The Federal Pay Debate

There has been a lot of chatter around the salaries and benefits of public servants.

Like every debate, there are two sides. We recently attended a panel discussion, organized by the Coalition for Effective Change (CEC), which brought this issue to the forefront by bringing together three of the biggest players in the debate: Congressional Budget Office (CBO), think tank and a member of the Federal Salary Council.

The CBO in a recent report about federal pay found that:

On Wages

• Federal civilian workers with no more than a high school education earned about 21 percent more, on average, than similar workers in the private sector
• Workers whose highest level of education was a bachelor’s degree earned roughly the same hourly wages, on average, in both the federal government and the private sector.
• Federal workers with a professional degree or doctorate earned about 23 percent less, on average, than their private-sector counterparts.

On Benefits

• Average benefits for federal workers with no more than a high school diploma were 72 percent higher than for their private-sector counterparts.
• Average benefits for federal workers whose education ended in a bachelor’s degree were 46 percent higher than for similar workers in the private sector.
• Workers with a professional degree or doctorate received roughly the same level of average benefits in both sectors.

On Total Compensation

• Federal civilian employees with no more than a high school education averaged 36 percent higher total compensation than similar private-sector employees.
• Federal workers whose education culminated in a bachelor’s degree averaged 15 percent higher total compensation than their private-sector counterparts.
• Federal employees with a professional degree or doctorate received 18 percent lower total compensation than their private-sector counterparts, on average.

Meanwhile, the American Enterprise Institute (AEI) also conducted a study of federal work pay and concluded that:

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.

The Federal Salary Council, which is tasked with examining regularly the pay of federal employees and making recommendations, also conducted its own study. The results were:

On average, its [federal] employees are underpaid by 26.3 percent compared with similar non-federal jobs, a “pay gap” that increased by about 2 percentage points over last year while federal salary rates were frozen.

Federal pay has long been a controversial topic with the results depending on the question asked and the methodology used to find the answer. And ASPA has been attentive to this issue as part of its policy engagement. In 2010, ASPA experts submitted the results of a study on federal pay comparability to the Office of Personnel Management (OPM). In that report, ASPA recommends:

With an emphasis on the more technical aspects of federal pay setting, these recommendations include amending the current policy of across-the-board pay adjustments to allow for disaggregated pay increases by grade level and expanding the within grade salary range from 30 percent to 40 percent or higher.

This was crystal clear when Andrew Biggs, resident scholar at the American Enterprise Institute and co-author of the study quoted above; Joseph Kile of the CBO and Rex Facer, an ASPA member and member of the Federal Salary Council, came together on the CEC panel.

Rising resentment over this perceived inequality appears to have fostered some anti-public servant sentiments. And in some cases, as became visible by the questions from the audience, some skepticism from retired and current federal employees.

The former believe that federal employee salaries should be leveled with equal jobs in the private sector. While the latter contend that public servants are not usually adequately compensated for the work that is done.

The answer seems to be right down the middle. As the New York Times noted:

Less-educated federal workers make a bit more than their private-sector counterparts and receive more generous benefits. Workers with a complete or incomplete college education or a master’s degree tend to make about the same amount, again with more generous benefits. But highly educated federal workers earn less than their peers in the private sector.

This may not be the answer most of us want to hear but it may be a good starting point. As Facer pointed out, we must ask “what is the appropriate pay that an employee should receive?” and “Do we have the right salary structure for the Federal Government?”

But that may be a whole other conversation!