Can you really trust claims about federal pay?

Editor's note: This article was updated June 15, 2012 to attribute a quote about number disparity to Rex Facer, a member of the Federal Salary Council.

Federal pay has never been a straightforward issue, but as many members of Congress and the presidential administration propose freezing, cutting or otherwise changing federal salaries in the name of deficit reduction, it is an important one.

But determining whether government employees are paid more, less or as much as private-sector employees is much harder than it seems.  

The complexity is rooted in the different methodologies used when looking at private and public sector compensation, according to panelists at the June 13 Coalition for Effective Change event. The event was held in downtown Washington, D.C., and was sponsored by the Partnership for Public Service.

Rex Facer, a member of the Federal Salary Council and associate professor of public finance and management at the Marriott School of Management at Brigham Young University, stressed the difficulty in evaluating something that’s rarely an apples-to-apples comparison.

What makes the Federal Salary Council’s analysis different is that it aims to ask how much individuals make, regardless of the sector they work in, he said. The council looks only at direct compensation and doesn’t assess any benefits employees receive, Facer said. However, the council does consider locality pay to explore how variations in compensation level within local labor markets differ from the overall, broad patterns of compensation differences nationwide.

That being said, the council has consistently seen a substantial gap between the pay federal employees receive to the compensation their peers outside the public sector get, Facer said.

Considering research by the council and data from the Bureau of Labor Statistics, “federal employees are undercompensated somewhere, on average, between 30 and 40 percent,” he said.

Fellow panelist Joseph Kile, assistant director of the Microeconomic Studies Division at the Congressional Budget Office, agreed there’s no short answer to the question and offered up significantly different numbers.

The makeup of the federal workforce is vastly different from industry, and those dissimilarities shape compensation. Feds tend to have more education than those in industry, Kile said. Half of the government workforce has bachelor’s degrees, while only 30 percent in the private sector has the same level of schooling.

Education has been “by far been the largest explanatory variable” in trying to answer the question of which sector employees earn more, Kile said. “On average, folks with relatively less education tend to earn more in the federal government than in the private sector, and that’s both in terms of cash compensation and benefits,” he explained.

The reverse is also true for employees with higher levels of education. Those individuals are more likely to earn less in government than those in the private sector with the same level of education, Kile said. In general, however, the CBO finds that feds make about 2 percent more than private sector employees, Kile said.

Answering an audience member’s question about the disparity in the numbers, Facer pointed to the possibility of bad data and flawed methodology. “We may not have all the right data pieces; it could be that we aren’t using the right methodological approaches,” he said.

But finding the “perfect” methodology might be tricky as no approach is flawless, Facer pointed out. “It’s really easy to find chinks in the approaches, no matter which way you’re looking at it,” he said.

About the Author

Camille Tuutti is a former FCW staff writer who covered federal oversight and the workforce.

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Reader comments

Thu, Jun 21, 2012 Fed Up Fed

"if you feel that you are not being paid enough, leave."

That's a consideration if you have less than 10 years in. Once you get beyond that, it gets harder to walk away from your invested time. I was offered an outstanding oportunity during the DOT COM bubble and almost jumped for the doubled salary offer. My kids were in school and the relocation would have disrupted that. 5 years later, it was a good thing since the company evaporated. But in those 5 years... Walking away from any job is easier when you're younger. Just as it gets harder to sit back and let politicians take pot shots at you and your co-workers without saying something or retiring when you otherwise love the work.

Tue, Jun 19, 2012

I think what people should focus on is that the BETTER feds are the ones who will leave because you pay them less. When people post things like, "Well, if you don't like it, then leave!" or hypotheses like, "If they could really make more in the private sector, then they would be leaving", they are failing to realize that the people who CAN make more in the private sector ARE leaving. I see it over and over again. When job conditions in the Federal Government decline, many of the best people receive job offers in the private sector and take them. The remaining Feds are, in many cases, there because they are the ones who HAVE NOT received offers and aren't as marketable. Therefore, what we are doing by freezing wages is ensuring that mediocre and poor performers run our Government. Think about that.

Mon, Jun 18, 2012

why would you work for the government if you could be making more in the private arena. because in the gov. you get paid and are not held accountable. there are many dedicated workers who love the job they are doing and there are many more not doing anything. its a good gig. if you feel that you are not being paid enough, leave.

Mon, Jun 18, 2012 Carol

I am a GS-11 in the IT field and earn at least $20,000.00 less a year than my counterpart on the outside with the same certification. The only reason I don’t leave is I’ve busted my rear for 30 years as a GS this month. I looked at my FERS retirement and will only receive $867 per month retirement. The majority of the FERS retirement relies on TSP savings. An outside employee can put the same 10% of pay into their companies 401K equivalent for retirement. What those who are pushing the pay freeze are not taking into consideration are those GS employees that were not under the NSPS system. I received the standard pay, with no bonuses, during the years NSPS employee’s earned large rating bonuses which added to their annual salary and subsequent retirement. So the system is not fair across the board. They need to freeze the pay of the NSPS employees not ALL GS.

Mon, Jun 18, 2012 David

Federal employees never have and never will make as much at the private sector, that’s just the nature of the beast. We have always been 15 to 25% behind on all of the wage surveys I have read for the localities I have worked over the years, unfortunately that gap has increased even further due to the freeze. Let’s not forget that everyone’s wages are set by wage surveys in your locality, not wand waving for pay.
Medical for federal employees is no bargain either, not only do we pay much higher deductibles, our biweekly/monthly rates are higher as well.
If you work for the Corp of Engineers or a Public Works operation in DOD then what I’m going to say will come with no surprise. We have been contracting out much of our work for years, because we must pay prevailing wage all of the contractors are making more than the people they are replacing plus the companies they work for are entitled to overhead and profit by law, now couple that with similar benefits and the cost for a contract employee is ridiculous. We have tried to convert some of the better contract employees to civil service when we had the opportunity, however most refuse because they would be taking a cut in pay and usually a hit in benefits as well.
The other issue is the privatization of the utility systems, in most cases where the conversion was made the government had a preferred or super user status, once converted to private sector our utility rates have quadrupled and we have lost control of the utilities causing outages and damage to critical systems costing the tax payer even more. Making this change on the larger installations has cost the taxpayer billions, it actually works fairly well on the really small installations, but those are few and far between. As a CSRS employee with well over 30 years it pains me to see the poor choices that have been made in the name of cost cutting and congressional mandates for more dependency on the private sector for the DOD.
All that said, we have plenty of government programs that should be reduced or eliminated and a good number that are the responsibility of the states and local citizens, not the federal government.

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