Last Friday’s post comparing federal employee retirement benefits to those in the private sector generated a lot of comments—most of them negative, strangely enough. Clearly, the post did the rounds among federal workers. While a range of (mostly spurious) issues were raised, a few in particular came up enough in the comments and in emails I received that I figured they’re worth clearing up.
First, many commenters thought the fact that I assumed a 44-year working career invalidated the whole comparison since the average federal employee doesn’t retire with 44 years of job tenure. One emailer told me I was making an ass of myself for assuming a full-career employee in the federal government. But as I said in the post, “in reality, most people take some time out of the workforce and most federal employees have held other jobs, but for these purposes that doesn’t matter too much.” And guess what? It doesn’t matter much, because I assumed that both the federal employee and the private sector worker had 44-year careers. If I lower the assumed years of work to, say, 30, both employees accrue fewer benefits, but the roughly two-to-one federal advantage stays around the same. The reason is that employer contributions toward retirement benefits are simply a lot higher in the federal government than in the typical private sector job.
Second, a number of comments wonder why I’m not looking at retirement pay for CEOs. Well, for one thing, the typical federal employee’s career choices aren’t between being, say, a GS-12 at HUD or Chief Executive Office of Exxon-Mobil. I compared benefits to what federal employees would likely receive in the private sector. Moreover, CEO pay or benefits is a private matter. If Apple thinks Steve Jobs is worth a billion dollars per year (and looking around there’s some evidence that he is) that’s a matter between Jobs and Apple shareholders. It doesn’t affect me—if I don’t like it, I can sell their stock. And it doesn’t really even affect Apple’s employees, who get paid according to their productivity just as Jobs does. Most importantly, Apple isn’t threatening to put me in jail if I don’t pay Steve Jobs’s supposedly excessive salary. The federal government takes non-payment somewhat more seriously. (P.S. Why do people focus on CEOs rather than, say, professional athletes? A CEO may manage billions of dollars in assets and thousands of employees over dozens of countries. A-Rod hits a ball with a bat for $32 million a year.)
Third, other comments said that because my analysis excluded stock options I was really missing the point. My answer: who do you guys think you are, the first 50 employees at Google? According to the BLS, only around 8 percent of employees nationwide receive any form of stock options, and even among the 10 percent of highest earning workers it’s only around 16 percent. In a similar vein, other comments lament that federal workers lost out during the go-go dot.com years. Maybe, but where’s pets.com and its employees and investors now? Only the sock puppet got out alive. Federal employees receive high pay and have near-total job security. That’s a tough combination to beat.
There’s simply a huge disconnect between what the academic research shows—from my recent work with Jason Richwine back to the first major federal pay study from Sharon Smith in 1976—and how federal employees perceive themselves.