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Townhall...
CBO
Study
on Federal Pay
by Chris
Edwards
February 5, 2012
CBO has
released a study comparing the wages and benefits of private sector and
federal
non-military workers. The study uses statistical techniques to make
comparisons
with adjustments for education level, experience, and other factors.
Here are
the overall results:
The wages
of federal workers are 2 percent higher than similar private-sector
workers, on
average.
The
benefits of federal workers are 48 percent higher than similar
private-sector
workers, on average.
The total
compensation (wages plus benefits) of federal workers is 16 percent
higher than
similar private-sector workers, on average.
CBO finds
that the federal compensation advantage varies by education level.
People with
low and middle levels of education generally do better in the
government, while
people with doctorates generally do better in the private sector.
CBO’s
results are generally in sync with my observations on federal pay. For
example,
I’ve pointed to the excessive pension and health benefits received by
federal
workers. The CBO says:
The federal
government provides retirement benefits to its workers through both a
defined-benefit plan and a defined-contribution plan, whereas many
large
private sector employers have replaced defined-benefit plans with
defined-contribution plans. The federal government also provides
subsidized
health insurance to qualified retirees, an arrangement that has become
uncommon
in the private sector.
I’ve also
noted that high job security is an important federal benefit that
should be
considered when deciding on federal pay levels. Federal workers get
laid off
and fired at much lower rates than private-sector workers. That benefit
has
value, and thus federal pay rates should be set somewhat lower than for
otherwise comparable jobs in the private sector. The CBO notes:
…greater
job security and less uncertainty about the size of pay raises tend to
decrease
the compensation that the federal government needs to offer, relative
to
compensation in the private sector, to attract and retain employees.
Given these
results, I’ve proposed these action items for Congress:
Continue
the federal pay freeze for a number of years.
Repeal the
federal defined-benefit pension plan.
Hire an
outside accounting firm to audit the Federal Salary Council’s
apparently
erroneous “pay gap” method, which always seems to find that federal
workers are
grossly underpaid.
Privatize
as many federal activities as possible so that markets can figure out
the
appropriate levels of compensation.
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