Federal pay

I suppose I should say something about this report on the pay of federal employees.

The government’s pay structure is relatively flat compared to private industry – the difference between the highest paid employees and lowest paid employees is much less in the government. The report is generally correct about this.

I think the report badly underestimates the value of government benefits. It says, "workers with a professional degree or doctorate received roughly the same level of average benefits in both sectors." When I recently had job offers and had to value the benefits, I sat down and ran the numbers and thought about the (subjective benefits). I estimated that the benefits at about 100% of my salary (in other words, to leave government I’d need an offer at close to twice my current salary, after factoring in the benefits offered by from outside employers). It looks like the CBO puts this number at close to 0. There is plenty of room for disagreement in this estimate. How much is an actual 40 hour work week worth, or taking a day off every couple weeks, an actual pension, job security, etc? Reasonable people can disagree.

The government is a really good place to work if you’re low-skilled, as the CBO shows. However, I’d add two points. First, your salary increases the longer you’re in government. People don’t often realize how old the federal workforce is, which skews the pay numbers. Also, these low skill jobs are increasingly being farmed out to contractors. Therefore, I’d guess that some of the disparity at the low end of the salary range will go away, as the old folks retire and are replaced by contractors. The apparent pay difference in favor of the private sector at the high-end may also be skewed by time, as a larger portion of these federal employees are relatively newer.

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3 Responses to Federal pay

  1. Chuck Rudd says:

    At AEI, Biggs and Richwine have done a lot of interesting work on this. I don’t know if the CBO figured it in to their numbers, but those guys added a job security premium into their analysis of, IIRC, between 5% and 10%.

  2. Dan says:

    As a Federal employee, I think the job security is a really big deal. I feel safer raising a family knowing my job will likely be around in 10 years.

    You are right about age. You get a little pay raise every year even if there is no change in title or duties. And then Federal employment has not grown in 30 years (presumably contracting has grown in its place but these employees don’t count as Feds).

    The average age of a Federal worker is now 47 years old:
    http://data.govloop.com/Government/Age-Distribution-of-Federal-Employees-Number-and-P/k5kr-j98h

    This is somewhat older than the average of 41.7 for the labor force generally.

    http://www.bls.gov/emp/ep_table_306.htm

  3. asdf says:

    I just started with the government, and I took an offer worth less then the private market (note that I’m state not federal). Workers here were furloughed, went through several years of salary freezes, etc. I definitely didn’t get the impression, at least for high skilled professionals like myself, they it was a great deal. Either you want to work on the projects being offered or you don’t, you don’t go into government for the money.

    The biggest benefit seems to be pension, but the pension in this state is massively underfunded so its in question whether a younger worker like me will get what I’ve been promised.

    What amazes me about government is it’s either really easy or really hard to spend money. Never in between. So we will write a 200,000 check on something with no background but can’t get 5,000 in expenses to research how that 200,000 will get spent. For the most part when people try to slam down on government expenditure it gets very political and you get a ton of, “penny wise, pound foolish,” stuff going on.

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