CBO: Feds Pay 17% More Than Private Sector for Similar Workers

By Terence P. Jeffrey | May 1, 2017 | 10:57am EDT
(Public Domain/Architect of the Capitol)

(CNSNews.com) - The federal government pays about 17 percent more in total compensation—including both wages and benefits—than the private sector does for similar workers, according to a report by the Congressional Budget Office.

“Overall,” CBO concluded, “total compensation was about 17 percent higher, on average, for federal workers than for similar private-sector workers, indicating that the government spent about 17 percent more on total compensation than it would have if it provided its employees compensation equal to that of their private-sector counterparts.”

“For workers with a bachelor’s degree or less, the cost of total compensation averaged about $60 per hour worked for federal employees, compared to about $46 per hour worked for employees in the private sector with similar observable characteristics,” said the CBO.

“In contrast,” said CBO, “the total compensation averaged about $77 per hour worked for federal employees with a master’s degree, professional degree, or doctorate, which is about $3 less than the average for their private sector counterparts.

When benefits are left out of the equation, and only wages are considered, federal workers with a bachelor’s degree or less are still paid more than their private sector counterparts.

“Federal workers with no more than a high school diploma earned 34 percent more per hour, on average, than private-sector employees with the same level of education,” said the CBO report.

“Federal employees whose highest level of education was a bachelor’s degree—about one-third of the federal workforce—earned roughly 5 percent more per hour, on average, than similar workers in the private sector,” said CBO.

Those with a doctorate or profession degree, however, earned higher wages in the private sector than in the federal government.

“Federal workers with a doctorate or professional degree earned 24 percent less per hour, on average, than similar workers in the private sector,” said CBO.

Also, when benefits are left out of the equation and only the average wages for federal workers are considered, the federal goverment would still save money if it made the wages it pays its workers equal to those of private-sector workers with the same educational level.

“On average, for employees at all educational levels, wages were 3 percent higher for workers in the federal government than for private-sector workers with certain similar observable characteristics,” said CBO. “Thus, the federal government would have reduced its spending on wages by 3 percent if it had decreased the pay of its less educated employees and increased the pay of its more educated employees to match the wages of their private-sector counterparts.”

The disparity between the benefits paid to federal workers and the benefits paid to private-sector workers is much greater than the disparity in wages, according to the CBO report.

“As with wages, differences in the cost of benefits in the federal government and the private sector varied by employees’ highest level of education,” said CBO. “For example, CBO estimates that, relative to the costs for similar workers in the private sector, benefit costs were about: 93 percent higher, on average, for federal workers with a high school diploma or less education; 52 percent higher, on average, for federal workers whose highest level of education was a bachelor’s degree; and roughly the same, on average, for federal workers with a professional degree or doctorate.”

The CBO noted that there could be non-qunatifiable "traits" that could effect a worker's compensation in and out of government.

"Even among workers with similar observable characteristics, however, employees of the federal government and in the private sector may differ in other traits, such as motivation or effort, that is not easy to measure but that can matter a great deal for individuals' compensation," said the CBO report.

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