Federal government employee compensation v. comparable private sector compensation
Are federal employees compensated better than comparable private sector employees?
Andrew Biggs an economist with the American Enterprise Institute, and Jason Richwine, an economist with the Heritage Foundation, have conducted a study which finds that yes, indeed they are. And, in fact, by quite a bit. In a conference call they outlined their methodology (you can find it in detail here in the study).
You may find their conclusions a bit startling but probably unsurprising. Biggs and Richwine compared three areas between federal government employees and comparable private sector employees: Salaries, benefits and job security.
Salaries:
Biggs and Richwine found that on average (using the Human Capital Model which is a widely accepted model for such studies) federal government employees enjoyed a 14% salary premium over private employees at the same level. The primary reason they found is federal employees are, on average, promoted more quickly in their jobs meaning at a comparable level with private sector employees they are usually less skilled and less experienced.
Benefits:
In terms of benefits, they found that private sector benefits in large private corporations (500+) averaged about 50% of salary. Federal workers enjoyed a significant advantage here, with an average of 66% of salary added in benefits. For instance, federal employees enjoyed significantly more paid time off than do private sector types (25%). Additionally, employee contributions to retirement are 3 times that of private sector employees. Bottom line: federal employees enjoy a 33% premium over private employees.
Job Security:
This measures the probability of becoming unemployed. Federal employees are much less likely to be laid off than are private sector employees. The study calculated an 11% premium here. Said another way, if a private sector employee was asked if he would take a 10% pay cut to be guaranteed employment no matter what, almost all would take it.
Adding all of that up (14% salary premium, 33% benefits premium and 11% job security premium) and weighting them properly, the total pay package including those three elements provides federal employees with a 39% premium over private sector employees in comparable positions.
The important question? How much is that difference worth in tax payer dollars? The market value of the difference is $60 billion dollars – a year.
Obviously what isn’t going to happen (reality in politics alert) is a $60 billion dollar reduction in pay and benefits. Or layoffs to balance it out.
But what can be planned is bringing federal compensation in line with private compensation on an apples to apples basis and eliminating that gap.
We all know how popular that will be right? Especially with the government unions (who’ve once again negotiated sweetheart deals with compliant politicians). But this is a nice chunk that can at least be eliminated at a future date through wage and benefit parity. Of course that means really freezing wages, rolling back benefit contributions and other unpopular fixes.
Biggs and Richwine will be testifying at a House Oversight Committee hearing on federal employee pay. Any bets on whether or not the final verdict of the committee isn’t to kick the can down the road again and leave the problem for others?
~McQ
The NPR kerfuffle and subsidies
Call it the obligatory NPR story, but I found the video of the NPR exec talking to a couple of fake Muslim Brotherhood types to be pretty revealing about the attitude of that particular organization.
And, like you, I’m sure, wondered “why, again are we subsidizing this particular entity?”
Of course I’d like to see government get out of the subsidy business altogether and yes that includes corporate welfare as well.
But this thing with NPR hit a particular nerve that goes beyond that. It clearly exposes a bias that certainly didn’t require much prodding from the fake Muslims to expose.
Ron Schiller, the NPR executive, is a real “treasure”. He tells the “Muslims” that NPR fired Juan Williams because it provides "non-racist, non-bigoted, straightforward telling of the news" and apparently William’s association with Fox News ran counter to that. At the same time he goes on a racist, bigoted and frankly uninformed rant about the Tea-Party, was open (or at least didn’t condemn) to slamming Jews and chuckled at the suggestion that radical Muslims called NPR “National Palestine Radio”.
He also said "it is clear that we would be better off in the long run without federal funding."
That’s been clear to me for decades. But for some reason, or perhaps multiple reasons, each time ending the subsidy to the Corporation for Public Broadcasting (the organization that passes those funds on to NPR) is brought up, we’re told that NPR can’t survive without it.
Uh, fine, so let it “wither on the vine”. NPR will either do that or find a way to survive and, per Schilling, it really would be better off without it.
I say grant his wish.
The function and purpose of government has been rather expansive over the past few decades. Do we really believe that providing tax subsidies for entertainment and journalism is one of the charges of government?
No. Neither is it a charge of government to provide corporations with subsidies, or ethanol producers, mohair producers, “green energy” companies, farmers, or any of a almost endless list of those given subsidy via government.
NPR’s particular case will probably see it’s subsidy ended – not because it is the right thing to do and as a precedent for ending subsidies everywhere, but because Ron Shilling made it indefensible by the left.
Looking at the list of subsidies this government pays out gives one the understanding as to how deep government’s tendrils are and how many there are. If subsidies were a cancer, I’m sure the doctor would pronounce the disease to be in stage 4.
It is a habit – an addiction – we have to break if we’re ever to see “smaller, less intrusive and less expensive government.” Let’s start with NPR, but for the right reasons.
~McQ



