CBO says federal-private pay differences vary according to educational level

A new report is further firing up the ongoing debate over how federal employee compensation compares with that of private-sector workers.

A new report is further firing up the ongoing debate over how federal employee compensation compares with that of private-sector workers.

One of the main points emphasized by the Congressional Budget Office report released this week is that differences in compensation between the two sectors vary widely depending on educational level.

According to the report—which compared wages, benefits and total compensation in the two sectors between 2005 and 2010—federal employment appeared to be the better deal for workers with no more than a high school education. The report said that civilian feds in that educational category earned an average of about 21 percent more than similar private-sector workers.

CBO found that federal and private-sector workers whose highest level of education was a bachelor’s degree earned about the same hourly wages on average. But feds with professional degrees or doctorates earned on average about a quarter less—23 percent less—than their private-sector counterparts.

The pool of federal workers tends to skew toward the latter two categories—taken as a whole, federal employees tend to be older, more educated and more concentrated in professional occupations than workers in the private sector, the report said.

“Overall, the federal government paid 2 percent more in total wages than it would have if average wages had been comparable with those in the private sector, after accounting for certain observable characteristics of workers,” the report said. Those “observable characteristics included educational level, years of work experience, occupation, employer size, geographic location, and demographic characteristics such as age, sex and gender.

The difference in benefits followed a similar pattern, although the report said that measuring those benefits was “more uncertain.”

According to the report, feds with no more than a high school diploma received benefits that were 72 percent higher than those of private-sector workers. Feds in the second group—those with no more than a bachelor’s degree—earned benefits that were 46 percent higher than for similar private-sector workers. And benefits were worth roughly the same for workers with professional degrees or doctorates in both the federal and private sectors, the report said.

In reacting to the CBO report, National Treasury Employees Union President Colleen Kelley agreed that highly-educated feds earn less than their private-sector counterparts, but largely rejected most of the other findings.

“CBO is clearly the expert on congressional budget scoring, but pay comparisons are not its principal expertise; that is the expertise of the Bureau of Labor Statistics,” Kelley said in a press statement. “BLS data have shown a consistent pay gap of 26 percent in comparable public- and private-sector jobs in favor of the private sector.”

NTEU noted that BLS uses the “more accurate” comparison of employee job duties as opposed to the employee characteristics examined by CBO.

Kelley expressed strong reservations about the use of the CBO findings to line up public- and private-sector pay. She noted that doing so would mean deep cuts to the salaries of the lowest-paid workers—which the report seems to indicate are the most “overpaid.”

“For example,” Kelley said, “that would mean cutting the salary of a clerk earning $20,000 a year by 20 percent down to $16,000, while increasing the salary of a highly paid manager making $200,000 by 20 percent to $240,000 …”


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