so called “pay gap”—that single number that we proffer every year—truly represents the Federal Government’s ability to compete in today’s hypercompetitive talent market…across all locales, grade levels, and occupations. And that same “suspect” approach is used to estimate local “pay gaps” that may or may not be real…but that have very real consequences for those Federal employees potentially affected by them.
Many federal employees read yearly that they are substantially underpaid when the FSC recommendations are released, reporting double-digit differences between federal and private sector salary levels.
CBO: Federal Employees Have More Benefits But Lower Salaries
The CBO addresses total compensation levels, including government—provided benefits such as retirement benefits, health insurance, and paid leave. Smaller private companies generally offer less generous health insurance and other benefits than larger companies.
To compare federal and private-sector compensation, the CBO compared the cost of the benefits provided to federal and private-sector employees, accounting for the same differences in workers’ characteristics used to analyze wages.
According to the CBO, the cost of benefits for workers at all levels of education was 43% higher for federal civilian employees than for private-sector employees. But, regarding wages, the CBO found the federal government would have spent about 10% more on salaries if it adjusted the pay of its employees to match private-sector counterparts.
CBO Report on Total Compensation: 2011-2015
The Congressional Budget Office (CBO) compared federal and private sector compensation from 2011-2015. Their report was released in 2017. Contrary to reports of the Federal Salary Council, which always report federal employees are underpaid, the nonpartisan CBO made these findings:
- Average benefits were 52 percent higher for federal employees whose highest level of education was a bachelor’s degree than for similar private-sector employees.
- Average benefits were 93 percent higher for federal employees with only a high school education than for their private-sector counterparts.
- Among employees with a doctorate or professional degree, average benefits were about the same in the two sectors.
- After accounting for workforce differences, such as education, overall federal employees are paid about 17 percent more in total compensation than similar employees in the private sector.
