Economics

CBO study concurs with Biggs-Richwine paper highlighting overpaid federal workers

The Congressional Budget Office has released a new study showing that federal government employees receive significantly higher compensation than private sector workers with the same levels of education and experience. The CBO report confirms many of the findings of a 2011 study I wrote with Jason Richwine of the Heritage Foundation and helps rebut claims that federal workers are underpaid.

CBO found that federal employees receive average salaries that are about 2 percent higher than those for similar private sector employees and benefits that by 48 percent exceed private sector levels. Total average federal compensation is 16 percent above private sector levels. With federal employee compensation totaling $200 billion per year, a 16 percent pay premium is big money.

CBO’s methods are broadly consistent with the 2011 AEI study, although we found a larger federal pay premium because we sought to capture a broader range of federal compensation—including the implicit value of federal workers’ near-total job security—and because of somewhat different economic assumptions. Nevertheless, the CBO report serves as a valuable contrast to figures generated by the federal Office of Personnel Management claiming that federal employees are underpaid by 26 percent relative to private sector jobs.

4 thoughts on “CBO study concurs with Biggs-Richwine paper highlighting overpaid federal workers

  1. “federal government employees receive significantly higher compensation than private sector workers with the same levels of education and experience”

    The chart and study not only do not support your assertion, they demolish it.

    • Dear Not Likely: How’s that again? The chart is broken down by educational level and shows higher total pay for all educational levels except professional or doctorate degrees, who make up something like 7 percent of the federal workforce.

      • Overall, the study finds that federal workers are paid 2% higher wages than their private counterparts. When we factor in benefits the amount is 19%, but this is hardly surprising given the fact that many lower wage private industry professions provide little in the way of benefits. I’m of the opinion that 2% is not “significantly higher,” although I will allow that’s a matter of interpretation.

        • So you’ve decided that salaries matter but benefits don’t? In any case, your interpretation is off, since CBO compares to private workers with similar levels of education and experience (and other characteristics) AND working at large firms, which offer the best benefits in the private sector. So they’re not comparing to Mom & Pop stores, Wal Mart, etc.

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