Posted by John Romano in Finance on December 11, 2009
WASHINGTON, D.C. (YBH.ME) – The internet news machine is abuzz this morning over a USA TODAY article in which it is revealed that federal workers earn an average salary of $71,206 vs. $40,331 for private sector employees. While those numbers are striking, an even more disconnected figure is available.
According to the CATO Institute, when benefits are included, federal workers earn far more than those in the private sector and the disparity is growing.
Federal employee wages surge versus private sector.
The CATO study, released in September, puts the average federal civilian salary with benefits at $119,982 vs. $59,909 for the private sector. Federal government employees now earn fully double that of their private sector countrymen. In 2004, the average federal employee made two-thirds more than a person employed in the private sector according to CATO. The rate of disparity is growing rapidly. Total federal employee compensation grew 57% from 2004-2008 and just 30.8% in the private sector over the same period.
Neither CATO or USA TODAY explored the non-financial compensation aspects of either group, such as job security, guaranteed wage increases, and pension security. Taking all three into account, federal government jobs would become even more valuable as the government doesn’t often shrink while private sector jobs ebb and flow on a more consistent basis.
CATO figures used in their analysis are from The Bureau of Economic Analysis. The USA TODAY study analyzed data from the Office of Personnel Management’s database. The different data sources and methodology account for slight differences in each report’s base numbers.
#1 by CapCityDC on March 9, 2010 - 5:23 pm
If all private sector reporters and economists do as poor a job researching a story as the USA Today reporter and Chris Edwards of CATO (so much for the BA and MA in Economics Mr. Edwards) did then no wonder they get paid less. The issues reported in this article and nearly every other recent story or TV "news" report fail to consider critical apple-to-apple factors in trying to compare Fed and private sector salaries. It's not enough to take an occupation, run a simple average salary, look at benefits and then say one is compensated more than the other. To make a true meaningful and EDUCATED comparison, you need to adjust for years of experience, geographic location (I'd argue that a larger percentage of Feds live in cities with much higher cost of living than the avg private person), number of degrees, and a few other critical factors. If you do not perform such "normalizations", then you as a reporter or Director of Tax Policy Studies (Mr. Edwards) are not truly educating the reader, basically all you are doing is feeding the hype to sell a story or play politics. And who cares about the facts and what's real so long as you sell a story or bash the Feds, right?
#2 by CapCityDC on March 9, 2010 - 5:24 pm
Why did Mr. Edwards and the USA Today reporter not look at past CBO (http://www.cbo.gov/ftpdocs/5xx/doc599/fedsal.pdf) and GAO reports saying Feds historically got payed less and try to explain the inconsistencies of then and now? And simply acknowledging that the CBO or OPM data is not the best data to make such a comparison does not absolve either of them from then going ahead and making BAD comparisons and BAD conclusions. Bad data=bad conclusions, it's that simple.
Try employing those bad research skills in a top notch private corporation or a federal agency Mr. Edwards and see how fast you will rejoin the ranks of the non-profit sector.