Age, education, duties boost public sector pay

Public sector employees, and especially federal employees, tend to be older and have higher levels of education, both of which are linked to higher salary levels, said a new report done for Congress.

In addition, a larger share of public sector than private sector workers, 55 percent versus 37 percent, are employed in management, professional and related occupations that also tend to pay more, said the report by the Congressional Research Service.

The relative salaries of public sector versus private sector workers has been an ongoing political issue in numerous states as well as in Washington in recent years. For federal employees, various reports done by different sources, using different sets of data and different methods, have concluded that federal employees are either substantially overpaid or underpaid. While the government’s own calculations take the latter position, skepticism of those figures, plus concerns about the federal deficit, led to a general salary freeze being imposed for 2011 and 2012.

“The effect of the recent recession on government budgets has increased the interest of policymakers in reviewing the compensation of public sector employees,” CRS noted. However, it cautioned that it was not attempting to compare the actual pay or benefits of private and public sector workers or use the characteristics of workers in the two sectors to try to explain differences in pay and benefits.

One notable difference is age, with 55 percent of federal employees, and 51 percent of all public sector workers, counting state and local government employees, being between the ages of 45 and 64. The comparable private sector figure is 43 percent.

“Older workers typically have more years of work experience than younger workers. Employees with more work experience generally earn more than workers with less experience,” the report said. “Thus, the age difference between private and public sector workers may translate into a difference in years of work experience. In turn, a difference in work experience may be reflected in differences in pay and benefits between private and public sector workers.”

Similarly, it said, 52 percent of public sector employees (46 percent of federal workers), have at least a bachelor’s degree, compared with 34 percent of private sector workers.

“Other things being equal, the higher educational attainment of public sector workers, especially workers with an advanced or professional degree, should result in higher pay for public sector workers compared to workers in the private sector,” the report said.

The study added that though public sector work tends to be concentrated in relatively high-paying managerial and professional positions, it can be difficult to compare salaries because broad occupational category groupings may not reflect the different nature of such work between the public and private sectors. Using detailed job descriptions meanwhile raises problems because certain occupations, such as law enforcement, are concentrated in one sector or the other.

Union membership rates also are higher in the public sector, the report added, noting that in 2009 for the first time, the majority of union-represented workers were in the public sector. However, for executive branch employees at least, union status typically is not directly linked to pay since employee unions generally cannot bargain over pay. U.S. Postal Service employees can bargain over pay, however, as can air traffic controllers.

CRS also examined a related issue, the number of public sector employees, which also has been the subject of controversy, with several bills pending in Congress to reduce the federal workforce through partial hiring freezes. It said that since 1955, the first year the federal government started keeping statistics on employment at all levels of government, public sector employment as a share of total employment has risen from 13.8 to 17.3 percent, peaking in 1975 at 19.2 percent. In that time, federal employment as a share of total employment has fallen from 4.5 percent to 2.3 percent.

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