Jason Richwine

Comparing Federal and Private Sector Compensation

Public sector compensation has come under increased scrutiny from politicians and the media, but comprehensive technical comparisons of federal and private compensation have been largely absent from the discussion. Drawing from the academic literature and using the most recent government data, this report measures the generosity of federal salaries, benefits, and job security. Compared to similar private sector workers, we estimate that federal workers receive a salary premium of 14 percent, a benefits premium of 63 percent, and extra job security worth 17 percent of pay. Together, these generate an overall federal compensation premium of approximately 61 percent. Reducing federal employee compensation to market levels could save taxpayers roughly

The Great Government Pay Debate

77 billion per year.

Finding Answers to the Public Compensation Question

The three statements that follow were provided by individuals who have public positions that are likely to influence how government pay systems are planned and managed. Government pay and benefits have become political issues and the goal is to provide a forum prior to the election where three distinct positions can be stated, followed by comment and rebuttal. The first statement, by the two independent members of the Federal Salary Council, Stephen Condrey and Rex Facer II, joined by a colleague Jared Llorens, argues for a variation on the existing program model. As background, the Council makes annual recommendations to the U.S. Office of Personnel Management (OPM) and the President’s Pay Agent on needed adjustments to the federal white-collar salary system. The second was drafted by Andrew Biggs and Jason Richwine, prominent critics of government pay practices and occasional spokespersons on this subject for the American Enterprise Institute and the Heritage Foundation, respectively. Their comments are posted occasionally on the websites of their respective organizations. The third statement was provided by Michael Filler, who serves as a presidentially appointed member of the National Council on Federal Labor–Management Relations and Director of the Public Services Division, International Brotherhood of Teamsters. The Teamsters has over 260,000 public and professional employees across North America. Following each statement are comments by the two other “sides.” This article is intended to highlight the issues that are contentious as well as those where there is agreement. A key point is the general agreement that government pay should be aligned with market levels although there are differences in exactly what that means. 462333 CBRXXX10.1177/08863687124623 33Compensation & Benefits ReviewRisher 2012