The truth about federal pay rates

How do you think the pay of federal workers compares with workers in the private sector? If you ask this question around you get a wide variety of answers. Government unions claim that government workers are underpaid – but then, union officials are paid to say that. Others agree that government workers are not highly paid, but suggest that the work is light, so overall it is a good deal. Another school of thought is that wages in government service are not high, but government workers more than make up for this with high benefits, such as health insurance and pension contributions. Government critics take another view – that the jobs are well paid and there are generous fringe benefits.

It is hardly surprising that there is a wide range of views on the matter. After all, the federal government employs a very large number of people. They work in different jobs, some with considerable responsibility; others, such as the FBI, involve risks; some are based in high cost areas such as New York City or Washington DC; others in field offices in heartland states. In almost all fields of endeavor some people work a lot harder than others, or are simply better at their jobs.

Given all these factors, it is fortunate that there is now some hard research on which to base an overall assessment – conducted by Chris Edwards at the Cato Institute. The figures are actually pretty clear. The government critics are spot on. In direct wages, average pay in the private sector in 2004 was $42,635. For federal employees the figure was $66,558. To many people in the Lake Champlain area, these may both seem high averages – but remember some of the most highly paid jobs are in areas where many costs, especially housing costs, are also very much higher.

When you add in benefits like health insurance and pensions, the federal government’s lead over the private sector grows even bigger. In the private sector, wages plus benefits totaled $51,876. In the federal sector, wages plus benefits $100,178. This advantage – 93% in 2004 – is the highest for decades, if not the highest ever. Federal pay and benefits were only 68% higher than the private sector in 2000. Between 1980 and 1990 it stayed at a constant 51%. As recently as 1960 it was less than half that, just 24%.

With the exception of the 1980s, the growth of the federal pay advantage has been pretty constant for over 50 years. And even in the 1980s, federal employees maintained their considerable advantage. And these figures take no account of the vastly greater job security in government jobs.

The costs are horrendous. There are 1.9 million civilian workers in executive branch of the federal government. They cost the taxpayers more than $200 billion annually. But it is worse than that. Paying high wages creates attractive jobs. People who could become doctors, entrepreneurs or inventors take jobs regulating those people instead. People who could produce wealth end up standing in the way of the real producers.

The federal government sucks talented people into overpaid jobs, when they could be doing something more useful. This hits rural areas like Lake Champlain – where there are fewer high paid private sector jobs to compete with the feds – especially hard. The trend of a growing federal pay advantage needs to be reversed.


Quentin Langley is editor of www.quentinlangley.net an academic at the University of Cardiff and is a columnist with Campaigns & Elections. This article was first published in the Common Sense series for Lake Champlain Weekly.

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