Today we’re going to follow up an article which I first delved into last year. Using BLS data, I detailed the pay gap between workers in the public sector and workers in the private sector. Public and private sector wages has become an increasingly politicized issue, so when the Congressional Budget Office tackled the topic, I read the report with great interest.
How does the compensation of federal civilian employees compare with that of employees in the private sector?
It’s a worthy title for this section, and also, the name of the CBO report: “How does the compensation of federal civilian employees compare with that of employees in the private sector?“. Similar to the results we found last year, the actual income earned by Federal and Private workers is only negligibly different. In fact, across all education levels (one common proxy to do skill based comparisons), there was only a 2% advantage for Federal employees. The largest income gap came for workers who attained only a High School diploma or less: Federal Employees made 21% more, on average. The private sector has an advantage for post-graduate work, with a 23% advantage on the income scale. Those who attained a Bachelor’s degree saw roughly the same income in private or Federal work.
Total Compensation, or the Benefits Gap
The place where the Federal sector wins out? Total compensation – or the combined value of both income and benefits to a worker. In fact, for anything less than a doctorate or professional degree, Federal workers held the advantage. In benefits alone, Federal workers with a High School diploma or less saw a 72% advantage. Overall, the CBO estimates that a worker in that demographic, on average, was 36% better compensated in Federal employment. Across all workers, including Professional Degrees and Doctorates? Federal workers were 16% better off.
There may be some bias introduced since the report didn’t narrow workers down to like professions. Some private sector positions have no direct comparison on the Federal side, and it is possible that those positions pay less. Additionally, it may be that as a whole, a country should have higher compensation for Government employees – theoretically, better performing workers (who could demand higher compensation) would be able to run the Government in a superior manner. Government employees also have another advantage – it is accepted that a Federal job is more stable than a private position, although the value is tough to quantify.
So, what do you think? Are you satisfied with the power of government and with its compensation practices? Do you think the CBO performed a fair study? What would you like to see for additional information on this topic?