This morning, Jason Richwine and I write in the Washington Post on the Federal Salary Council’s claim that federal government jobs on average pay 35% less than similar private sector positions. We run through a number of problems with this conclusion—one of which is that it’s simply implausible on its face that the government could retain employees while paying only 65 cents on the dollar—but the main one is that the Council’s analysis ignores differences in qualifications between government and private sector workers. There’s evidence that, even in the same job, private sector workers have more education and experience than federal employees. Once you control for that difference, the large federal “salary gap” essentially disappears.
Also of Interest
State by state: A comparison of public and private-sector pay
The chained CPI: A sucker's bet for the GOP
But the chained CPI really isn't being proposed as a Social Security reform, as a way to make the program more solvent or better-functioning. True Social Security reforms think about ways to better protect the poor, or to encourage longer work lives, or increase retirement saving. The chained CPI, by contrast, is about producing savings within the 10-year budget scoring window.
Don’t raise or eliminate the cap
But by eliminating the cap, a person earning $225,000 would pay roughly four times more in taxes than he'll receive in benefits. A growing resemblance to a welfare plan would be inescapable.