Government jobs: Bloated Pay, Benefits Cost Us All

COMMENTARY Jobs and Labor

Government jobs: Bloated Pay, Benefits Cost Us All

Jul 7, 2010 2 min read

Research Fellow, Labor Economics

As research fellow in labor economics at The Heritage Foundation, James Sherk researched ways to promote competition and mobility.
Feel like you're not paid enough? Worry about losing your job? Wish you had better benefits? Ever think about quitting?

If you answered "yes" to these questions, one thing is certain: You don't work for Uncle Sam.

That's because federal workers are much better off than private-sector workers in all the major markers of job satisfaction — salary, job security, benefits and job desirability. And it's costing taxpayers a bundle.

Start with the money. The average federal employee earns an annual salary almost 60% higher than the average private-sector employee — $79,000 vs. $50,000. Federal employees do have more education (on average) than private-sector workers. Their unions argue that this justifies their higher pay. But it doesn't. Even after controlling for education and experience, federal employees get paid significantly better — 22% more per hour, on average — than private-sector workers.

Not all federal workers earn above-market pay. The government bases raises on seniority, not performance, so the most skilled and hardest-working federal employees are actually underpaid. Overall, though, government workers earn well above what their private-sector counterparts make, even before you consider benefits.


Oh, the benefits

Those benefits include more than one type of retirement plan. Federal employees can enroll in a Thrift Savings Plan that works like a 401(k). But they also get a "defined contribution" plan, which lets a worker with 30 years of experience retire at 56 with full benefits.

Government workers also can enroll in the Federal Employees Health Benefits Program. There are no age, health, or pre-existing condition restrictions.

Paid leave? Check. Federal employees with just three years of experience get 20 days annually, and those who have logged more than 15 years get 26 paid days off. Group life insurance? Check. And many federal buildings even offer on-site child care. To be sure, many large private employers offer two or three of these benefits, but very few offer them all.

Job security

Once you add up these benefits, the gap in total compensation rises even higher — 30% to 40% above comparable private-sector workers.

Federal civil servants enjoy another perk: near-absolute job security. Private businesses cut hiring and increase layoffs when sales drops. From 2007 through 2009, the adult unemployment rate in the private sector more than doubled, from 4.2% to 9.4%. Not in government. The percentage of federal employees who lost jobs barely budged, going from 2.0% to 2.9%.

This is largely because of civil service rules. It's virtually impossible to fire federal employees for bad performance once they've passed a one-year probationary period.

Not surprisingly, federal employees rarely quit. In good economic times, they voluntarily leave at roughly a third the private-sector rate. And that disparity has only grown since the recession began.

Why should taxpayers care? Because it's costing them money. If Congress were to set up a payment system like the private sector's, it would save about $47 billion a year. That's serious money.

Lawmakers can take other steps: reducing benefits, contracting more non-essential tasks to private-sector companies, and making it easier to dismiss underperforming employees.

"Be thankful we're not getting all the government we're paying for," Will Rogers once said. Indeed. With a little effort, we could even pay less for the government we have.

James Sherk is a senior policy analyst in labor economics at The Heritage Foundation.

First appeared in USA Today