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Federal Employee Compensation vs the Private Sector

Friday March 8th, 2013   •   Posted by Craig Eyermann at 7:43am PST   •  

How much more are the employees of the federal government compensated than their peers in the private sector?

The Congressional Budget Office released a study in 2012 that took factors like age, skills, experience, education, employer size and occupation into account, to do as close to an apples-to-apples comparison as possible. The chart below reveals what they found by level of education:


In a nutshell, the federal government way overpays people with the lowest levels of education, while also showering them with outsize benefits.

The wage picture equalizes somewhat for people who have college degrees, but once again, the federal government’s benefits package sharply tilts the total compensation table to the federal government employees’ gain.

Once we get to people with higher levels of education, we see wages in the private sector start to overtake those available in the federal government, but once again, those extremely generous benefits more than make up the difference with the private sector.

It’s not until we get to the topmost education levels, such those required by medical doctors and surgeons, that we finally see wages earned in the private sector clearly overtake those in the federal government. Meanwhile, the level of benefits finally equalizes.

With more than two million civilian employees, what the CBO’s analysis suggests is that there is a lot of opportunity to reduce the cost of operating the U.S. government by bringing the pay and benefits it provides to federal government workers fully in line with those available in the private sector.

And for those federal government workers who say they could make a lot more money if they worked in the private sector while they demand raises and even more generous benefits than almost any person employed in the private sector earns today, we think that’s because what they might do in the private sector is probably a lot more valuable to society than what they are doing as federal government employees. If they think they can really be any more generously compensated in the private sector, they ought to go out and prove it outside of the Washington D.C. metropolitan area.

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March 2013