Their Needs Are More, So They Give Less


The National Institute for Retirement Security's "Out of Balance?" study—which I discussed earlier today and which was the source of much debate back in May—should not be allowed to escape into the memory hole.

The study's major claim—that public employees are at par with or slightly below private sector counterparts when you control for their higher levels of education—becomes less persuasive the longer you look at it.

Now along comes AEI's Andrew G. Biggs to blow up another piece of NIRS' messaging. While it's true that government employees are often also graduate students (Who would have thought those two groups of highly motivated world shakers would overlap?), the difference in compensation is actually more pronounced the less educated you are:

"The pay gap difference between federal and private jobs is not uniform," says Biggs. "In general, the pay premium is very large for low skilled workers, and small or negative for highly skilled workers, like your SEC regulators. But most people don't have MDs or PhDs. Up through a Masters, you'll find on average that people make more in the federal government, especially at the low end with folks like paper clerks."

This comes in an interview that raises other methodological questions regarding relative pay of public and private workers:

You're aware that some studies have come the opposite conclusion: that federal workers are underpaid. Why are they wrong?

The government has produced numbers where they claim that federal workers are underpaid by 22 percent. We say they're overpaid by 12 percent. The difference is in the methodology. We looked at the same person—based on age, education, all those things—and put him in the federal government or the private sector. The government looked at the same job in the federal government vs. private sector.

They looked at jobs. You looked at people. Why does the distinction matter?

Because government promotes faster, and at a younger age, than the private sector. The federal government is saying "our senior accountants earn less than a senior accountant in the private sector." But somebody who might be a junior accountant in the private would be senior in federal government. For many people, getting more responsibility at a younger age is a reason to go to the government.

Title allusion unpacked: