Federal Employees News Digest

CBO reports feds are overcompensated—experts beg to differ

The Congressional Budget Office has issued a report finding that pay and benefits for federal employees are not in synch with compensation for their private-sector counterparts.

In the study, released April 26, the CBO concludes that total federal compensation—wages and benefits, together—is on average 17 percent greater than that enjoyed by those working in the private and nonprofit sectors of the economy. The report covered the years 2011 to 2016.

The finding that feds are overpaid was quickly embraced by organizations that perennially tend to attack federal worker productivity. “The Trump administration and Congress should try to bring federal pay and workplace conditions in line with the rest of the nation,” the conservative Cato Institute said in a statement. “Reforms should include cutting the overly generous federal benefits package and reducing the hurdles to firing poorly performing federal workers.”

But the details of the CBO study are more nuanced than the average salary numbers indicate.

For example, among feds with graduate and other professional degrees, total compensation tends to be significantly less than that of comparable private-sector employees. In these higher-echelon jobs total compensation—pay plus benefits—lags that offered in the private sector, by an average of 18 percent.

Still, for feds with a bachelor’s degree—or just a high school diploma—the CBO study finds the opposite: compensation is greater than that of their private-sector equivalents. Feds with a bachelor’s degree earn total compensation that is on average 21 percent higher than that of someone with the same terminal level of education in the private sector. And for those with just a high school diploma, the total pay and benefits advantage over the private sector is 53 percent. 

Counting wages alone, the differences were not quite as great. Feds with a bachelor’s degree alone received wages on average only 5 percent more than in the private sector, while those with a high school diploma earned 34 percent more. Wages alone for those with professional or graduate degrees were 24 percent less on average. So, just counting wages, significant—though smaller—discrepancies remain compared with the private sector.

Unions reject findings, cite other studies

Unions and other employee organizations were quick to slam the CBO’s latest report, with its overall conclusion of excessive compensation for feds. These groups identified numerous potential flaws in the report’s methodology, citing conflicting figures from analyses done by other arms of the government.

“This report is designed to justify the elimination of a pay system that does an excellent job of avoiding pay discrimination in the federal government,” J. David Cox, president of the American Federation of Government Employees, said. “According to scientific studies by the government’s own wage experts at the Office of Personnel Management and Bureau of Labor Statistics, federal employees on average earn 34 percent less today than employees performing comparable jobs in the private sector.”

Indeed, exactly as Cox claimed, the government’s Federal Salary Council—in its latest published calculation of the federal pay gap—found that feds earned 34.07 percent less than workers in comparable jobs who receive “non-federal pay.” FSC analysis uses data from around the country, and is the part of the federal government specifically tasked with studying and recommending adjustments to federal pay. The FSC is a unit of OPM.

“The Congressional Budget Office ignores these [other federal] data and instead focuses on educational attainment as the basis on which pay comparisons are made,” Cox complained. “The CBO approach is not useful for pay-setting but it’s very useful for those who want to cut wages and salaries for the federal workforce.

The National Treasury Employees Union likewise objected to the CBO’s findings—and the methodology behind them. NTEU argued that more accurate data on comparative salaries are available from yet another federal agency, the BLS.

In fact, the BLS provides the raw data used to create the comparative salary reports favored by AFGE—those from the FSC.

“While the CBO is an expert on budget scoring, the Bureau of Labor Statistics—which finds a consistent pay gap in comparable public and private sector jobs in favor of the private sector—is the expert in wage and compensation comparisons,” Tony Reardon, national president of the National Treasury Employees Union, said.

In short, the union researchers and leaders argued, as they have in past years, that the CBO comparisons do not compare enough factors, and therefore come up with inaccurate conclusions—a finding shared by other employee unions and associations as well as many outside experts.

NARFE enters the fray

Another major force in studying and protecting federal pay and benefits, the National Association of Retired and Active Federal Employees—NARFE—also slammed the CBO’s findings.

“I think it’s an anomaly that they said that feds are overcompensated,” NARFE National Treasurer Jon Dowie told FEND. “And we don’t agree with CBO’s figures.”

Dowie took particular issue with CBO’s headline claim—that federal employee compensation is 17 percent greater than that of comparable employees from the rest of the economy. He pointed to the same sort of weaknesses in data-crunching that leaders at AFGE and NTEU did.

“Under the current system, we have a three-legged approach. We have a thrift savings plan, similar to a 401(k), Social Security, and pensions—the FERS and CSRS—which have been reduced compared with the old system,” Dowie said. “This is all part of the overall understood agreement when you come to work for the federal government, that you will have these benefits when you retire.”

“It’s all part of an incentive to stay with the federal government—staying with it, versus changing jobs more frequently and going outside of the government to get a larger compensation package, which the federal government doesn’t offer—things like signing bonuses and profit sharing, great relocation packages and even stock ownership,” Dowie continued. “All of these kinds of things are not available in the government sector, but they are in the private sector. And I am not certain the CBO really takes these kinds of things into account.”

Academic experts on labor relations and compensation frequently note how difficult it is to compare salaries even in people working in the same profession across geographical divides—and that it is much tougher once you are comparing people in government to people in the private sector.

Jack Fiorito, an expert on labor relations and a professor at Florida State University’s School of Management, discussed this problem with FEND.

“It is very hard to control for all the differences in wages in these studies,” Fiorito told FEND.  “It is hard to compare one job slot, at a specific job, to another without comparing exactly what kinds of workers are in it.”

“You can wind up inadvertently botching your comparison—like comparing a professional accountant with a short-order cook in a fast food restaurant,” he told FEND. “Why? One reason is because overall the white-collar workers in the federal government are more qualified than the average in the private sector.”

Fiorito noted has seen multiple academic studies showing just this effect.

“The government is just a completely different space—and on average, compared to jobs involving similar descriptions or education levels in the private sector, it involves higher skills,” he said. Therefore, Fiorito said, it was all too easy—and wrong—for the CBO to conclude in such a comparison that feds are overpaid.

NARFE’s Dowie offered similar statistical objections union and academic experts offered in criticism of the CBO’s findings. But he noted another, less monetary factor he thinks should mitigate against any effort to paint feds as overpaid.

“I’d also note that our dedicated federal employees put in considerable additional time in other ways that they support the public—often more than people know,” Dowie told FEND. “I’d point out, also, in my view a federal employee is really never off duty.”
There are many special duties and risks—during on-duty and off-duty time—that come just from being a federal employee, Dowie explained.

“If you are an IRS agent, people—on duty and off-duty—always are asking you questions about taxes,” Dowie told FEND. “Or if you work for the military, no matter what you do you are in some danger. My wife, working for the federal government, was in the Pentagon on 9/11. Even when you don’t think you are in the line of fire, whatever forces there are in the world that disagree with our government take it out on our federal employees.”

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