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New Research: Federal Workers Make 61 Percent More than Private Counterparts

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D.C. Think Tank Claims Reduction in Federal Compensation Could Save $77 Billion Per Year

NEW ORLEANS, La. – The American Enterprise Institute, a D.C.-based think tank, recently released a working paper which finds that federal employees receive a salary premium of 14 percent, a benefits premium of 63 percent, and extra job security worth 17 percent of pay. That makes the total federal compensation premium approximately 61 percent.

The study’s authors estimate that if federal employee compensation was reduced to private levels, taxpayers could save $77 billion per year.

A 2009 study by the Bureau of Economic Analysis, a branch of the U.S. Department of Commerce, claims that federal civil servants earned average pay and benefits of $123,049 while state and local government employees earned average pay and benefits of $69,913. The BEA found private workers, by comparison, made $61,051 on average in total compensation, indicated an even greater difference between compensation premium of 101 percent.

According to LouisianaSunshine.org, the average pay for public employees in Louisiana is $44,341, while the average salary for all occupations is $37,980.

The BEA website highlights four factors that contribute to the wage disparity.

First, private sector employee salaries range from minimum wage workers to the highest paid CEOs, while members of the federal government’s civilian workforce are concentrated in professional, administrative, and technical occupations.

Second, there has been a shift towards higher skilled federal employees, while low-skilled and low-paid workers have been outsourced to private companies.

Third, federal government employees receive higher benefits in the form of pensions and health insurance contributions than private employees, with many private employees receiving no benefits.

Lastly, federal compensation estimates include large payments for unfunded liabilities. For example, in 2006 the value of payments for unfunded liabilities were $28.6 billion or 10.7 percent of total federal compensation.

Cato Institutes’s Chris Edwards claims that the BEA’s first criteria misses the point, since “the federal workforce has always been full of lawyers and scientists.”

Additionally, Edwards claims that, “Total wages and benefits paid to executive branch civilians amounted to $230 billion in 2010,” while over the last decade, “compensation of federal employees rose much faster than compensation of private-sector employees.”

On the contrary, John Berry, Director of the U.S. Office of Personnel Management, claims that headlines purporting a gap between public and private employees are comparing “apples to oranges.”

He states that reports from the Cato Institute and other organizations “look only at gross averages,” including service workers and entry level positions. This, he contends, reduces the private sector’s average pay “in comparison to the federal average, which does not include many of the subcategories in its workforce.”

Additionally, Berry purports that the federal workforce has become more specialized.

“Thirty years ago, over 22% of our workforce was in blue collar jobs. Now that percentage has dropped by half while the percentage of IT and Health professionals has doubled.”

 

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

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  • Anonymous

    Professional athletes make millions for playing a kids sport. Maybe we should lower their salaries too. This is rediculous. Nobody was saying federal employee’s were higher paid when the economy was good. I know in the profession of wildland firefighting, federal employees are paid far less than state and local government in California. The difference is so bad that the federal firefighting agencies such as the U.S. Forest Service and BLM can barely hold on to their employees. What a joke.

  • http://pulse.yahoo.com/_4AWTHTF2NUP6DBXGZMARFKXAAI Laura

    Statistics like these have no business being published by a group with an agenda, and they are often used incorrectly, at you’ve read above.

    To paraphrase Mark Twain: “There are lies, damnd lies, and statistics”.  So take this disinformation with a grain of salt…

  • Anonymous

    I think this is a great idea only if corporate CEOs, Bankers, Actors, professional athletes, Lawyers, Doctors, Wall Streeters and others limit thier income to that of the president of the US. This is one more example of the the wealthy wanting to lay blame and responsiblity on everyone else other than themselves for the great recession that they and only they caused.

  • Anonymous

    Barry your right and IT positions in the federal govt are paid 3 times what they are in the private sector, so I’m assuming that $77B could be much much larger

  • Michael Anthony

    Who ever wrote this article should know that apple and oranges are not the same thing.  I think that trying to deceived the public will be the Achilles heel of the GOP party.  It upsets me when people try to misinform the general public, but eventually it will backfire.

    • http://twitter.com/RealRobRoss Robert Ross

      Michael,

      Just to clarify, I did make the distinction. 

      On the contrary, John Berry, Director of the U.S. Office of Personnel Management, claims that headlines purporting a gap between public and private employees are comparing “apples to oranges.”

      He states that reports from the Cato Institute and other organizations “look only at gross averages,” including service workers and entry level positions. This, he contends, reduces the private sector’s average pay “in comparison to the federal average, which does not include many of the subcategories in its workforce.”

      Additionally, Berry purports that the federal workforce has become more specialized.“Thirty years ago, over 22% of our workforce was in blue collar jobs. Now that percentage has dropped by half while the percentage of IT and Health professionals has doubled.”

