Federal employees on average earn slightly more than private sector workers with similar educational backgrounds, with less-educated federal employees well ahead while more highly educated ones lag behind, according to a study issued Tuesday.
The report concluded that overall, federal employees are paid 3 percent more, ranging from a 34 percent advantage for those with a high school education or less to a 24 percent shortfall for those with a professional degree or doctorate.
The CBO report is the latest entry in the long-running debate over how federal employee and private sector salaries compare. Various studies, using different methods and different sets of data, have reached widely varying conclusions.
According to the government’s official tabulation, based on Labor Department data, federal employees lagged 34 percent on average as of last fall. Earlier reports from conservative and libertarian think tanks have concluded that they are ahead by amounts ranging from 14 percent to 78 percent.
The CBO findings, covering 2011-2015, fall roughly in the middle, as did a similar report in 2012 covering 2005-2010 that found an overall advantage for federal salaries of 2 percent, also with a range by educational level.
It said that even though federal pay rates were frozen for three of the years included in the latest report, many employees continued to receive merit-based and other raises in that time, and the government slowed its hiring at lower-paid entry levels, raising its overall average salaries.
The report also found the government’s benefits superior, by 47 percent on average, with a similar range by educational level. For those with a high school education or less, the government’s benefits package was found to be 93 percent higher; for those with doctorates or professional degrees, benefits were found to be about the same.
The government’s advantage was largely due to the value of its defined benefit retirement annuity, a benefit that is increasingly rare in the private sector, especially in lower-wage jobs. The benefit measure also took into account the value of paid leave and health insurance, including the government’s policy of continuing to pay most of the premium costs for its retirees.
Combining pay and benefits into a measure of “total compensation,” the CBO said that federal employees on the lowest end of its educational scale are ahead by 53 percent while those at the highest end are behind by 18 percent — for an overall average advantage to federal employees of 17 percent.
The CBO meanwhile noted that the government’s workforce overall is more highly educated than the private sector’s. Just 13 percent of federal employees have only a high school diploma or less compared with 36 percent in the private sector, while 60 percent have a bachelor’s degree or higher, compared with 35 percent. The rest have “some college.”
J. David Cox Sr., president of the American Federation of Government Employees, said the CBO report “is based on several faulty assumptions. First, it assumes that wages are primarily a function of educational attainment. They are not. In the federal government, pay is an attribute of the job, not the individual.”
He also said in an emailed statement that the CBO report includes self-reported data from private sector employees on the value of their benefits, which are unreliable, and that it fails to take into account the additional costs the government incurs in funding retirement benefits for its employees because it may put that money only in relatively low-yield Treasury securities.
Cox and National Treasury Employees Union President Tony Reardon said that the government’s official tally — produced by an advisory council whose membership includes both — is a “more accurate comparison of actual job duties,” as Reardon characterized it in a statement.
The CBO said it did take into account other factors that affect salary, such as years of work experience, but that it reported its findings in terms of educational levels because that “plays a particularly large role in determining compensation.”
However, the CBO cautioned that its estimates “do not show precisely what federal workers would earn if they were employed in a comparable position in the private sector” and that the differences “could be larger or smaller” depending on traits the study did not attempt to measure, such as job security. Further, it said, the value of benefits is “much more uncertain” than data on wages, largely because of the difficulty of projecting the future value of retirement benefits.
Assessing how changes in pay and benefits would affect the government’s ability to recruit and retain valued workers was “beyond the scope of this analysis,” it added.
The National Active and Retired Federal Employees Association said that “while the report provides some valuable data, policy-makers must not jump to too many conclusions regarding its implications on federal personnel policy.” It said the CBO underestimated the value of private sector benefits by excluding stock options and profit-sharing arrangements and did not account for increases in the required contributions toward retirement by federal employees hired in recent years, which amount to a pay cut.
“While many private sector employers have eliminated or slashed health insurance and retirement benefits, especially for lower-paid employees, there is no justification for the federal government to join this race to the economic bottom,” Reardon said.
Comparisons of federal and non-federal compensation do not necessarily affect decisions on federal employee pay and benefits in the short run. For example, despite years of official government data showing federal workers behind on average by 30 percent and more, federal employees received raises averaging 2.1 percent in January of this year, varying somewhat by locality.
The Office of Management and Budget recently confirmed, as first reported by The Washington Post, that the Trump administration’s upcoming budget proposal will recommend a 1.9 percent raise for January 2018.