Think Federal Workers Are Overpaid? Look Closer to Home

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Department of Motor Vehicles DMVWant a good salary and benefits? Get a job with the federal government -- or so the prevailing wisdom goes.

But if you really want to take home more than the average Joe, get a job working for the state.

In a report released earlier this year, the Congressional Budget Office confirmed America's long-standing hunch that federal employees are making out like bandits compared to their private sector counterparts. Judging strictly by pay stubs, the majority of public employees with education levels ranging anywhere from no high school diploma, all the way up to a college degree, out-earn their private sector peers.

The advantage only swings toward the private sector when workers possess a master's degree or better. What's more, when you factor in the value of generous government perks, even private sector master's degree-holders lose out.

Overall, the CBO found that federal government employees of similar backgrounds, levels of experience, and education earn about 2% more in base salary than comparable private sector employees. Add in health insurance, pensions, and paid vacations (which average 48% higher for federal government workers), and the net result is 16% greater total compensation for federal government workers.

Nice Work If You Can Get It

Numbers like these are bound to raise some ire among the taxpaying public. So why do so many government workers still lament their "low" wages? They may be neglecting to factor in the value of their benefits (for college graduates and higher). Or it may be that the folks doing the most complaining belong to the upper class of "professional degree or doctorate" holders, who do in fact earn a bit less (barely $90,000), and receive fewer benefits (worth about $50,000), than their private sector counterparts. After all, this category includes lawyers -- and the federal government hires a lot of lawyers.

But even for the unlucky few government employees who are getting the short end of the paycheck, there's a solution: Don't work for the federal government. Work for one of the states.

Think Globally, Work Locally

According to a new report out of the Bureau of Labor Statistics, the wages being earned by government employees at the state and local levels would make a federal government lawyer blush.

Here are the headline numbers -- again, focusing on total compensation that includes both base salary and benefits:

  • On average and across the country, the total employee compensation for employees both public and private "averaged $30.69 per hour" in June 2012. (That covers wages, plus all benefits and costs.)
  • Within private industry, however, "total employer compensation costs ... averaged $28.78 per hour," according to the BLS report. (Of this, wages and salaries constituted 70%, with perks making up the balance).
  • Meanwhile, "total employer compensation costs for State and local government workers averaged $41.16 per hour" (of which wages and salaries made up 65% of the total. So again, whether at the state, local, or federal level, government still provides the best benefits).

As you might guess, the biggest factor in state and local government compensation is benefits. Result, as a percentage of total compensation, government workers make out on such benefits as:

  • Paid leave (7.3% of total compensation).
  • Insurance (12%) (Health insurance in particular -- 11.6%).
  • Retirement and savings plans (8.5%) (Defined benefit pensions in particular -- 7.7%).
  • In contrast, workers in the private sector have the edge on performance bonuses and defined contribution plans -- i.e., 401(k) plans. Despite these small victories, though, when you get down to the bottom line, public state and local employees still out-earn their private sector counterparts by a whopping 43%.

That's more than twice the difference between compensation rates at the federal government level.

Taxpayers constantly complain that federal government workers are overpaid, underworked, and "feeding at the public trough." The clear implication of this recent study: The better meal is to be had from state and local governments.


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102 Comments

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Phil

All government employees know that they have a great deal - salary, benefits, vacation, sick pay, little stress and recession-proof jobs!. We should stop rocking the boat and just make sure that we keep the status quo.

August 30 2012 at 11:22 AM Report abuse +4 rate up rate down Reply
roncline59

I'm a federal employee, and I have NOT had a pay increase in 3 years.The President froze raises
shortly after he was elected........but the goverment can waste billions else where.
You can bet I wont be voting for him

August 30 2012 at 7:55 AM Report abuse -1 rate up rate down Reply
ED

My issue with ALL government employees is the level of incompetence. These folks can't get fired, and they know it. Social Security and the VA are the worst.

August 30 2012 at 7:35 AM Report abuse +3 rate up rate down Reply
dencuddy

You idiots ignore and demonize unions until government workers are miking better money than you and instead of joining a union and demanding better working conditions you allow the wealthy to blame those better off than yourselves.

August 30 2012 at 7:19 AM Report abuse rate up rate down Reply
lightmeariver

it is not the salary or the benefits issues - it is the absolute absence of merit, in hiring, career development and promotion that is the root cause of wasted taxpayers money in any level of the government bureaucracy.

August 30 2012 at 7:12 AM Report abuse rate up rate down Reply
bobystyles

It is not the pay--having lived and worked within--what is allowed when it comes to no-show work ethics, fuding reports and time sheets along with PERKS under the guise of business vouchers is the true issue--there are sufficient documents to back it all up.

August 30 2012 at 6:48 AM Report abuse rate up rate down Reply
soundchasr

Nice article. Nice attempt to divide the working people in this country.
The writer of this article makes it sound like 30.00 an hour is such alot of money,
Maybe in Ohio but not in New York. To the folks in the Rust Belt who have lost their good
paying union jobs to China.You owe it to yourselves for allowing businesses like Wal-mart
,Target etc to flurish. The best part is you still shop in these stores.
Here in good old union, liberal,Brooklyn N.Y we have managed to stop every attempt
Wal-mart has made to open a store here. With their low paying, no benefit jobs, that
destroy local economies,they will never get to sell their imported crap here.

August 30 2012 at 4:03 AM Report abuse +1 rate up rate down Reply
Retool

This article fails to mention that most federal jobs are represented by a union!! One person, alone, trying to negotiate a pay raise, or an increase in benefits is like an ant trying to move a mountain!! You take what they give you or someone else will have your job (immediately)!!!

August 30 2012 at 4:03 AM Report abuse +1 rate up rate down Reply
lylenpat

How about looking at and realizing that "Defined State and Local Benefit Plans" usually equal that 7.7% because State and Local workers don't or probably will NOT GET Social Security. Not sure without looking at the law, but they may not be entitled to Medicare either. When you do the comparisons, just make sure you investigate and tell the whole story, not just the part to make headlines and/or upset people.

August 30 2012 at 1:34 AM Report abuse -2 rate up rate down Reply
Joy Zocco

As a former state worker, there is one benefit that we never had - severance pay. We were allowed to turn in unused vacation and sick time for 1/4 salary value. Even with the large amount I turned in, my recompense was minuscule (something like 1/100th) compared to my friends severance pay.

August 29 2012 at 11:06 PM Report abuse +1 rate up rate down Reply