      – Robert Ross

  • Anonymous

    Well, I entered comments yesterday and they are no where to be found. This article is so biased that they are only showing 4 comments.  I am one of these over paid federal workers. I make $47000.00 per year. I have student loans that are choking me and some will be around till i am past the age of 70.  I get my health insurance through my husband’s employment because it is cheaper and better. I won’t be able to retire until i am well over 70, if then, and i will only get $1250.00 from the retirement system, FERS.  I could have had a private sector job that would have paid me $7000.00 a year more, a company car, insurance, retirement, 401k with match, and an expense account.  I chose the federal government because of the security.  I also have to drive an hour to work which costs about $200.00/pay period and had to buy a car for the commute. In the private sector it was furnished.

    The federal government demands the top performers through testing and the application process. Then after the hiring process you have to provide proof of your academic preformance. I graduated with a bs degree cum laude and had to provide transcripts. If the government demands the best and brightest shouldn’t they have to pay for it?  If they are taking the cream off the top do these people not deserve the salary and benefits?  Well, I am here to say that they do not pay for it in the beginning, but the security is the attraction.  With the way that we are being treated the attraction may be gone.

    I gave up all that to go to work for the federal government to be harassed and abused by our elected officials.

  • Anonymous

    Sure, let’s just throw all sorts of people out of jobs.  It’s not like we don’t have enough people without jobs at the moment.  Let’s reduce salaries, watch people lose houses and mortgages, watch another community face massive foreclosures, watch more shops and stores close, etc., etc.  Misery loves company.

  • Anonymous

    ox·y·mo·ron/ˌäksəˈmôrˌän/ Noun –
    A figure of speech in which apparently contradictory terms appear in conjunction. ie: sanitary landfill, resident alien, Federal worker………

    • http://www.facebook.com/people/Richard-Jefferson/100000588873574 Richard Jefferson

      moron-mo:ron/Noun
      1. a foolish or stupid person
      2. a person having an intelligence quotient of between 50 and 70, able to work under supervision
      3. etee

      • Anonymous

        Urban Dictionary
        personal attack – ˈpərsənəl  əˈtak
        1.      logical fallacy that demeans your opponent instead of refuting their argument.
        2.      generally used as reasoning for IP address banning on Internet sites.
        3.      predominately utilized by Democrats in political discussions in which they lack a grasp of the subject being discussed.

        • Michael Anthony

          gul·li·ble/ˈgələbəl/Adjective: Easily persuaded to believe something; credulous.

  • http://pulse.yahoo.com/_KSH3G2MIICZLGKKGGLKYKPI5F4 Nail Creek Jack

    Less federal employees means more workload for those remaining and slower response to the public’s inquiries. The result is more public dismay over the slow response with same. More heat from Congress to the agency to get it done. More employees leave jobs. Government does get smaller but at who’s expense? Public or the federal employee?

  • Anonymous

    Folks need to wake up.  In an era where corporations are making the most money they have ever made, we have to ask ourselves why is the pay so low.  They cry about pensions and good healthcare but in the end, those who run these companies enjoy pensions and benefits the average person could only dream about.  And they do this while they stick it to their employees.  Our legislators are no different.  There is a growing movement in this country that will not be happy until the working person is making what they pay in India or China.  And the most insane thing is that they have regular, working people fighting for their cause.  It’s understandable that private sector employees are jealous about job security and pensions.  But they are mad at the wrong person.  They should be asking their employers why they have no benefits or pensions?  What happened to them?

  • http://pulse.yahoo.com/_YZ2X6IE53HSUBWREDEHGDVQIEI Corporate Traveller

    This is news to you
    Yet the civil servants will take the country rather than accept less – look at Greece as an example
    they really think that the world cannot live without them – that everyone but them are crooks and that they are doing a wonderful job

  • http://pulse.yahoo.com/_YZ2X6IE53HSUBWREDEHGDVQIEI Corporate Traveller

    Don’t count on it
    Civil servants around the world seldom give up pay and perks
    Look at Greece as an example
    Yet these people feel and are taught that
    1) the world cannot live without them
    2) they are doing a vital and important job
    3) everyone else but them are crooks

    its a cancer

  • http://www.facebook.com/profile.php?id=100001689103986 Ree Tired

    To be more fair, do a comparison of federal employees with another big employer like Boeing or Microsoft.  Their benefits, salaries and raises are better than federal employees.

    However, a cost reduction in salaries and benefits of members of Congress and higher GS employees  of GS 14, 15 and SES is not unreasonable as they are overpayed for the work they do. I saw this while working for the government for over 30 years.

  • http://profiles.yahoo.com/u/Z3UI2Y4GRTR3UCKOLBYX5QJ4CA Trudy

    As the article relates, one big concern is the number of highly paid professional positions (including physicians, financiers, engineers, etc).  I am shocked to see scores of 14s and 15s hired under this administration at a cost of $105k up to $200K plus to oversee programs implementing bogus regulations.  I bet I saw 40 or more positions in just the last few months for financial oversight jobs between 150-250K.  Why also does the FED own tens of thousands of physicians, nurses and health administrators?  Why not outsource it and give the jobs back to private sector–let large healthcare entities compete for these contracts? Just do a search on USAJOBS.gov for 14 and 15 level jobs. 

  • Anonymous

    As a federal worker, my particular position was underpaid when compared to private sector positions of the same work role.  The private sector was making 20% more for the same job description.  No one cared.  But now?  Blame the federal worker….  Scape goating is very unuseful.