CBO report is Republicans’ ammunition to continue pay freeze

Correction: Earlier versions of this column incorrectly stated the Congressional Budget Office found federal workers with no more than a high school education earned less than their private-sector counterparts. Such employees earned more than those in the private sector. This has been updated.

Joe Davidson
Columnist February 8, 2012

A Congressional Budget Office report issued last week has become Exhibit A in Republicans’ efforts to extend a freeze on federal pay rates and limit retiree benefits.

The main take-away from the report: “Overall, the federal government paid 16 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.”

Joe Davidson writes the Federal Diary, a column about the federal workplace that celebrated its 80th birthday in November 2012. View Archive

That average covers big exceptions and includes benefits, although the CBO acknowledges that comparing benefits is an “uncertain” exercise. CBO found that only federal workers with no more than a high school education actually earned more than private-sector counterparts. Employees with a bachelor’s degree earned about the same, and those with advanced degrees are paid about 23 percent less.

Whatever the nuances, House Republicans didn’t need the CBO report in December, when they approved offsetting the cost of a payroll tax-holiday extension in part by adding another 12 months to the current pay freeze.

Yet more than studies produced by conservative think tanks, the report by the independent CBO was a gift to Republicans who have long sought to reduce the federal payroll. On Feb. 1, during the debate before the House approved legislation adding another 12 months to the federal pay freeze, Republicans repeatedly used the CBO report as ammunition.

“I think it is important to also look at the facts behind federal employees as they are compared to the private sector,” said Rep. Sean P. Duffy (R-Wis.), the bill’s sponsor. “The Congressional Budget Office came out, and they’ve said that federal employees make 16 percent more on average than the private sector. . . .

“That doesn’t make sense. And I hear a lot of conversation from my friends across the aisle about fairness and parity. Well, I think you should start to use the term ‘fairness’ today. There should be parity between the private sector and the public sector.”

The next day, when six Republican senators introduced a bill providing for alternatives to Defense Department cuts scheduled to take place next year, the senators used the report to push for extending the two-year freeze on federal pay rates by 18 months, through June 2014, and reducing the workforce through attrition. The 18 months, however, effectively could be two years because federal raises are paid in January.

Citing CBO findings, the senators’ statement said, “it’s inexcusable that federal employees are being compensated so much more than the taxpayers in the private sector who subsidize those federal benefits.”

But the CBO findings certainly are not universally accepted.

Rep. Steny H. Hoyer (D-Md.) told reporters that the Duffy bill “ignores the substance of what has proved to be a thorny issue, and that is how you properly assess the pay of federal employees.”

The CBO’s figures aren’t the only data in this debate.

During the House session, Rep. Elijah E. Cummings (D-Md.) said that “the much better report is the Bureau of Labor Statistics report. They have more experience at this, and they show that federal employees were paid 26 percent less than private-sector employees.”

That report, produced by the Federal Salary Council using BLS data, tries to compare the work done by federal and private-sector workers, not just their “observable characteristics.”

As Office of Personnel Management Director John Berry has pointed out, workers in both sectors could have similar characteristics, such as education, and do similar work, such as operating a forklift. But that work might actually differ significantly in difficulty, complexity or safety. For example, should a forklift operator at a furniture warehouse be paid the same as one who moves nuclear materials?

John D. Donahue, a Harvard public policy professor and the author of “The Warping of Government Work,” said the CBO report “pretty much gets it right” but acknowledges that it doesn’t directly account for the differences in duties.

Donahue added, however, that differences in duties tend to be reflected in differences in workers, so “if a forklift operator in a federal facility has a much more demanding job than his counterpart in a soda-bottling plant, that will mean that the federal worker has more education and more experience, and the CBO study adjusts for education and experience.”

But does that mean federal employees are overpaid?

Rather than racing to the bottom, Colleen M. Kelley, president of the National Treasury Employees Union, wrote in The Washington Post last week, “The logical policy implications of the CBO conclusions would be to provide significant raises to the highest-paid federal employees.”

Previous columns by Joe Davidson are available at wapo.st/JoeDavidson. Follow the Federal Diary on Twitter: @JoeDavidsonWP

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