Thursday, June 1, 2006 6:24 a.m. EDT
Federal Workers Reap Big Rewards
Compensation for the federal government's 1.9 million civilian workers in the executive branch costs almost $200 billion annually, according to a study by Chris Edwards, director of Tax Policy Studies at the Cato Institute.
Federal wages and benefits, Edwards reports, have been rising quickly, and by 2004, the average compensation of federal workers was almost twice the average in the private sector.
As a result, Edwards says that "The federal civilian workforce has become an elite island of secure and high-paid workers, separated from the ocean of private-sector American workers who must compete in today’s dynamic economy.”
His study, "Federal Pay outpaces Private-Sector Pay," Cato Institute, May 2006, showed:
The average federal worker earned $100,178 in wages and benefits in 2004, which compared to $51,876 for the average private-sector worker. Looking just at wages, federal workers earned an average $66,558, 56 percent more than the $42,635 earned by the average private worker.
According to U.S. Bureau of Economic Analysis data, since 1990 average compensation has increased 115 percent in the government and 69 percent in the private sector.
Pay inflation has been fueled by routine adjustments that move workers into higher salary brackets regardless of performance, and by jobs that are redefined upward into higher pay ranges; the federal civilian workforce has become an elite island of secure and high-paid workers, separated from the ocean of private-sector American workers who must compete in today's dynamic economy.
Edwards asks: "Are federal workers underpaid or overpaid? Despite the escalation of federal compensation, some government studies have found that federal workers are underpaid, and that they suffer from a 'pay gap' compared to private-sector workers. By contrast, some academic studies have found that federal workers are overpaid. Comparison studies that find a pay gap sometimes compare federal workers to those in large businesses. But many U.S. workers are employed by small businesses, which to have lower compensation levels. More important, comparison studies typically look just at wages and don’t consider the superior benefits paid the government. Federal workers receive government health benefits, a pension plan with inflation protection, and a retirement savings plan with a very generous match. (By contrast, 40 percent of private-sector workers do not have access to an employer retirement plan at all.)
"Federal workers typically have generous holiday and vacation schedules, flexible work hours, training options, incentive awards, excessive disability benefits, flexible spending accounts, union protections and a usually more relaxed pace of work than private workers. Perhaps the most important benefit of federal work is the extreme job security. The rate of "involuntary separations” (layoffs and firings) in the federal workforce is just one-quarter the rate in the private sector. Just 1 in 5,000 federal non-defense workers is fired for poor performance each year. All these federal advantages in benefits suggest that, in comparable jobs, federal wages should be lower than private-sector wages.”
Congress, Edwards recommended, should restrain federal compensation by freezing federal wages for a period of years and examining fringe benefit programs for possible savings. In the longer term, the coming surge in federal worker retirement as baby boomers enter their sixties offers an opportunity to downsize federal agencies without problematic layoffs or buyouts.Newsmax.com