Mythbusting: Federal Workers Are NOT Underpaid by 35 Percent

In my misspent youth, I took a job as an "economist" at the Federal Energy Regulatory Commission in Washington, D.C.


Siesta - another federal fringe benefit

In my misspent youth, I took a job as an "economist" at the Federal Energy Regulatory Commission in Washington, D.C. Yes, I was a bureaucrat for three whole soul-destroying years. But I certainly did not feel underpaid. I once asked one of my new colleagues at FERC who had just left an engineering job in the natural gas industry why he'd done it? "I like the pace of work in the government," he replied. Let's just say that the pace was not blistering.

Given my experience, I have ever since been annoyed whenever a report is issued claiming that federal bureaucrats are generally underpaid. Last month, the Federal Salary Council issued yet another such report asserting the bureaucrats are underpaid by 35 percent in comparison with private sector workers in similar jobs. That figure was a jump of nearly 10 percent over the previous year's number.

In an op-ed in today's Washington Post, American Enterprise Institute scholar Andrew Biggs, and Heritage Institute policy analyst Jason Richwine set the record straight:

If these figures are to be believed, federal employees are paid only 65 cents for every dollar received by nonfederal employees doing the same work. Put another way, the average federal employee who shifts to a job outside government would increase his salary by 54 percent.

The figures are implausible on their face. How could government pay employees more than one-third less than the going rate, yet keep employee turnover at only a fraction of the private-sector turnover rate? Data from the Bureau of Labor Statistics Job Openings and Labor Turnover survey show that, from 2001 to 2010, federal employees quit their jobs at less than half the rate of workers in large private-sector companies.

First, the pay agent doesn't consider fringe benefits, even though benefits for federal workers are famously generous. In addition to a 401(k)-type pension with a handsome employer match, federal workers receive a traditional defined-benefit pension — for which they contribute less than 1 percent of salary — as well as retiree health coverage. A Congressional Budget Office study published in January found that the federal retirement package was 2.7 times more generous than what is paid by large private-sector firms. Federal workers also receive more paid vacation and sick days. Even if they endured a salary penalty of 35 percent, their benefits would make up much of the difference.

But federal salaries are not 35 percent below private-sector levels. All five outside studies reviewed this year by the Government Accountability Office found that federal pay is equal to or higher than those of comparable private-sector workers. This is consistent with three decades of academic research. According to our analysis of Census Bureau data last year, the typical private-sector worker who shifts to a federal job receives a salary increase, while federal workers who leave for the private sector tend to get a salary cut.

I am not saying that Federal workers are all shirkers; many do hard creditable work. But if some bureaucrats find the pace of Federal work too grueling or the salary too low, they can always seek a nice cushy sinecure in private industry.

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  1. many do hard creditable work.

    Yeah. But I’m guessing the actual number is in the low triple digits.

    1. Yeah. But I’m guessing thankfully, the actual number is in the low triple digits.

  2. You know what really sucks?

    It’s when a person quits a cushy govt job and takes a job in the private sector, and then – after a few years – is laid off, and can’t find more than occasional part time work. It’s especially awful when one is a flagrant partisan Democrat whose public persona requires them to support a set of policies that have pushed them semi-permanently into the ranks of the structurally unemployed.

  3. Hold on here…

    Weren’t we being told a few months ago that federal workers were being paid MORE than the private sector, and that this was supposedly justified because government workers were so much more intelligent, credentialed, advanced and sophisticated than their private sector counterparts? How did they suddenly end up earning less?

    1. It became convenient to the narrative.

  4. The truth isn’t important. What matters is getting a “study” out there that can be thrown out to “refute” claims about government workers being handsomely paid.

    So, mission accomplished. For the pro-pubsec partisans, and the genuinely apathetic/uninformed, this study will accomplish its intended purpose of obfuscating/neutralizing the true state of affairs.

    1. Are you questioning the august
      Federal Salary Council ? They did a study. A study I tells ya.

    2. Yep. As it happens, the Ministry of Truth performs a purely creative role. There is no need for the memory hole — one simply plucks out of the air the truth that one desires.

  5. You know who must be really screwed? Women who work in the public sector. They only make 85 cents for every dollar a man makes. So by my count, a woman who works in the public sector only makes 55 cents for every dollar a man in the private sector makes!


    1. “””You know who must be really screwed? Women who work in the public sector.””‘

      So not only do these women get paid by the taxpayers, they get sex too! Lucky girls.

  6. But if some bureaucrats find the pace of Federal work too grueling or the salary too low, they can always seek a nice cushy sinecure in private industry.

    All the studies of comparative worker pay purport to control for several variables (education, experience, etc.), but the real test is much simpler: when someone thinks he’s underpaid, considering his workload and tangible and intangible benefits, he finds a new job. But the turnover in the government is lower than in the private sector.

    1. That’s called empirical evidence.

      But what a fair price for a government worker is can be determined just the same as what a fair price for a loaf of bread or a gallon of gas or a pound of sugar or a kilowatt of electricity or a new school is. It’s whatever the market will bear. Obviously, there are still an awful lot of people who think the market will bear higher prices for government. Are they wrong? Sadly, I doubt it.

    2. I wonder how they define turnover, though. People move around in government jobs all the time, but they stay working for the government. Turnover is high in some places for certain positions. But does it count as a turnover if they continue to work for the govnerment or taking a similar position with a different office/agency? Not sure. But if a private sector person goes to work for another company working, essentially, the same job, then it is considered a turnover.

  7. If federal workers are so underpaid, they should get rid of their union becasue it isn’t doing them any good.

  8. Question: You know how many people work for the government?

    Answer: Half of them.

    1. Answer (cont’d): Meanwhile the other half collect the pay from the half that does.

  9. OK. I am a federal worker and I have been for the last 3 years. I previously worked in the private sector. I have been amazed at how things work around here.

    First, they found that things worked too well. They were figuring benefits as a fixed percentage. – Forgive me for being vague but I still work here. – One person could easily handle hundreds of files a month. This was not acceptable! They adopted a complex formula based on factors that involved canvassing most counties of the US and adapting a formula on a case by case, county by county basis. They also instituted a three levels of review. The first specialist (government worker) did 300 files the first month. After the new rules, the pace slowed to less than 20 a month. Of course more employees were needed (I was one of the new hires).

  10. There is a group that bands together. One sells personal marketing products on the side. They are protected from any criticism by the fact that they are a minority. They stick together. You do not cross them. What ever they are collecting money for, you pitch in immediately.

    Government workers are hired not on ability. If a job requires 35wpm typing, a person who types 125 wpm is not preferred over the 35 wpm typist. If you are a minority, you get the job. In my case, a typing test was never given to me or any of the others hired at that time. Two of the others were “hunt and peckers”.

    A degree from a 4 year community college is just as good at a degree from MIT for employment consideration.

    When the funds are flush they can create jobs. The first year I was there they decided they needed all files audited. Not the kind of financial audit that you are considering but someone just to check and make sure all the papers are in the file. The next thing I knew somebody’s grandmother was auditing my files. Fine, but I spent sometime looking for lost files before I was told what was happening.

    Sorry – have to go. Later.

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