CBO: Federal workers make more than their private-sector counterparts

The Congressional Budget Office has found that the federal government pays slightly more in average wages and significantly more in benefits than the private sector. But the advantages mostly accrue to less-educated workers, while compensation for federal employees with professional and doctoral degrees lag significantly behind their private-sector counterparts.

On average, the CBO discovered that the federal government pays about 2 percent more in total wages and about 16 percent more when the employer-provided benefits are factored in, comparing workers with similar occupations and backgrounds. But there was a big range based on education level: Federal workers with no more than a high-school degree earned about 21 percent more than comparable private-sector workers, while those with a professional or doctoral degree earned about 23 percent less on average.

Anecdotal evidence seems to back this up, too: The highest-paid White House advisers made $172,200 last year, as Derek Thompson points out, and it’s reasonable to assume that former Office of Management and Budget chief Peter Orszag makes significantly more at his new job at Citigroup. Though, as Modeled Behavior rightly notes, his compensation may be higher because of his White House experience, revealing the latent benefit of federal employment for higher-educated workers who leave for the private sector.

Similarly, if the value of benefits were factored in, those with a high-school degree at most had 36 percent higher total compensation, while the professional/doctoral set earned about 18 percent less than their private-sector counterparts. The biggest factor behind this gap is “the defined-benefit pension plan that is available to most federal employees,” the CBO explains, noting that private employers have been moving away from such benefits.